HomeMy WebLinkAbout3739Ordinance No. 3739
(Amending or Repealing Ordinances)
CFN=104 - Finance
Passed - 4/19/2005
LTGO Refunding Bond, 2005
ORDINANCE NO. ✓ / i
AN ORDINANCE of the City of Kent,
Washington, relating to contracting indebtedness; providing
for the issuance of a $7,369,000 par value Limited Tax
General Obligation Refunding Bond, 2005, to provide the
funds required to refund in (a) a current refunding of the
City's outstanding 1996 State of Washington, Department
of Ecology Loan, (b) an advance refunding of a portion of
the City's outstanding Sewerage System Improvement and
Refunding Revenue Bonds, 1993, (c) a current refunding of
certain maturities of the City's Limited Tax General
Obligation and Refunding Bonds, 1995, (d) an advance
refunding of a portion of the City's outstanding Limited
Tax General Obligation Various Purpose and Refunding
Bonds, 2000, and (e) and paying the administrative costs of
such refunding and the costs of issuance and sale of such
bond; providing for and authorizing the purchase of certain
obligations out of the proceeds of the sale of the bond 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; providing for the call,
payment and redemption of the outstanding bonds and the
loan to be refunded; fixing the date, form, maturity, interest
rate, terms and covenants of the bond; establishing a bond
fund; and approving the sale and providing for the delivery
of the bond to Bank of America, N.A., of Seattle,
Washington.
PASSED: April 19, 2005
This document prepared by
FOSTER PEPPER & SHEFELMAN PLLC
1111 Third Avenue, Suite 3400
Seattle, WA 98101
(206) 447-4400
50505757 06 LTGO Refunding Bond, 2005
TABLE OF CONTENTS
SECTION 1. — Definitions............................................................................................ 4
SECTION2. —
Debt Capacity........................................................................................ 6
SECTION 3. —
Authorization of Bond...........................................................................
7
SECTION 4. —
Description of Bond..............................................................................
7
SECTION 5. —
Bond Registrar; Registration and Transfer of Bond ..............................
8
SECTION 6. —
Payment of Bond..................................................................................
9
SECTION 7. —
Optional Prepayment of Bond...............................................................
9
SECTION 8. —
Failure To Pay Installments................................................................10
SECTION 9. —
Pledge of Taxes...................................................................................10
SECTION 10.
— Covenants..........................................................................................10
SECTION 11.
— Form and Execution of Bond............................................................10
SECTION 12.
— Bond Fund and Deposit and Use of Bond Proceeds ..........................
11
SECTION 13.—
Refunding of the Refunded Bonds.....................................................12
SECTION 14.
— Call for Redemption of the Refunded Bonds....................................15
SECTION 15.
— City Findings with Respect to Refunding.........................................15
16. — Preservation of Tax Exemption for Interest on the Bond..................16
17. — Designation of the Bond as a "Qualified Tax -Exempt Obligation." .16
18. — Refunding or Defeasance of the Bond...............................................17
19. — Approval of Transaction....................................................................17
20. — Severability .....................................................................................18
21. — Effective Date.......................................................... ......................19
5050575706 i LTGO Refunding Bond, 2005
ORDINANCE NO.
AN ORDINANCE of the City of Kent,
Washington, relating to contracting indebtedness; providing
for the issuance of a $7,369,000 par value Limited Tax
General Obligation Refunding Bond, 2005, to provide the
funds required to refund in (a) a current refunding of the
City's outstanding 1996 State of Washington, Department
of Ecology Loan, (b) an advance refunding of a portion of
the City's outstanding Sewerage System Improvement and
Refunding Revenue Bonds, 1993, (c) a current refunding of
certain maturities of the City's Limited Tax General
Obligation and Refunding Bonds, 1995, (d) an advance
refunding of a portion of the City's outstanding Limited
Tax General Obligation Various Purpose and Refunding
Bonds, 2000, and (e) and paying the administrative costs of
such refunding and the costs of issuance and sale of such
bond; providing for and authorizing the purchase of certain
obligations out of the proceeds of the sale of the bond 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; providing for the call,
payment and redemption of the outstanding bonds and the
loan to be refunded; fixing the date, form, maturity, interest
rate, terms and covenants of the bond; establishing a bond
fund; and approving the sale and providing for the delivery
of the bond to Bank of America, N.A., of Seattle,
Washington.
