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HomeMy WebLinkAboutRes2014-065 Sponsored by: Hunt ism CITY OF SEWARD, ALASKA RESOLUTION 2014-065 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY OF SEWARD TO ISSUE HARBOR IMPROVEMENT REVENUE REFUNDING BONDS, 2014 IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $3,675,000 TO REFUND CERTAIN OUTSTANDING HARBOR IMPROVEMENT BONDS OF THE CITY, FIXING CERTAIN DETAILS OF SUCH BONDS AND AUTHORIZING THEIR SALE, AND PROVIDING FOR RELATED MATTERS WHEREAS, the City of Seward, Alaska (the "City") is a home rule city and under Section 11 of Article X of the Alaska Constitution may exercise all legislative power not prohibited by law or the Charter of the City, and it has been determined that the matters set forth in this resolution are not prohibited by law or the Charter; and WHEREAS, there is now outstanding (i) $930,000 principal amount of Harbor Improvement Revenue Bonds, 2005 of the City maturing on or after June 1, 2016 (the "2005 Bond") issued under Resolution No. 2000-094 and Resolution 2005-058 of the City; and (ii) $2,745,000 principal amount of Harbor Revenue Bonds, 2006 of the City, maturing on or after June 1, 2017 (the "2006 Bonds") issued under Resolution 2000-094 and Resolution 2006-05 of the City; and WHEREAS, the Council finds that it is in the best interest of the City to provide for the refunding, including the payment of principal of and interest on, those maturities of the 2005 Bonds and 2006 Bonds (the "Refunded Bonds") refunding of which the City Manager or City Finance Director determines will produce the debt service savings specified in this resolution, by the issuance of Harbor Improvement Revenue Refunding Bonds, in one or more series, in the aggregate principal amount of not to exceed $3,675,000 (the "Bonds"); and WHEREAS, Section 11.2(a) of the home rule Charter of the City provides that the City may issue refunding bonds without ratification of the voters; and WHEREAS, the Council finds that it is necessary and appropriate to delegate to each of the City Manager and City Finance Director authority to determine the maturity amounts, interest rates, and other details of the Bonds, and to determine other matters pertaining to the Bonds that are not provided for in this resolution; and WHEREAS, the Alaska Municipal Bond Bank and the City intend to enter into Amendatory Loan Agreements, which amend the Loan Agreements dated as of October 1, 2005 and June 1, 2006 (the "Loan Agreements") between the Alaska Municipal Bond Bank and the City to provide for the refunding of the Refunded Bonds through their exchange for the Bonds 1.. and related matters. CITY OF SEWARD, ALASKA RESOLUTION 2014-065 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE egi+ CITY OF SEWARD, ALASKA that: Section 1. Definitions. The following terms shall have the following meanings in this resolution: (A) "Amendatory Loan Agreements" means the Amendatory Loan Agreements between the City and the Bond Bank, amending the Loan Agreements to provide for the refunding of the Refunded Bonds through their exchange for the Bonds and related matters. (B) "Bond" or "Bonds" means any of the "Harbor Improvement Revenue Refunding Bonds, 2014" of the City of Seward, the issuance and sale of which are authorized herein. (C) "Bond Bank" means the Alaska Municipal Bond Bank, a public corporation of the State of Alaska. (D) "Bond Bank Bonds" means the General Obligation and Refunding Bonds, 2014 Series One of the Bond Bank. (E) "Bond Register" means the registration books maintained by the Registrar, which include the names and addresses of the Registered Owners of the Bonds or their nominees. i (F) "City" means the City of Seward, a municipal corporation of the State of Alaska, tri organized as a home rule city under Section 11 of Article X of the Alaska Constitution. (G) "City Finance Director" means the Finance Director of the City. (H) "Code" means the Internal Revenue Code of 1986, as amended from time to time, together with all regulations applicable thereto. (I) "Council" means the Council of the City of Seward, as the general legislative authority of the City of Seward, as the same shall be duly and regularly constituted from time to time. (J) "Loan Agreements" means the Loan Agreements, as amended by the Amendatory Loan Agreements. (K) "Refunded Bonds" means the maturities of the 2005 Bonds and the 2006 Bonds, the refunding of which is approved by the City Manager or City Finance Director under Section 12. (L) "Registered Owner" means the person named as the registered owner of a Bond in the Bond Register. (M) "Registrar" means the City Finance Director. CITY OF SEWARD, ALASKA RESOLUTION 2014-065 (N) "Resolution" means this Resolution of the City. Section 