HomeMy WebLinkAbout3689ORDINANCE NO. 3689
AN ORDINANCE of the City Council of the City of
Kent, Washington, relating to contracting indebtedness;
providing for the issuance of $3,465,000 par value of
Unlimited Tax General Obligation Refunding Bonds, 2004
(Taxable), of the City to provide funds with which to pay the
cost of advance refunding a portion of the City's outstanding
Unlimited Tax General Obligation Refunding Bonds, 1993,
and paying the administrative costs of such refunding and the
costs of issuance and sale of such bonds; fixing the date,
form, maturity, interest rate, options of redemption, terms and
covenants of the bonds; providing for and authorizing the
purchase of certain obligations out of the proceeds of the
sale of the bonds herein authorized and for the use and
application of the money derived from those investments;
authorizing the execution of an agreement with U.S. Bank
National Association of Seattle, Washington, as refunding
trustee; establishing a bond redemption fund; providing for
bond insurance; and approving the sale and providing for the
delivery of the bonds to Lehman Brothers Inc. of Seattle,
Washington.
PASSED MAY 4, 2004
This document prepared by:
Foster Pepper & Shefelman PLLC
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447-4400
5N299" 02 UTGO Refunding Bonds, 2004
TABLE OF CONTENTS
Page
SECTION1. - Definitions...............................................................................................3
SECTION 2. - Authorization and Purposes of Bonds .................................................... 6
SECTION 3. - Description of Bonds.............................................................................. 6
SECTION 4. - Registration and Transfer of Bonds ........................................................ 6
SECTION 5 - Payment of Bonds.................................................................................... 8
SECTION 6. - Redemption Provisions and Open Market Purchase of Bonds .............. 8
SECTION 7. - Notice of Redemption...........................................................................10
SECTION 8. - Failure To Redeem Bonds...............................................................10
SECTION 9. - Pledge of Taxes...................................................................................10
SECTION 10. - Bond Fund and Deposit of Bond Proceeds........................................11
SECTION 11 . - Refunding of the Refunded Bonds....................................................11
SECTION 12. - City Findings with Respect to Refunding............................................14
SECTION 13. - Form and Execution of Bonds.............................................................14
SECTION 14. - Bond Registrar...................................................................................15
SECTION 15. - Refunding or Defeasance of the Bonds..............................................16
SECTION 16. - Approval of Bond Purchase Agreement...........................................17
SECTION 17. - Preliminary Official Statement Deemed Final.....................................18
SECTION 18. - Undertaking to Provide Continuing Disclosure...................................18
50428W 02 LTGO Refunding Bonds, 2004
SECTION 19 . - Bond Insurance............................................................................... 21
SECTION 20: - Severability.........................................................................................21
SECTION 21: - Effective Date..................................................................................... 22
504289"02 LTGO Refunding Bonds, 2004
ORDINANCE NO. 3689
AN ORDINANCE of the City Council of the City of
Kent, Washington, relating to contracting indebtedness;
providing for the issuance of $3,465,000 par value of
Unlimited Tax General Obligation Refunding Bonds, 2004
(Taxable), of the City to provide funds with which to pay the
cost of advance refunding a portion of the City's outstanding
Unlimited Tax General Obligation Refunding Bonds, 1993,
and paying the administrative costs of such refunding and the
costs of issuance and sale of such bonds; fixing the date,
form, maturity, interest rate, options of redemption, terms and
covenants of the bonds; providing for and authorizing the
purchase of certain obligations out of the proceeds of the
sale of the bonds herein authorized and for the use and
application of the money derived from those investments;
authorizing the execution of an agreement with U.S. Bank
National Association of Seattle, Washington, as refunding
trustee; establishing a bond redemption fund; providing for
bond insurance; and approving the sale and providing for the
delivery of the bonds to Lehman Brothers Inc. of Seattle,
Washington.
RECITALS
A. Pursuant to Ordinance No. 2948, the City heretofore issued its $6,700,000
par value Unlimited Tax General Obligation Bonds, 1990 (the "1990 Bonds"), for the
purpose of paying part of the cost of aiding and cooperating with The Housing Authority of
the County of King, a public body corporate and politic formed under Washington law (the
"Authority"), in the planning, designing, acquiring, development, constructing, rehabilitating
and equipping of housing, together with related facilities, in the City for low-income senior
citizens (the "Project").
B. Pursuant to Ordinance No. 3115, the City heretofore issued its
$14,085,000 par value Unlimited Tax General Obligation Refunding Bonds, 1993 (the
"1993 Bonds"), a portion of which 1993 Bonds were used to pay the cost of advance
refunding the callable portion of the 1990 Bonds.
504289"03 1 UTGO Refunding Bonds, 2004
C. There are presently outstanding $3,210,000 par value of 1993 Bonds
allocable to the 1990 Bonds as more fully described herein (the "Refunded Bonds").
D. Pursuant to that certain Housing Cooperation Agreement dated June 13,
1991 (the "HCA"), between the Authority and the City, the City on December 15, 1992,
transferred the Project to the Authority for operation by the Authority, and the Authority has
operated the Project since that time.