RECITALS
A. The City of Kent, Washington (the "City"), authorized the Mayor to
into a State Revolving Fund Loan Agreement between the State of Washington
nent of Ecology and the City of Kent, Loan Agreement No. L9600018 with an
e date of July 1, 1995 (the "DOE Loan" or "Agreement"), in the original
5050575706 1 LTGO Refunding Bond, 2005
principal amount of $2,119,619, as amended by Amendment No. 1 and reduced to the
original principal amount of $1,572,645.91 for the purpose of improving the water
quality of Garrison Creek by reducing streambed and bank erosion due to high water
velocities in the stream, the payment of the DOE Loan to be a claim and charge on
Gross Revenues of the Utility junior and inferior to the Senior Lien Obligations.
B. Pursuant to the Agreement, the City reserved the right to prepay the
Loan in whole or in part upon 30 -days written notice and that $1,102,477.75 principal
amount remains outstanding on the DOE Loan and bears interest at the rate of 4.80%
(the "Refunded DOE Loan")
C. The City, pursuant to Ordinance No. 3128 of the City, heretofore issued
$8,690,000 par value Sewerage System Improvement and Refunding Revenue Bonds,
1993 (the "1993 Bonds"), and by that ordinance reserved the right to redeem the 1993
prior to their maturity on any interest payment date on or after November 1,
at par plus accrued interest to the date fixed for redemption.
D. Pursuant to Ordinance No. 3128, there are presently $2,520,000 par
of 1993 Bonds maturing on November 1 of the years 2006 and 2013, and bearing
rates 5.30% and 5.50%, respectively (the "1993 Refunded Bonds").
E. The City, pursuant to Ordinance No. 3209 of the City, heretofore issued
000 par value Limited Tax General Obligation and Refunding Bonds, 1995 (the
995 Bonds"), and by that ordinance reserved the right to redeem the 1995 Bonds
for to their maturity on or after December 1, 2004, at the price of 101% of par plus
crued interest to the date fixed for redemption prior to November 30, 2005; and
F. Pursuant to Ordinance No. 3209, there are presently $1,485,000 par
?due of 1995 Bonds maturing on December 1 of each of the years 2006 through 2008,
Lclusive, and bearing various interest rates from 6.00% to 6.20% (the "1995 Refunded
onds").
5050575706 2 LTGO Refunding Bond, 2005
G. The City pursuant to Ordinance No. 3524 of the City, heretofore issued
$20,145,000 par value Limited Tax General Obligation Various Purpose and
Refunding Bonds, 2000 (the "2000 Bonds"), and by that ordinance reserved the right to
redeem the 2000 Bonds prior to their maturity on or after December 1, 2010, at 101%
of par plus accrued interest to the date fixed for redemption, if redeemed December 1,
2010, through November 30, 2011.
H. Pursuant to Ordinance No. 3524, there are presently outstanding
$2,050,000 par value of 2000 Bonds allocable to the new money portion of the 2000
Bonds maturing on December 1, 2020, and bearing interest at the rate of 5.375% (the
"2000 Refunded Bonds"),
I. After due consideration, it appears to the City Council that the
Refunded DOE Loan, 1993 Refunded Bonds, 1995 Refunded Bonds and 2000
Refunded Bonds (the "Refunded Bonds") may be refunded by the issuance and sale of
a bond authorized herein so that a substantial savings will be effected by the difference
between the principal and interest cost over the life of the bond authorized herein for
such purpose and the principal and interest over the life of the Refunded Bonds but for
such refunding, which refunding will be effected by the Refunding Plan (as defined
J. The City Council has determined that it is necessary to authorize the
e of a bond to provide funds to pay the cost of carrying out the various purposes
above and to pay the administrative costs of such refunding and costs of
e of the authorized bond.
K. Bank of America, N.A., Seattle, Washington, has proposed to purchase
bond under the terms and conditions set forth herein.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
5050575706 3 LTGO Refunding Bond, 2005
SECTION 1. — Deinitions As used to this ordinance, the following words
have the following meanings:
"Acquired Obligations" means those United States Treasury Certificates of
Indebtedness, Notes, and Bonds --State and Local Government Series and other direct,
noncallable obligations of the United States of America purchased to accomplish the
refunding of the Refunded Bonds as authorized by this ordinance.