2. Authorization of Bonds and Purpose of Issuance. For the purpose of effecting the refunding by exchange of the Refunded Bonds in the manner set forth hereinafter and in the Amendatory Loan Agreements, the City hereby authorizes and determines to issue and sell the Bonds, in one or more series, in the aggregate principal amount of not to exceed $3,675,000. Section 3. Obligation of Bonds. The Pledged Revenues as defined in Resolution 2000- 094 and Resolution 2005-58 are hereby pledged to the payment of the principal of and interest on the Bonds as the same become due and payable. In compliance with Section 13 of Resolution 2005-58, Section 13 of Resolution 2000- 094, if applicable, and Section 13 of Resolution 2006-05, at the time of issuance of the Bonds, a payment will be made in the Reserve Subaccount, for each series of Bonds, created under those resolutions such that the total amount of such payment, together with the money already in the Reserve Subaccount, will be equal to the Reserve Account Requirement. In compliance with Section 16 of Resolution 2005-58 and Section 16 of Resolution 2000-094, if applicable, the City covenants that (i) it will pay into and maintain in the Reserve Subaccount the amount required by said Section 16 to be paid into and maintained in said subaccount; and (ii) it will establish, maintain, and collect Passenger Fees (as defined in Resolution 2000-094 and Resolution 2005- 58) sufficient to meet the same requirements as are contained in subsection (a) of Section 16 of Resolution 2005-58 and, if applicable, Resolution 2000-094. fir.. The Bonds are "Future Parity Bonds" which are harbor improvement bonds issued under Resolution 2000-094 and Resolution 2005-58. In accordance with said resolutions, the City pledges that payments to be made out of the Pledged Revenues into the Bond Account and Reserve Subaccount to pay and secure the payment of the principal of and interest on the Bonds are and will be on a parity with the payments required by said resolutions to be made out of such Pledged Revenues into such Bond Account and Reserve Subaccount. The Bonds are issued under Section 16(b) of Resolution 2005-58 and Section 16(b) of Resolution 2000-094, if applicable. The issuance of the Bonds, for each series of Bonds, does not require a greater amount to be paid out of Pledged Revenues for principal and interest over the life of the Refunded Bonds, and the other conditions required in said sections are met. Section 4. Designation, Maturities, Interest Rates, and Other Details of Bonds. The Bonds shall be designated "City of Seward, Alaska, Harbor Improvement Revenue Refunding Bonds, 2014 Series (A)(B)" with the additional designation provided under Section 12. The Bonds shall be in the denomination of$5,000 or any integral multiple thereof, shall be numbered separately in the manner and with such additional designation as the Registrar deems necessary for purposes of identification, and may have endorsed thereon such legends or text as may be necessary or appropriate to conform to the rules and regulations of any governmental authority or any usage or requirement of law with respect thereto. The Bonds shall bear interest from their date, payable semi-annually in each year. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. CITY OF SEWARD, ALASKA RESOLUTION 2014-065 The dated date, the principal and interest payment dates, the aggregate principal amount, the principal amount of each maturity, and the interest rates on the Bonds shall be determined at the time of execution of the Amendatory Loan Agreements under Section 16. Section 5. Redemption. The Bonds may be redeemed as provided in the Amendatory Loan Agreements. Section 6. Form of Bond. Each Bond shall be in substantially the following form, with such variations, omissions and insertions as may be required or permitted by this Resolution: UNITED STATES OF AMERICA STATE OF ALASKA CITY OF SEWARD (A Municipal Corporation of the State of Alaska) NO. $ HARBOR IMPROVEMENT REVENUE REFUNDING BOND, 2014 SERIES (A)(B) REGISTERED OWNER: .r PRINCIPAL AMOUNT: The City of Seward (the "City"), a municipal corporation of the State of Alaska, hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or its registered assigns, the Principal Amount indicated above in the following installments on [ 1] of each of the following years, and to pay interest on such installments from the date hereof, payable on [ 1, 20 ] and semiannually thereafter on the 1st days of and of each year, at the rates per annum as follows: Maturity Principal Interest Date Amount Rate For so long as this Bond is owned by the Alaska Municipal Bond Bank (the "Bond Bank"), payment of principal and interest shall be made as provided in the Loan Agreements between the Bond Bank and the City, dated as of October 1, 2005 [June 1, 2006], as amended by the Amendatory Loan Agreement dated , 2014 (the "Loan Agreements"). In the event that this Bond is no longer owned by the Bond Bank, installments of principal and interest on this Bond shall be paid by check or draft mailed by first class mall to the Registered Owner as of the close of business on the fifteenth day of the month preceding CITY OF SEWARD,ALASKA RESOLUTION 2014-065 fir.. each installment payment date; provided that the final installment of principal and interest on this Bond shall be payable upon presentation and surrender of this Bond by the Registered Owner at the office of the Registrar. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. Both principal of and interest on this Bond are payable in lawful money of the United States of America which, on the respective dates of payment thereof, shall be legal tender for the payment of public and private debts. This Bond is one of the Harbor Improvement Revenue Refunding Bonds, 2014 Series (A)(B) of the City of Seward, Alaska, of like tenor and effect except as to interest rate, serial number and maturity, aggregating $ in principal amount, and constituting Bonds authorized for the purpose of refunding certain general obligation bonds issued by the City, and is issued under Resolution 2014- of the City entitled: A RESOLUTION AUTHORIZING THE CITY OF SEWARD TO ISSUE HARBOR IMPROVEMENT REVENUE REFUNDING BONDS, 2014 IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $3,675,000 TO REFUND CERTAIN OUTSTANDING HARBOR IMPROVEMENT BONDS OF THE CITY, FIXING CERTAIN DETAILS OF SUCH BONDS AND AUTHORIZING THEIR SALE AND PROVIDING FOR RELATED MATTERS (the "Resolution"). This Bond maturing on or after 1, , may be called for redemption by the City on any date on and after 1, as provided in the Amendatory Loan Agreements. This Bond is transferable as provided in the Resolution, (i) only upon the bond register of the City, and (ii) upon surrender of this Bond together with a written instrument of transfer duly executed by the registered owner or the duly authorized attorney of the registered owner, and thereupon a new fully registered Bond or Bonds in the same aggregate principal amount and maturity shall be issued to the transferee in exchange therefor as provided in the Resolution and upon the payment of charges, if any, as therein prescribed. The City may treat and consider the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal or redemption price, if any, hereof and interest due hereon and for all other purposes whatsoever. This Bond is a special limited obligation of the City of Seward, payable as the principal and interest hereon become due solely from Pledged Revenues as the term is defined in Resolution 2000-094 and Resolution 2005-58 of the City. Neither full faith or credit of the City are pledged for the payment of the principal CITY OF SEWARD, ALASKA RESOLUTION 2014-065 of and interest on the Bond nor is this Bond payable from any tax revenues of the City. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts or things required by the constitution or statutes of the State of Alaska and the home rule Charter of the City to exist, to have happened or to have been performed precedent to or in the issuance of this Bond exist, have happened and have been performed, and that the series of Bonds of which this is one, together with all other indebtedness of the City, is within every debt and other limit prescribed by said constitution, statutes, or Charter. IN WITNESS WHEREOF, THE CITY OF SEWARD, ALASKA, has caused this Bond to be signed in its name and on its behalf by the manual or facsimile signature of its Mayor and its corporate seal (or a facsimile thereof) to be impressed or otherwise reproduced hereon and attested by the manual or facsimile signature of its Clerk, all as of the day of 2014. Jean Bardarson, Mayor ] ATTEST: Johanna Kinney, CMC City Clerk [SEAL] Section 7. Execution. The Bonds shall be executed in the name of the City by the Mayor or his designee, and its corporate seal shall be impressed or otherwise reproduced thereon and attested by the City Clerk. The execution of a Bond on behalf of the City by persons who at the time of the execution are duly authorized to hold the proper offices shall be valid and sufficient for all purposes, although any such person shall have ceased to hold office at the time of authentication of the Bond or shall not have held office on the date of the Bond. Section S. Payment of Principal and Interest. The Bonds shall be payable in lawful money of the United States of America which at the time of payment is legal tender for the payment of public and private debts. As long as the Bond Bank is the