E. Pursuant to a First Amendment to Housing Cooperation Agreement (the
"HCA Amendment"), between the Authority and the City, the City expects to agree to
permit the Authority to enter into certain transactions with a tax credit limited partnership in
which the Authority will be the sole managing partner (the "Partnership") for the purpose of
enabling the Authority and the Partnership to finance the cost of needed repairs and
capital replacements for the Project at a cost of approximately $2,400,000.
F. The Partnership will be a nongovernmental person, and the transactions
between the Authority and the Partnership may cause the 1993 Bonds to be treated as
taxable private activity bonds unless the City takes a remedial action with respect to the
Refunded Bonds in the manner permitted by applicable United States Treasury
Regulations issued by the Internal Revenue Service under the Internal Revenue Code of
1986, as amended.
G. After due consideration, it appears to the City Council that a remedial action
may be accomplished with respect to the Refunded Bonds by the issuance and sale of the
taxable unlimited tax general obligation refunding bonds authorized herein (the "Bonds") to
refund and defease the Refunded Bonds, which refunding will be effected by:
(a) The issuance of the Bonds and the payment of the costs of
the issuance of the Bonds and the costs of the refunding; and
(b) The payment of the principal of and interest on the
Refunded Bonds when due up to and including their maturity.
504289M 02 2 UTGO Refunding Bonds, 2004
H. To effect that refunding in the manner that will be most advantageous to the
City it is found necessary and advisable that certain Acquired Obligations (hereinafter
defined) bearing interest and maturing at such time or times as necessary to accomplish
the refunding as aforesaid be purchased out of the proceeds of the Bonds and other funds
provided by the Authority to the extent, if any, necessary under the requirements of
chapter 39.53 RCW applicable to the Bonds, in accordance with the HCA Amendment.
The City Council deems it to be in the best interests of the City to issue and
sell the Bonds to pay the cost of advance refunding the Refunded Bonds and to pay the
administrative costs of such refunding and the costs of issuance and sale of the Bonds.
J. Financial Guaranty Insurance Company of New York, New York ("Bond
Insurer"), has made a commitment to issue an insurance policy (the "Municipal Bond
Insurance Policy") insuring the payment when due of the principal of and interest on the
Bonds as provided therein, and the City Council of the City deems that the purchase of the
Municipal Bond New Issue Insurance Policy is in the best interest of the City.
K. Lehman Brothers Inc. of Seattle, Washington, has offered to purchase the
bonds authorized herein under the terms and conditions hereinafter set forth in the form of
a Bond Purchase Agreement.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. - Definitions. As used in this ordinance, the following words shall
have the following meanings:
"Acquired Obligations" means those direct, noncallable obligations of the United
States of America purchased to accomplish the refunding of the Refunded Bonds as
authorized by this ordinance and chapter 39.53 RCW.
5042890 02 3 UTGO Refunding Bonds, 2004
"Bond Fund" means the Unlimited Tax General Obligation Refunding Bond Fund,
2004 (Taxable), created by this ordinance for the payment of the Bonds.
"Bond Insurer" means Financial Guaranty Insurance Company.
"Bond Register" means the books or records maintained by the Bond Registrar
containing the name and mailing address of the owner of each Bond and the principal
amount and number of Bonds held by each owner.
'Bond Registrar" means the Fiscal Agent.
"Bonds" means the $3,465,000 par value Unlimited Tax General Obligation
Refunding Bonds, 2004 (Taxable), of the City issued pursuant to and for the purposes
provided in this ordinance.
"City" means the City of Kent, Washington, a municipal corporation duly organized
and existing under and by virtue of the laws of the state of Washington.
"Code" means the United States Internal Revenue Code of 1986, as amended, and
applicable rules and regulations promulgated thereunder.
"DTC" means The Depository Trust Company, New York, New York.
"Finance Director" means the Finance Director of the City.
"Fiscal Agent" means the fiscal agent of the state of Washington, or any other
paying agent/registrar of the City, as the same may be designated from time to time.
"Letter of Representations" means the Blanket Issuer Letter of Representations
dated March 16, 1999, between the City and DTC, as it may be amended from time to
time.
504289"02 4 UTGO Refunding Bonds, 2004
"Municipal Bond Insurance Policy" means the policy issued by the Bond Insurer
insuring the payment of the principal of and interest on the Bonds.
"Refunded Bonds" means the outstanding Unlimited Tax General Obligation
Refunding Bonds, 1993, of the City issued pursuant to Ordinance No. 3115, the refunding
of which has been provided for by this ordinance, which are more particularly described as
follows:
Maturity Date
Principal
Interest
(December 1)
Amounts
Rates
2004
$480,000
5.20%
2005
515,000
5.30
2006
540,000
5.40
2007
530,000
5.50
2008
555,000
5.55
2009
590,000
5.60
"Refunding Plan" means:
(a) the placement of sufficient proceeds of the Bonds which,
with other money legally available, if necessary, will acquire the Acquired
Obligations to be deposited, with cash, if necessary, with the Refunding
Trustee;
(b) the payment of the principal of and interest on the Refunded
Bonds when due up to and including their respective maturities; and
(c) the payment of the costs of issuing the Bonds and the costs
of carrying out the foregoing elements of the Refunding Plan.