"Bank" means Bank of America, N.A., of Seattle, Washington.
"Bond Fund" means the Limited Tax General Obligation Refunding Bond
2005, created and established by this ordinance.
"Bond Registrar" means the Finance Director.
"Bond" means the Limited Tax General Obligation Refunding Bond, 2005, of
City issued pursuant to and under the authority of this ordinance to carry out the
undine Plan.
"City" means the City of Kent, Washington.
"DOE Loan" means that certain State Revolving Fund Loan Agreement
i the State of Washington Department of Ecology and the City of Kent, Loan
lent No. L9600018 effective date of July 1, 1995, in the original principal
of $2,119,619, as amended by Amendment No. 1 and reduced to the original
d amount of $1,572,645.91 and bearing interest at the rate of 4.80%.
"Finance Director" means the Finance Director of the City (or the successor
to the Finance Director).
50505757 06 4 LTGO Refunding Bond, 2005
"Proposal Letter" means the Proposal Letter, together with its Summary of
Terms and Conditions, of the Bank dated February 15, 2005, describing certain
conditions under which the Bank proposes to purchase the Bond.
"Refunded Bonds" means, collectively, 1993 Refunded Bonds, 1995 Refunded
Bonds and 2000 Refunded Bonds, the refunding of which have been provided for by
I this ordinance.
"Refunded DOE Loan" means the DOE Loan currently with the State of
Washington Department of Ecology with a current outstanding principal amount of
$1,102,477.75.
"1993 Refunded Bonds" means the outstanding $2,520,000 par value of
Sewerage System Improvement and Refunding Revenue Bonds, 1993, of the City
maturing in the years 2006 and 2013, issued pursuant to Ordinance No. 3128.
"1995 Refunded Bonds" means the outstanding $1,485,000 par value Limited
General Obligation and Refunding Bonds, 1995, of the City maturing in the years
through 2008, issued pursuant to Ordinance No. 3209.
"2000 Refunded Bonds" means the outstanding $2,050,000 par value Limited
General Obligation Various Purpose and Refunding Bonds, 2000, of the City
able to the new money portion of the 2000 Bonds maturing on December 1, 2020,
pursuant to Ordinance No. 3524.
"Registered Owner" means the Bank, as registered owner of the Bond, or any
owner of the Bond.
"Refunded Bond Ordinances" means Ordinances Nos. 3128, 3209 and 3524 of
City.
5050575706 5 LTGO Refunding Bond, 2005
"Refunding Plan" means:
(a) The Finance Director's transfer to the Refunding Trustee
of the amounts on deposit in the Reserve Account and Principal and
Interest Account of the City's Sewerage System Revenue Bond Fund,
1986, allocable to the 1993 Refunded Bonds;
(b) Upon delivery of the Bond, the immediate payment by
the Bank on behalf of the City, from proceeds of the Bond, of the entire
outstanding principal of and accrued interest on the DOE Loan;
(c) The call, payment and redemption on November 1, 2005,
of all of the 1993 Refunded Bonds at a price of par plus accrued interest
to November 1, 2005;
(d) The call, payment and redemption on June 2, 2005, of all
of the 1995 Refunded Bonds at a price of 101% of par plus accrued
interest to June 2, 2005; and
(e) The payment of the interest on the 2000 Refunded Bonds
when due up to and including December 1, 2010, and the call, payment
and redemption on December 1, 2010, of all of the 2000 Refunded
Bonds at a price of 101 % of par; and
"Refunding Trust Agreement" means a Refunding Trust Agreement between the
and the Refunding Trustee substantially in the form of that which is on file with the
Director and by this reference incorporated herein.
"Refunding Trustee" means U.S. Bank National Association of Seattle,
gton, serving as trustee or escrow agent or any successor trustee or escrow
SECTION 2. —Debt Capacity The assessed valuation of the taxable property
un the City as ascertained by the last preceding assessment for City purposes for
calendar year 2005 is $8,798,031,223, and the City, as of February 28, 2005, has
standing general indebtedness evidenced by limited tax general obligation bonds,
s, leases and conditional sales contracts in the principal amount of $77,368,365
Lrred within the limit of up to 1-1/2% of the value of the taxable property within the
permitted for general municipal purposes without a vote of the qualified voters
5050575706 6 LTGO Refunding Bond, 2005
therein, and unlimited tax general obligation bonds or notes in the principal amount of
$4,950,000 incurred within the limit of up to 2-1/2% of the value of the taxable
property within the City for capital purposes only, issued pursuant to a vote of the
qualified voters of the City, and the amount of indebtedness for which bonds are
authorized herein to be issued is $7,369,000.