"Refunding Trust Agreement" means a Refunding Trust Agreement between the
City and the Refunding Trustee substantially in the form of that which is on file with the
Finance Director and by this reference incorporated herein.
"Refunding Trustee" means U.S. Bank National Association of Seattle,
Washington, serving as trustee or escrow agent or any successor trustee or escrow agent.
504289" 02 5 UTGO Refunding Bonds, 2004
SECTION 2. -Authorization and Purposes of Bonds. The City shall borrow money
on the credit of the City and issue negotiable taxable unlimited tax general obligation
bonds evidencing that indebtedness in the amount of $3,465,000 to provide the funds to
carry out the Refunding Plan. The general indebtedness to be incurred shall be within the
limit of up to 2-1/2% of the value of the taxable property within the City issued pursuant to
a vote of the qualified votes of the City
SECTION 3. - Description of Bonds. The Bonds shall be in the aggregate principal
amount of $3,465,000; shall be dated their date of initial delivery; shall be in the
denomination of $5,000 or any integral multiple thereof; shall be numbered separately in
the manner and with any additional designation as the Bond Registrar deems necessary
for purposes of identification; shall bear interest (computed on the basis of a 360 -day year
of twelve 30 -day months) payable semiannually on each June 1 and December 1,
commencing December 1, 2004, to the maturity or earlier redemption of the Bonds; shall
bear interest at the rate of 3.46% per annum; and shall mature on December 1, 2009.
Interest on the Bonds will not be excluded from gross income of the registered owners for
federal income tax purposes. $255,000 of principal of the Bonds shall constitute nonvoted
debt of the City.
SECTION 4. - Registration and Transferof Bonds. The Bonds shall be issued only
in registered form as to both principal and interest and shall be recorded on the Bond
Register. The Bond Register shall contain the name and mailing address of the owner of
each Bond and the principal amount and number of each of the Bonds held by each
owner.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any
authorized denomination of an equal aggregate principal amount. Bonds may be
transferred only if endorsed in the manner provided thereon and surrendered to the Bond
Registrar. Any exchange or transfer shall be without cost to the owner or transferee. The
Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days
preceding any principal or interest payment date.
5642994902 6 UTGO Refunding Bonds, 2004
The Bonds initially shall be registered in the name of Cede & Co., as the nominee
of DTC. The Bonds so registered shall be held in fully immobilized form by DTC as
depository in accordance with the provisions of the Letter of Representations. Neither the
City nor the Bond Registrar shall have any responsibility or obligation to DTC participants
or the persons for whom they act as nominees with respect to the Bonds regarding
accuracy of any records maintained by DTC or DTC participants of any amount in respect
of principal of or interest on the Bonds, or any notice which is permitted or required to be
given to registered owners hereunder (except such notice as is required to be given by the
Bond Registrar to DTC).
For as long as any Bonds are held in fully immobilized form, DTC, its nominee or
its successor depository shall be deemed to be the registered owner for all purposes
hereunder and all references to registered owners, bondowners, bondholders or the like
shall mean DTC or its nominee and shall not mean the owners of any beneficial interests
in the Bonds. Registered ownership of such Bonds, or any portions thereof, may not
thereafter be transferred except: (i) to any successor of DTC or its nominee, if that
successor shall be qualified under any applicable laws to provide the services proposed to
be provided by it; (ii) to any substitute depository appointed by the City or such substitute
depository's successor; or (iii) to any person if the Bonds are no longer held in immobilized
form.
Upon the resignation of DTC or its successor (or any substitute depository or its
successor) from its functions as depository, or a determination by the City that it no longer
wishes to continue the system of book -entry transfers through DTC or its successor (or
any substitute depository or its successor), the City may appoint a substitute depository.
Any such substitute depository shall be qualified under any applicable laws to provide the
services proposed to be provided by it.
If (i) DTC or its successor (or substitute depository or its successor) resigns from
its functions as depository, and no substitute depository can be obtained, or (ii) the City
determines that the Bonds are to be in certificated form, the ownership of Bonds may be
504299"02 7 UTGO Refunding Bonds, 2004
transferred to any person as provided herein and the Bonds no longer shall be held in fully
immobilized form.
SECTION 5 - Payment of Bonds. Both principal of and interest on the Bonds shall
be payable in lawful money of the United States of America. Interest on the Bonds shall
be paid by checks or drafts of the Bond Registrar mailed on the interest payment date to
the registered owners at the addresses appearing on the Bond Register on the 15`" day of
the month preceding the interest payment date. Principal of the Bonds shall be payable
upon presentation and surrender of the Bonds by the registered owners to the Bond
Registrar. Notwithstanding the foregoing, for as long as the Bonds are registered in the
name of DTC or its nominee, payment of principal of and interest on the Bonds shall be
made in the manner set forth in the Letter of Representations.
SECTION 6. - Redemption Provisions and Open Market Purchase of Bonds. The
Bonds shall be issued without the right or option of the City to redeem those Bonds prior to
their stated maturity or mandatory redemption dates.
The Bonds are Term Bonds and, if not purchased in the open market under the
provisions set forth below, shall be called for redemption pro rata (in such manner as the
Bond Registrar shall determine) at par plus accrued interest on December 1 in years and
amounts as follows:
504289"02 8 UTGO Refunding Bonds, 2004
Mandatory Mandatory
Redemption Redemption
Years Amounts
2004
$590,000
2005
560,000
2006
580,000
2007
560,000
2008
575,000
2009
600,000
If the City shall purchase Term Bonds in the open market as set forth below, the
par amount of the Term Bonds so purchased (irrespective of their actual purchase prices)
shall be credited against one or more scheduled mandatory redemption amounts for those
Term Bonds (as allocated by the City) beginning not earlier than 60 days after the date of
the purchase, and the City shall promptly notify the Bond Registrar in writing of the manner
in which the credit for the Term Bonds so purchased has been allocated.
Portions of the principal amount of any Bond, in installments of $5,000 or any
integral multiple thereof, may be redeemed. If less than all of the principal amount of any
Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there shall be
issued to the registered owner, without charge therefor, a new Bond (or Bonds, at the
option of the registered owner) of the same maturity and interest rate in any of the
denominations authorized by this ordinance in the aggregate principal amount remaining
unredeemed.
The City further reserves the right and option to purchase any or all of the Bonds in
the open market at any time at any price plus accrued interest to the date of purchase.
All Bonds purchased or redeemed under this section shall be canceled.
Notwithstanding the foregoing, for as long as the Bonds are registered in the name
of DTC or its nominee, selection of Bonds for redemption shall be in accordance with the
Letter of Representations.
50429M 02 9 UTGO Refunding Bonds, 2004
SECTION 7. - Notice ofRedemotion. The City shall cause notice of any intended
redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date
fixed for redemption by first-class mail, postage prepaid, to the registered owner of any
Bond to be redeemed at the address appearing on the Bond Register at the time the Bond
Registrar prepares the notice, and the requirements of this sentence shall be deemed to
have been fulfilled when notice has been mailed as so provided, whether or not it is
actually received by the registered owner of any Bond. Interest on Bonds called for
redemption shall cease to accrue on the date fixed for redemption unless the Bond or
Bonds called are not redeemed when presented pursuant to the call. In addition, the
redemption notice shall be mailed within the same period, postage prepaid, to Moody's
Investors Service, Inc., and Standard & Poor's at their offices in New York, New York, or
their successors, to Lehman Brothers Inc. at its office in Seattle, Washington, or its
successor, to the Bond Insurer at its principal office in New York, New York, or its
successor, to each NRMSIR or the MSRB and to such other persons and with such
additional information as the Finance Director shall determine, but these additional
mailings shall not be a condition precedent to the redemption of Bonds. Notwithstanding
the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee,
notice of redemption shall be given in accordance with the Letter of Representations.
SECTION 8. - Failure To Redeem Bonds. If any Bond is not redeemed
when properly presented at its maturity or call date, the City shall be obligated to pay
interest on that Bond at the same rate provided in the Bond from and after its maturity or
call date until that Bond, both principal and interest, is paid in full or until sufficient money
for its payment in full is on deposit in the Bond Fund and the Bond has been called for
payment by giving notice of that call to the registered owner of each of those unpaid
Bonds.
SECTION 9. - Pledge of Taxes. For as long as any of the Bonds are
outstanding, the City irrevocably pledges to levy taxes annually without limitation as to rate
or amount 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
504259" 02 10 UTGO Refunding Bonds, 2004
of and interest on the Bonds, and 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.
SECTION 10. - Bond Fund and Deposit ofBond Proceeds. The Bond Fund
is created and established in the office of the Finance Director as a special fund
designated as the Unlimited Tax General Obligation Refunding Bond Fund, 2004
(Taxable), for the purpose of paying principal of and interest on the Bonds. Accrued
interest on the Bonds, if any, received from the sale and delivery of the Bonds, together
with any net premium and/or contingency amounts received from Lehman Brothers Inc.
that are not necessary to pay the administrative costs of the refunding and the costs of
issuance and sale of the Bonds, shall be deposited into the Bond Fund. The remaining
principal proceeds of the sale of the Bonds shall be deposited with the Refunding Trustee
in accordance with the provisions of Section 11 herein. All taxes and other funds collected
for and allocated to the payment of the principal of and interest on the Bonds shall be
deposited in the Bond Fund.
SECTION 11. - Refunding of the Refunded Bonds.
(a) Appointment of Refunding Trustee. U.S. Bank National Association of
Seattle, Washington, is appointed Refunding Trustee.