SECTION3 — Authorization of Bond. The City shall borrow money on the
credit of the City and issue its limited tax general obligation bond evidencing that
indebtedness in the principal amount of $7,369,000 for general City purposes to carry
out the Refunding Plan and to pay costs of issuance and sale of the Bond (the "costs of
issuance"). The general indebtedness to be incurred shall be within the limit of up to
1-1/2% of the value of the taxable property within the City permitted for general
municipal purposes without a vote of the qualified voters therein.
SECTION4 — Description of Bond The Bond shall be in the aggregate
al amount of $7,369,000; shall be dated its date of delivery; shall mature
December 1, 2020; shall be numbered R-1; shall be in fully registered form; and shall
bear interest at the rate of 4.05% per annum (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, 2005, to the maturity or earlier prepayment of the Bond.
Principal of the Bond shall be payable in annual installments on December 1 of each
in accordance with the following schedule:
5050575706 7 LTGO Refunding Bond, 2005
Installment Principal
Year Amount
2005
$155,000
2006
875,000
2007
912,000
2008
948,000
2009
441,000
2010
458,000
2011
479,000
2012
495,000
2013
721,000
2014
224,000
2015
232,000
2016
244,000
2017
266,000
2018
283,000
2019
305,000
2020
331,000
The City Council finds that fixing the above interest rate is in the best interest
of the City.
Portions of the above installment payment amounts are allocated to carrying out
the Refunding Plan, including a ratable share of proceeds used to pay the costs of issuance
of the Bond, in accordance with the schedule attached hereto as Exhibit A and
herein by reference.
SECTIONS. — Bond Registrar. Registration and Transfer of Bond The
ance Director shall serve as Bond Registrar for the Bond. The Bond Registrar shall
p, or cause to be kept, at its office in Kent, Washington, sufficient books for the
istration and transfer of the Bond (the "Bond Register"), which shall contain the
ie and mailing address of the Registered Owner of the Bond. The Bond Registrar is
iorized, on behalf of the City, to authenticate and deliver the Bond in accordance
h the provisions of the Bond and this ordinance, to serve as the City's paying agent
the Bond and to carry out all of the Bond Registrar's powers and duties under this
The Bond Registrar shall be responsible for its representations contained in
e Bond Registrar's Certificate of Authentication on the Bond.
$050575706 8 LTGO Refunding Bond, 2005
The Bond shall be issued only in registered form as to both principal and
interest and shall be recorded on the Bond Register. The Bond may not be assigned or
transferred by the Bank, except that the Bank may assign or transfer the Bond to any
successor to the business and assets of the Bank.
SECTION 6. — Payment of Bond. Installments of principal of and interest on
the Bond shall be payable in lawful money of the United States of America and shall
be paid by check, draft or warrant of the Bond Registrar mailed five days prior to the
installment payment date to the Registered Owner at the address appearing on the
Bond Register on the 15`x` day of the month preceding the installment payment date or
by wire transfer or electronic debit to the Registered Owner on the installment payment
date. The Registered Owner shall present and surrender the Bond at the office of the
Bond Registrar in Kent, Washington, for cancellation promptly after the final
installment of principal and interest on the Bond is paid by the City, whether at
maturity or upon earlier prepayment and redemption. The Bond, when presented and
surrendered under this section, shall be destroyed or cancelled in accordance with law.
The City and the Bond Registrar may deem and treat the Registered Owner as
absolute owner of the Bond for the purpose of receiving payment of principal and
rest and for all other purposes, and neither the City nor the Bond Registrar shall be
cted by any notice to the contrary other than proper notice of assignment or
SECTION 7. —Optional Prepayment of Bond. The City reserves the right and
ion to prepay all or any portion of the principal installments of the Bond at any time
)r to its stated principal installment payment date at par plus accrued interest to the
e of prepayment, subject to the payment of a potential prepayment fee as described
the applicable Proposal Letter and set forth in Exhibit B attached hereto and
herein by reference. Prior written notice by the City to the Bank shall not
required. Interest on the principal amount of the Bond called for prepayment shall
Lse to accrue on the dated fixed for prepayment unless the principal amount called
prepayment is not paid on the prepayment date. The amounts of the semiannual
5050575706 9 LTGO Refunding Bond, 2005
payments on the Bond shall not be adjusted to reflect reamortization upon any such
prepayment.