(b) Use of Bond Proceeds: Acquisition of Acguired Obligations. All of the
proceeds of the sale of the Bonds, exclusive of the accrued interest thereon and any
contingency amount which shall be paid into the Bond Fund, shall be deposited
immediately upon the receipt thereof with the Refunding Trustee and used, together with
other funds legally available, if necessary, to discharge the obligations of the City relating
to the Refunded Bonds under Ordinance No. 3115 by providing for the payment of the
amounts required to be paid by the Refunding Plan. To the extent practicable, such
obligations shall be discharged fully by the Refunding Trustee's simultaneous purchase of
the Acquired Obligations, bearing such interest and maturing as to principal and interest in
such amounts and at such times so as to provide, together with a beginning cash balance,
5042EW 02 11 UTGO Refunding Bonds, 2004
if necessary, for the payment of the amount required to be paid by the Refunding Plan.
The Acquired Obligations are listed and more particularly described in Exhibit A attached
to the Refunding Trust Agreement between the City and the Refunding Trustee, but are
subject to substitution as set forth below. Any Bond proceeds or other money deposited
with the Refunding Trustee not needed to purchase the Acquired Obligations and provide
a beginning cash balance, if any, and pay the costs of issuance of the Bonds shall be
returned to the City at the time of delivery of the Bonds to the initial purchaser thereof and
deposited in the Bond Fund to pay interest on the Bonds on the first interest payment date.
(c) Substitution of Acquired Obligations. Prior to the purchase of any Acquired
Obligations by the Refunding Trustee, the City reserves the right to substitute other direct,
noncallable obligations of the United States of America ("Substitute Obligations") for any of
the Acquired Obligations and to use any savings created thereby for any lawful City
purpose if, (a) in the opinion of Foster Pepper & Shefelman PLLC, the City's bond counsel,
the interest on the Refunded Bonds will remain excluded from gross income for federal
income tax purposes under Sections 103, 148, and 149(d) of the Code, and (b) such
substitution shall not impair the timely payment of the amounts required to be paid by the
Refunding Plan, as verified by a nationally recognized independent certified public
accounting firm.
After the purchase of the Acquired Obligations by the Refunding Trustee,
the City reserves the right to substitute therefor cash or Substitute Obligations subject to
the conditions that such money or securities held by the Refunding Trustee shall be
sufficient to carry out the Refunding Plan, that such substitution will not cause the
Refunded Bonds to be arbitrage bonds within the meaning of Section 148 of the Code and
regulations thereunder in effect on the date of such substitution and applicable to
obligations issued on the issue date of the Bonds, and that the City obtain, at its expense:
(1) a verification by a nationally recognized independent certified public accounting firm
acceptable to the Refunding Trustee confirming that the payments of principal of and
interest on the substitute securities, if paid when due, and any other money held by the
Refunding Trustee will be sufficient to carry out the Refunding Plan; and (2) an opinion
504289"02 12 UTGO Refunding Bonds, 2004
from Foster Pepper & Shefelman PLLC, bond counsel to the City, or its successor, to the
effect that the disposition and substitution or purchase of such securities, under the
statutes, rules, and regulations then in force and applicable to the Bonds, will not cause
the interest on the Refunded Bonds to be included in gross income for federal income tax
purposes and that such disposition and substitution or purchase is in compliance with the
statutes and regulations applicable to the Bonds. Any surplus money resulting from the
sale, transfer, other disposition, or redemption of the Acquired Obligations and the
substitutions therefor shall be released from the trust estate and transferred to the City for
deposit into Bond Fund.
(d) Administration of Refunding Plan. The Refunding Trustee is authorized and
directed to purchase the Acquired Obligations (or Substitute Obligations) and to make the
payments required to be made by the Refunding Plan from the Acquired Obligations (or
Substitute Obligations) and money deposited with the Refunding Trustee pursuant to this
Ordinance. All Acquired Obligations (or Substitute Obligations) and the money deposited
with the Refunding Trustee and any income therefrom shall be held irrevocably, invested
and applied in accordance with the provisions of Ordinance No. 3115, this ordinance,
chapter 39.53 RCW and other applicable statutes of the state of Washington and the
Refunding Trust Agreement. All necessary and proper fees, compensation, and expenses
of the Refunding Trustee and all other costs incidental to the setting up of the escrow to
accomplish the refunding of the Refunded Bonds and costs related to the issuance and
delivery of the Bonds, including bond printing, verification fees, bond insurance premium,
bond counsel's fees, and other related expenses, shall be paid out of the proceeds of the
Bonds.
(e) Authorization for Refunding Trust Agreement. To carry out the Refunding
Plan provided for by this ordinance, the Mayor or Finance Director of the City is authorized
and directed to execute and deliver to the Refunding Trustee a Refunding Trust
Agreement substantially in the form on file with the Finance Director and by this reference
made a part hereof setting forth the duties, obligations and responsibilities of the
Refunding Trustee in connection with the payment, redemption, and retirement of the
504289"02 13 UTGO Refunding Bonds, 2004
Refunded Bonds as provided herein and stating that the provisions for payment of the
fees, compensation, and expenses of such Refunding Trustee set forth therein are
satisfactory to it. Prior to executing the Refunding Trust Agreement, the Mayor or Finance
Director of the City is authorized to make such changes therein that do not change its
substance and purpose.
SECTION 12. - City Findings with Respect to Refunding. The City Council finds
and determines that the issuance and sale of the Bonds at this time is necessary and in
the best interest of the City and its taxpayers and in the public interest in order to comply
with the City's covenants in the ordinances of the City authorizing the issuance and sale of
the 1990 Bonds and the 1993 Bonds not to take or permit any use of proceeds of those
bonds at any time during the term of those bonds that would cause interest on those
bonds to be included in gross income for federal income tax purposes.
The City Council further finds and determines that the money to be deposited with
the Refunding Trustee for the Refunded Bonds in accordance with Section 11 of this
Ordinance will discharge and satisfy the obligations of the City under Ordinance No. 3115
with respect to the Refunded Bonds, and the pledges, charges, trusts, covenants, and
agreements of the City therein made or provided for as to the Refunded Bonds, and that
the Refunded Bonds shall no longer be deemed to be outstanding under Ordinance No.
3115 immediately upon the deposit of such money with the Refunding Trustee.
SECTION 13. - Form and Execution of Bonds. The Bonds shall be printed or
lithographed on good bond paper in a form consistent with the provisions of this ordinance
and state law and shall be signed by the Mayor and City Clerk, either or both of whose
signatures may be manual or in facsimile, and the seal of the City or a facsimile
reproduction thereof shall be impressed or printed thereon.
Only Bonds bearing a Certificate of Authentication in the following form, manually
signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
benefits of this ordinance:
50129%402 14 UTGO Refunding Bonds, 2004
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Kent, Washington,
Unlimited Tax General Obligation Refunding Bonds, 2004 (Taxable),
described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENT, Bond
Registrar
By
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that
the Bonds so authenticated have been duly executed, authenticated and delivered and are
entitled to the benefits of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to be an
officer of the City authorized to sign bonds before the Bonds bearing his or her facsimile
signature are authenticated or delivered by the Bond Registrar or issued by the City, those
Bonds nevertheless may be authenticated, issued and delivered and, when authenticated,
issued and delivered, shall be as binding on the City as though that person had continued
to be an officer of the City authorized to sign bonds. Any Bond also may be signed on
behalf of the City by any person who, on the actual date of signing of the Bond, is an
officer of the City authorized to sign bonds, although he or she did not hold the required
office on the date of issuance of the Bonds.
SECTION 14. - Bond Reaisfrar. The Bond Registrar shall keep, or cause to be
kept, at its principal corporate trust office, sufficient books for the registration and transfer
of the Bonds, which shall be open to inspection by the City at all times. The Bond
Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred
or exchanged in accordance with the provisions of the Bonds and this ordinance, to serve
as the City's paying agent for the Bonds and to cant' out all of the Bond Registrar's
SM289 02 15 UTGO Refunding Bonds, 2004
powers and duties under this ordinance and City Ordinance No. 2418 establishing a
system of registration for the City's bonds and obligations.
The Bond Registrar shall be responsible for its representations contained in the
Bond Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may
become the owner of Bonds with the same rights it would have if it were not the Bond
Registrar and, to the extent permitted by law, may act as depository for and permit any of
its officers or directors to act as members of, or in any other capacity with respect to, any
committee formed to protect the rights of Bond owners.
SECTION 15. - Refunding or Defeasance of the Bonds. The City may issue
refunding bonds pursuant to the laws of the state of Washington or use money available
from any other lawful source to pay when due the principal of and interest on the Bonds, or
any portion thereof included in a refunding or defeasance plan, and to redeem and retire,
refund or defease all such then -outstanding Bonds (hereinafter collectively called the
"defeased Bonds") and to pay the costs of the refunding or defeasance. If money and/or
direct obligations of the United States of America maturing at a time or times and bearing
interest in amounts (together with money, if necessary) sufficient to redeem and retire,
refund or defease the defeased Bonds in accordance with their terms are set aside in a
special trust fund or escrow account irrevocably pledged to that redemption, retirement or
defeasance of defeased Bonds (hereinafter called the "trust account"), then all right and
interest of the owners of the defeased Bonds in the covenants of this ordinance and in the
funds and accounts obligated to the payment of the defeased Bonds shall cease and
become void. The owners of defeased Bonds shall have the right to receive payment of
the principal of and interest on the defeased Bonds from the trust account. The City shall
include in the refunding or defeasance plan such provisions as the City deems necessary
for the random selection of any defeased Bonds that constitute less than all of a particular
maturity of the Bonds, for notice of the defeasance to be given to the owners of the
defeased Bonds and to such other persons as the City shall determine, and for any
required replacement of Bond certificates for defeased Bonds. The defeased Bonds shall
be deemed no longer outstanding, and the City may apply any money in any other fund or
504299U 02 16 UTGO Refunding Bonds, 2004
account established for the payment or redemption of the defeased Bonds to any lawful
purposes as it shall determine.