SECTION 8. —Failure To Pay Installments. If any installment of principal of
and interest on the Bond is not paid when due, or the City shall fail to comply with any
other covenant of this ordinance, the interest rate on the Bond shall, at the option of the
Bank, be increased by two (2) percentage points, until such default has been cured or
until all principal and accrued interest of the Bond have been repaid in full.
SECTION 9. — P1edze of Taxes For as long as any principal of 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
sufficient, together with other money legally available and to be used therefor,
pay when due the principal of and interest on the Bond, and the full faith, credit and
of the City are pledged irrevocably for the annual levy and collection of
taxes and the prompt payment of that principal and interest.
SECTION 10 — Covenants The City covenants with the Bank for as long as
Bond remains outstanding that it will provide to the Bank the following:
(a) its annual state audit report within 10 days of its receipt
from the State auditor.
(b) its internally prepared unaudited financial statement
within 270 days of its fiscal year end.
(c) within 45 days of adoption, the City's preliminary annual
budget and final budget adoption ordinance.
(d) such other information as the Bank may reasonably
request from time to time.
SECTION 11 — Form and Execution of Bond. The Bond shall be prepared in a
m consistent with the provisions of this ordinance and state law and shall be signed
the Mayor and City Clerk, either or both of whose signatures may be manual or in
5050575706 10 LTGO Refunding Bond, 2005
facsimile, and the seal of the City or a facsimile reproduction thereof shall be
impressed or printed thereon.
To be valid or obligatory for any purpose or entitled to the benefits of this
ordinance, the Bond shall bear a Certificate of Authentication in the following form,
manually signed by the Bond Registrar:
CERTIFICATE OF AUTHENTICATION
This Bond is the fully registered City of Kent, Washington, Limited Tax
General Obligation Refunding Bond, 2005, described in the Bond Ordinance.
Rv
Bond Registrar
The authorized signing of a Certificate of Authentication shall be conclusive
-'vidence that the Bond so authenticated has been duly executed, authenticated and
delivered and is entitled to the benefits of this ordinance.
If any officer whose facsimile signature appears on the Bond ceases to be an
;er of the City authorized to sign bonds before the Bond bearing his or her
,mile signature is authenticated or delivered by the Bond Registrar or issued by the
, the Bond nevertheless may be authenticated, issued and delivered and, when
enticated, issued and delivered, shall be as binding on the City as though that
on had continued to be an officer of the City authorized to sign bonds. The Bond
may be signed on behalf of the City by any person who, on the actual date of
Ling of the Bond, is an officer of the City authorized to sign bonds, although he or
did not hold the required office on the date of issuance of the Bond.
SECTION 12. — Bond Fund and Deposit and Use of Bond Proceeds The
id Fund is created and established in the office of the Finance Director as a special
3 designated the Limited Tax General Obligation Refunding Bond Fund, 2005, for
purpose of paying principal of and interest and any prepayment fee on the Bond.
taxes collected for and allocated to the payment of the principal of and interest on
Bond shall be deposited in the Bond Fund.
5050575706 11 LTGO Refunding Bond, 2005
A sufficient amount of the proceeds of the Bond shall be electronically
transferred on the delivery date of the Bond by the Bank on behalf of the City to the
State of Washington, Department of Ecology, to repay and retire the DOE Loan. The
remaining proceeds of the Bond shall be deposited with the Refunding Trustee as set
forth in Section 13 below to cavy out remaining portion of the Refunding Plan.
SECTION 13 — RefundiL?g Refundingof 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 Acquired Obligations. A
sufficient amount of the proceeds of the sale of the Bond, together with funds
transferred from the Sewerage System Revenue Bond Fund, 1986, of the City, shall be
deposited immediately upon the receipt thereof with the Refunding Trustee and used to
discharge the obligations of the City relating to the Refunded Bonds under the
Bond Ordinances 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, 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 Bond shall be returned to the City at the time of delivery of the Bond to the Bank
and deposited in the Bond Fund to pay interest on the Bond on the first interest
payment date.