If the Bonds are registered in the name of DTC or its nominee, notice of any
defeasance of Bonds shall be given to DTC in the manner prescribed in the Letter of
Representations for notices of redemption of Bonds.
Notwithstanding anything in this section to the contrary, if the principal of and/or
interest due on the Bonds is paid by the Bond Insurer pursuant to the Municipal Bond
Insurance Policy, the Bonds shall be treated as remaining outstanding forall purposes and
shall not be considered paid by the City, and the covenants, agreements and other
obligations of the City to the registered owners of the Bonds shall continue to exist and run
to the benefit of the Bond Insurer, and the Bond Insurer shall be subrogated to the rights of
the registered owners.
SECTION 16. -Approval of Bond Purchase Agreement. Lehman Brothers Inc. of
Seattle, Washington, has presented a purchase contract (the "Bond Purchase
Agreement") to the City offering to purchase the Bonds under the terms and conditions
provided in the Bond Purchase Agreement, which written Bond Purchase Agreement is on
file with the City Clerk and is incorporated herein by this reference. The City Council finds
that entering into the Bond Purchase Agreement is in the City s best interest and therefore
accepts the offer contained therein and authorizes its execution by City officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Agreement, with the approving legal opinion of Foster
Pepper & Shefelman PLLC, bond counsel of Seattle, Washington, regarding the Bonds.
The proper City officials are authorized and directed to do everything necessary for
the prompt delivery of the Bonds to Lehman Brothers Inc. and for the proper application
and use of the proceeds of the sale thereof.
5042894002 17 UTGO Refunding Bonds, 2004
SECTION 17. - Preliminary Official Statement Deemed Final. The City Council has
been provided with copies of a preliminary official statement dated April 23, 2004 (the
"Preliminary Official Statement"), prepared in connection with the sale of the Bonds. For
the sole purpose of Lehman Brother's compliance with Securities and Exchange
Commission Rule 15c2 -12(b)(1), the City "deems final" that Preliminary Official Statement
as of its date, except for the omission of information as to offering prices, interest rates,
selling compensation, aggregate principal amount, principal amount per maturity, maturity
dates, options of redemption, delivery dates, ratings and other terms of the Bonds
dependent on such matters.
SECTION 18. - Undertaking to Provide Continuing Disclosure. To meet the
requirements of United States Securities and Exchange Commission ("SEC") Rule 15c2 -
12(b)(5) (the "Rule"), as applicable to a participating underwriter for the Bonds, the City
makes the following written undertaking (the "Undertaking") for the benefit of holders of the
Bonds:
(a) Undertaking to Provide Annual Financial Information and
Notice of Material Events. The City undertakes to provide or cause to be
provided, either directly or through a designated agent:
(i) To each nationally recognized municipal securities
information repository designated by the SEC in accordance with
the Rule ("NRMSIR") and to a state information depository, if any,
established in the state of Washington (the "SID") annual financial
information and operating data of the type included in the final
official statement for the Bonds and described in subsection (b) of
this section ("annual financial information");
(ii) To each NRMSIR or the Municipal Securities
Rulemaking Board ("MSRB"), and to the SID, timely notice of the
occurrence of any of the following events with respect to the Bonds,
if material: (1) principal and interest payment delinquencies; (2)
non-payment related defaults; (3) unscheduled draws on debt
service reserves reflecting financial difficulties; (4) unscheduled
draws on credit enhancements reflecting financial difficulties; (5)
substitution of credit or liquidity providers, or their failure to perform;
(6) modifications to rights of holders of the Bonds; (7) Bond calls
(other than scheduled mandatory redemptions of Term Bonds); (8)
5"28944 02 18 UTGO Refunding Bonds, 2004
defeasances; (9) release, substitution, or sale of property securing
repayment of the Bonds; and (10) rating changes; and
(iii) To each NRMSIR or to the MSRB, and to the SID,
timely notice of a failure by the City to provide required annual
financial information on or before the date specified in subsection
(b) of this section.
(b) Type of Annual Financial Information Undertaken to be
Provided. The annual financial information that the City undertakes to
provide in subsection (a) of this section:
(i) Shall consist of (1) annual financial statements
prepared (except as noted in the financial statements) in
accordance with applicable generally accepted accounting
principles applicable to governmental units, as such principles may
be changed from time to time and as permitted by State law, which
statements shall not be audited, except, however, that if and when
audited financial statements are otherwise prepared and available
to the City they will be provided; (2) a statement of the City's
general obligation debt service requirements; and (3) an update of
the information set forth in tables 1, 3, 4, 5, 8, 9 and 10 of the
Official Statement for the Bonds;
(ii) Shall be provided to each NRMSIR and the SID, not
later than the last day of the ninth month after the end of each fiscal
year of the City (currently, a fiscal year ending December 31), as
such fiscal year may be changed as required or permitted by State
law, commencing with the City's fiscal year ending December 31,
2004, and
(iii) May be provided in a single or multiple documents,
and may be incorporated by reference to other documents that
have been filed with each NRMSIR and the SID, or, if the document
incorporated by reference is a "final official statement" with respect
to other obligations of the City, that has been filed with the MSRB.