(c) Substitution of Acquired Obligations. Prior to the purchase of any
;d Obligations by the Refunding Trustee, the City reserves the right to substitute
5050575706 12 LTGO Refunding Bond, 2005
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 Bond and 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
Bond or 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 dates of the Bond and the Refunded
Bonds, as applicable, and that the City obtain, at its expense: (1) a verification by a
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 from
Foster Pepper & Shefelman PLLC, bond counsel to the City, its successor, or other
nationally recognized bond counsel to the City, 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 Bond, will not cause the interest on the Bond or 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 Bond. 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
o be used for any lawful City purpose.
5050575706 13 LTGO Refunding Bond, 2005
(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 the Refunded Bond Ordinances, 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 for the Bond 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 Bond, including bond printing, verification fees, bond
counsel's fees, and other related expenses, shall be paid out of the proceeds of the
(e) Authorization for Refunding Trust Agreement. To carry out the
iding Plan provided for by this ordinance, the Mayor or Finance Director of the
is authorized and directed to execute and deliver to the Refunding Trustee a
iding Trust Agreement substantially in the form on file with the City Clerk and by
reference made a part hereof setting forth the duties, obligations and
of the Refunding Trustee in connection with the payment, redemption,
retirement of the Refunded Bonds as provided herein and stating that the
visions for payment of the fees, compensation, and expenses of such Refunding
stee set forth therein are satisfactory to it. Prior to executing the Refunding Trust
•eement, the Mayor or Finance Director of the City is authorized to make such
rages therein that do not change the substance and purpose thereof or that assure that
escrow provided therein and the Bond are in compliance with the requirements of
;ral law governing the exclusion of interest on the Bond from gross income for
income tax purposes.
5050575706 14 LTGO Refunding Bond, 2005
SECTION 14 — Call for Redemption of the Refunded Bonds The City calls
for redemption on the following dates, the following Refunded Bonds at the following
percentage of par plus accrued interest:
Refunded
Redemption
Redemption
Bonds
Date
Price
1993 Refunded Bonds
November 1, 2005
100%
1995 Refunded Bonds
June 2, 2005
101%
2000 Refunded Bonds
December 1, 2010
101%
Such calls for redemption shall be irrevocable after the delivery of the Bond to the
Bank. The dates on which the Refunded Bonds are herein called for redemption are
the first practicable date on which each of those bonds may be called.
The proper City officials are authorized and directed to give or cause to be
such notices as required, at the times and in the manner required, pursuant to the
ctive Refunded Bond Ordinances in order to effect the respective redemption
to their maturity of each of the respective Refunded Bonds.
SECTION 15 — City Findings with Respect to Refunding. The City Council of
City finds and determines that the issuance and sale of the Bond at this time will
a savings to the City and is in the best interest of the City and its tax and
and in the public interest. In making such finding and determination, the
Council has given consideration to the installment payment amounts of the Bond
the maturities of the Refunded Bonds, the costs of issuance of the Bond and the
wn earned income from the investment of the proceeds of the issuance and sale of
Bond and other money of the City used in the Refunding Plan pending payment
redemption of the Refunded Bonds.
5050575706 15 LTGO Refunding Bond, 2005
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 13 of
this ordinance will discharge and satisfy the obligations of the City under the Refunded
Bond Ordinances 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
and that the Refunded Bonds shall no longer be deemed to be outstanding
such ordinances immediately upon the deposit of such money with the
Refunding Trustee.
SECTION 16 — Preservation of Tax Exemption for Interest on the Bond The
City covenants that it will take all actions necessary to prevent interest on the Bond
from being included in gross income for federal income tax purposes, and it will
neither take any action nor make or permit any use of proceeds of the Bond or other
funds of the City treated as proceeds of the Bond at any time during the term of the
Bond which will cause interest on the Bond to be included in gross income for federal
tax purposes. The City also covenants that it will, to the extent the arbitrage
ate requirement of Section 148 of the Internal Revenue Code of 1986, as amended
"Code"), is applicable to the Bond, take all actions necessary to comply (or to be
tted as having complied) with that requirement in connection with the Bond,
Wing the calculation and payment of any penalties that the City has elected to pay
an alternative to calculating rebatable arbitrage, and the payment of any other
alties if required under Section 148 of the Code to prevent interest on the Bond
n being included in gross income for federal income tax purposes. The City
tifies that it has not been notified of any listing or proposed listing by the Internal
ienue Service to the effect that it is a bond issuer whose arbitrage certifications may
be relied upon.
SECTIONI7. — Designation of the Bond as a "Qualified Tax -Exempt
ligation " The City has determined and certifies that (a) the Bond is not a "private
ivity bond" within the meaning of Section 141 of the Code; (b) the reasonably
icipated amount of tax-exempt obligations (other than private activity bonds and
ter obligations not required to be included in such calculation) which the City and
entity subordinate to the City (including any entity that the City controls, that
5050575706 16 LTGO Refunding Bond, 2005
derives its authority to issue tax-exempt obligations from the City, or that issues tax-
exempt obligations on behalf of the City) will issue during the calendar year in which
Ithe Bond is issued will not exceed $10,000,000; and (c) the amount of tax-exempt
obligations, including the Bond, designated by the City as "qualified tax-exempt
obligations" for the purposes of Section 265(b)(3) of the Code during the calendar year
in which the Bond is issued does not exceed $10,000,000. The City designates the
Bond as a "qualified tax-exempt obligation' for the purposes of Section 265(b)(3) of
the Code.
SECTION 18. — Refundine or Defeasance of the Bond The City may issue
riding bonds pursuant to the laws of the State of Washington or use money
Table from any other lawful source to pay when due the principal of and interest on
Bond, or any portion thereof included in a refunding or defeasance plan, and to
;em and retire, refund or defease such then -outstanding Bond (hereinafter
ectively called the "defeased Bond") and to pay the costs of the refunding or
;asance. If money and/or direct obligations of the United States of America
at a time or times and bearing interest in amounts (together with money, if
) sufficient to redeem and retire, refund or defease the defeased Bond in
e with its terms are set aside in a special trust fund or escrow account
.y pledged to that redemption, retirement or defeasance of the defeased Bond
er called the "trust account"), then all right and interest of the owner of the
Bond in the covenants of this ordinance and in the funds and accounts
bligated to the payment of the defeased Bond shall cease and become void. The
,er of the defeased Bond shall have the right to receive payment of the principal of
interest on the defeased Bond from the trust account. The defeased Bond shall be
no longer outstanding, and the City may apply any money in any other fund or
established for the payment or redemption of the defeased Bond to any lawful
as it shall determine.
SECTION 19. —Approval of Transaction. The Bank has proposed to purchase
Bond under the terms and conditions provided in the Proposal Letter, which written
osal Letter is on file with the City and is incorporated herein by this reference.
City Council finds that accepting an offer by the Bank on substantially the same
5050575706 17 LTGO Refunding Bond, 2005
terms and conditions as set forth in the Proposal Letter is in the City's best interest and
therefore the City authorizes the proper City officials to accept such an offer. This
ordinance shall be deemed a covenant to comply with all terms and conditions set forth
in the Proposal Letter.
The City shall pay or reimburse the Bank for its legal expenses as provided in
Proposal Letter, not to exceed $500 for the Bond. Banc of America Securities
LLC shall be paid a structuring fee equal to .50% of the par amount of the Bond.
The Bond will be prepared at the City's expense and will be delivered to the
together with the approving legal opinion of Foster Pepper & Shefelman PLLC,
bond counsel of Seattle, Washington, regarding the Bond.
The proper City officials are authorized and directed to do everything necessary
the prompt sale and delivery of the Bond to the Bank and for the proper application
use of the proceeds of the sale thereof.
SECTION20. — Severability. If any one or more sections, subsections, or
aces of this ordinance are held to be unconstitutional or invalid, such decision
not affect the validity of the remaining portion of this ordinance and the same
remain in full force and effect.
5050575706 18 LTGO Refunding Bond, 2005
SECTION21 — 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. (2
MAYOR PRO 7FM
ATTEST:
RENDA JACOBER, OITY CLERK
APPROVED/AS TOYC RM:
R'PEPKR & S14EFELMAN PLLC
Counsel and Bond Counsel
ASSED: /f day of April, 2005.
/9 day of April, 2005.
,V day of April, 2005.