(c) Amendment of Undertaking. The Undertaking is subject to
amendment after the primary offering of the Bonds without the consent of
any holder of any Bond, or of any broker, dealer, municipal securities
dealer, participating underwriter, rating agency, NRMSIR, the SID or the
MSRB, under the circumstances and in the manner permitted by the Rule.
%42""02 19 UTGO Refunding Bonds, 2004
The City will give notice to each NRMSIR or the MSRB, and the
SID, of the substance (or provide a copy) of any amendment to the
Undertaking and a brief statement of the reasons for the amendment. If
the amendment changes the type of annual financial information to be
provided, the annual financial information containing the amended financial
information will include a narrative explanation of the effect of that change
on the type of information to be provided.
(d) Beneficiaries. The Undertaking evidenced by this section
shall inure to the benefit of the City and any holder of Bonds, and shall not
inure to the benefit of or create any rights in any other person.
(e) Termination of Undertaking. The City's obligations under
this Undertaking shall terminate upon the legal defeasance of all of the
Bonds. In addition, the City's obligations under the Undertaking shall
terminate if those provisions of the Rule which require the City to comply
with the Undertaking become legally inapplicable in respect of the Bonds
for any reason, as confirmed by an opinion of nationally recognized bond
counsel or other counsel familiar with federal securities laws delivered to
the City, and the City provides timely notice of such termination to each
NRMSIR or the MSRB and the SID.
(f) Remedy for Failure to Comgly with Undertaking. As soon
as practicable after the City learns of any failure to comply with the
Undertaking, the City will proceed with due diligence to cause such
noncompliance to be corrected. No failure by the City or other obligated
person to comply with the Undertaking shall constitute a default in respect
of the Bonds. The sole remedy of any holder of a Bond shall be to take
such actions as that holder deems necessary, including seeking an order
of specific performance from an appropriate court, to compel the City or
other obligated person to comply with the Undertaking.
(g) Designation of Official Responsible to Administer
Undertakina. The Finance Director (or such other officer of the City who
may in the future perform the duties of that office) or his or her designee is
authorized and directed in his or her discretion to take such further actions
as may be necessary, appropriate or convenient to carry out the
Undertaking set forth in this section and in accordance with the Rule,
including, without limitation, the following actions:
(i) Preparing and filing the annual financial information
undertaken to be provided;
504290" 02 20 UTGO Refunding Bonds, 2004
Qi) Determining whether any event specified in
subsection (a)(ii) has occurred, assessing its materiality with
respect to the Bonds, and, if material, preparing and disseminating
notice of its occurrence;
(iii) Determining whether any person other than the City
is an "obligated person" within the meaning of the Rule with respect
to the Bonds, and obtaining from such person an undertaking to
provide any annual financial information and notice of material
events for that person in accordance with the Rule;
(iv) Selecting, engaging and compensating designated
agents and consultants, including but not limited to financial
advisors and legal counsel, to assist and advise the City in carrying
out the Undertaking; and
(v) Effecting any necessary amendment of the
Undertaking.
SECTION 19. - Bond Insurance. The District is authorized to purchase from the
Bond Insurer the Municipal Bond Insurance Policy issued bythe Bond Insurer insuring the
prompt payment of the principal of and interest on the Bonds and agrees to the conditions
for obtaining that policy, including the payment of the premium therefor. The Mayor or
Finance Director is hereby authorized to execute the Bond Insurer's Commitment for
Municipal Bond Insurance.
SECTION 20: - Severability. If any one or more sections, subsections, or
sentences of this ordinance are held to be unconstitutional or invalid, such decision shall
not affect the validity of the remaining portion of this ordinance and the same shall remain
in full force and effect.
506289"02 21 UTGO Refunding Bonds, 2004
SECTION 21: - Effective Date. This ordinance shall take effect and be in
force five (5) days from and after its passage, approval and publication as provided by law.
ATTEST:
BRENDA JACOBER, MY CLERK
APPROVED AS TO FORM:
FOSTER PEPPER & SHEFELMAN PLLC
Special Counsel and Bond Counsel
PASSED day of May, 2004.
APPROVED- day of May, 2004.
PUBLISHED. g day of May, 2004.
I hereby certify that this is a true copy of Ordinance No. 3689, passed by the
City Council of the City of Kent, Washington, and approved by the Mayor of the City of Kent
as hereon indicated.
sac.4 �w (SEAL)
BRENDA JACOBER, QM CLERK
22 UTGO Refunding Bonds, 2004
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5042894402
sac.4 �w (SEAL)
BRENDA JACOBER, QM CLERK
22 UTGO Refunding Bonds, 2004