�2 msm.. ea
5050575706 19 LTGO Refunding Bond, 2005
EXHIBIT A
Allocation of Refundins Bond
Installment
1993
1995
2000
Payment
Refunded
Refunded
Refunded
Years
Bonds
Bonds
Bonds
2005
$ 47,000
$ 52,000
2006
$265,000
482,000
12,000
2007
276,000
503,000
12,000
2008
287,000
523,000
13,000
2009
298,000
13,000
2010
308,000
14,000
2011
323,000
15,000
2012
333,000
15,000
2013
347,000
221,000
2014
224,000
2015
232,000
2016
244,000
2017
266,000
2018
283,000
2019
305,000
2020
331,000
DOE
Loan
$ 56,000
116,000
121,000
125,000
130,000
136,000
141,000
147,000
153,000
Total
$155,000
875,000
912,000
948,000
441,000
458,000
479,000
495,000
721,000
224,000
232,000
244,000
266,000
283,000
305,000
331,000
5050575706 LTGO Refunding Bond, 2005
Exhibit B
Calculation of Prepayment Fee
Prepayment Fee — Breakfunding
(Initial Cost of Funds Rate / Treasury Rate)
The Prepayment Fee shall be the sum of fees calculated separately for each Prepaid Installment, as
follows:
(1) Determine the amount of interest which would have accrued each month for the Prepaid
Installment, had it remained outstanding until the applicable Original Payment Date at the Initial Cost of
Funds Rate applicable to the Prepaid Installment;
(2) Subtract from each monthly interest amount determined in (1) above, the amount of
interest that would accrue for that Prepaid Installment if it were reinvested from the date of prepayment
through the Original Payment Date, at the Treasury Rate;
(3) If (1) above, minus (2) above, for the Prepaid Installment is greater than zero, discount
the monthly difference to the date of prepayment by the Treasury Rate. The sum of the discounted
monthly differences is the prepayment fee for that Prepaid Installment, plus
(4) An amount equal to all costs and expenses (subject to a cap of $200) Bank reasonably
expects to incur in liquidation and reinvestment of such prepaid funds.
For purposes of this Section, the capitalized terms used herein and not otherwise defined have the
following meanings:
(1) "Initial Cost of Funds Rate" means the fixed interest rate of interest per annum
representing Borrower's cost of purchasing funds, or the cost of purchasing and exchanging funds
through swaps or other derivative products, for an amount and under terms reflecting the characteristics of
the Prepaid Installment from the date the Bond shall begin to bear interest through the Maturity Date.
(2) "Original Payment Dates" means the dates on which principal of the Bond would have
been paid if there had been no prepayment. If a portion of the principal would have been paid later than
the end of the interest period in effect at the time of prepayment, then the Original Payment Date for that
portion shall be the last day of the Interest Period.
(3) "Prepaid Installment" means the portion of the prepaid principal of the Bond that would
have been paid on a single Original Payment Date.
(4) Treasury Rate" means the interest rate yield for U.S. Government Treasury Securities that
the Bank determines could be obtained by reinvesting a specified Prepaid Installment in such securities
from the date of prepayment through the Original Payment Date.
Bank may adjust the Treasury Rate and Initial Cost of Funds Rate to reflect the difference
between the terms of such investments and the terms of the Bond, such as compounding, accrual basis, or
other costs and terms. Each of the rates is Bank's estimate only, and Bank is under no obligation to
actually reinvest any prepayment. The rates shall be based on information from either the Telerate or
Reuters information services, The Wall Street Joumal or other information sources the Bank deems
appropriate.
5050575706 LTGO Refunding Bond, 2005
CERTIFICATION
I, the undersigned, City Clerk of the City of Kent, Washington (the "City"),
hereby certify as follows:
1. The attached copy of Ordinance No..M(the "Ordinance") is a full,
'true and correct copy of an ordinance duly passed at a regular meeting of the City
Council of the City held at the regular meeting place thereof on April 19, 2005, as that
ordinance appears on the minute book of the City; and the Ordinance will be in full
force and effect five days after the publication of its summary in the City's official
newspaper; and
2. A quorum of the members of the City Council was present throughout
meeting and a majority of those members present voted in the proper manner for
passage of the Ordinance.
IN WITNESS WHEREOF, I have hereunto set my hand this /'? day of April,
CITY OF KENT, WASHINGTON
5050575706 LTGO Refunding Bond, 2005