Registered Owner of the Bonds, payment of principal and interest on the Bonds shall be made as provided in the Loan Agreements. If the Bond Bank is no longer the Registered Owner of the Bonds, installments of principal and interest on the Bonds shall be paid by check mailed by first class mail to the Registered Owner as of the fifteenth day of the month preceding each installment payment date Nib CITY OF SEWARD, ALASKA RESOLUTION 2014-065 at the address appearing on the Bond Register; provided that the final installment of p rind al p and interest on a Bond shall be payable upon presentation and surrender of the Bond by the Registered Owner at the office of the Registrar. Section 9. Registration. The Bonds shall be issued only in registered form as to both principal and interest. The City designates the City Finance Director as Registrar for the Bonds. The Registrar shall keep, or cause to be kept, the Bond Register at the principal office of the City. The City covenants that, until all Bonds have been surrendered and canceled, it will maintain a system for recording the ownership of each Bond that complies with the provisions of Section 149 of the Code. The City and the Registrar may treat the person in whose name any Bond shall be registered as the absolute owner of such Bond for all purposes, whether or not the Bond shall be overdue, and all payments of principal of and interest on a Bond made to the Registered Owner thereof or upon its order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City nor the Registrar shall be affected by any notice to the contrary. Section 10. Transfer and Exchange. Bonds shall be transferred only upon the books for the registration and transfer of Bonds kept at the office of the Registrar. Upon surrender for transfer or exchange of any Bond at such office, with a written instrument of transfer or authorization for exchange in form and with guaranty of signature satisfactory to the Registrar, duly executed by the Registered Owner or the duly authorized attorney of the Registered Owner, the City shall execute and deliver an equal aggregate principal amount of Bonds of the same maturity of any authorized denominations, subject to such reasonable regulations as the City may prescribe and upon payment sufficient to reimburse it for any tax, fee or other governmental charge required to be paid in connection with such transfer or exchange. All Bonds surrendered for transfer or exchange shall be canceled by the Registrar. Section 11. Bonds Mutilated, Destroyed, Stolen or Lost. Upon surrender to the Registrar of a mutilated Bond, the City shall execute and deliver a new Bond of like maturity and principal amount. Upon filing with the Registrar of evidence satisfactory to the City that a Bond has been destroyed, stolen or lost and of the ownership thereof, and upon furnishing the City with indemnity satisfactory to it, the City shall execute and deliver a new Bond of like maturity and principal amount. The person requesting the execution and delivery of a new Bond under this section shall comply with such other reasonable regulations as the City may prescribe and pay such expenses as the City may incur in connection therewith. Section 12. Designation of Refunded Bonds. The City Manager and the City Finance Director each is authorized to designate which maturities of 2005 Bonds and 2006 Bonds authorized to be refunded in this Resolution shall be refunded, provided that the refunding of the 2005 Bonds and 2006 Bonds so designated shall realize a reasonable debt service savings, net of all issuance costs and underwriting discount, on a present value basis. The City Manager and City Finance Director each is authorized to further designate the Bonds "Series A" for Bonds deemed in the designation to refund maturities of the 2005 Bonds and "Series B" for Bonds deemed in the designation to refund maturities of the 2006 Bonds. CITY OF SEWARD, ALASKA RESOLUTION 2014-065 Section 13. Tax Covenants. The City covenants to comply with any and all applicable requirements set forth in the Code in effect from time to time to the extent that such compliance shall be necessary for the exclusion of the interest on the Bonds from gross income for federal income tax purposes. The City covenants that it will make no use of the proceeds of the Bonds which will cause the Bonds or the Refunded Bonds to be "arbitrage bonds" subject to federal income taxation by reason of section 148 of the Code. The City covenants that it will not take or permit any action that would cause the Bonds to be "private activity bonds" as defined in Section 141 of the Code. Section 14. Amendatory and Supplemental Resolutions. (A) The Council from time to time and at any time may adopt a resolution or resolutions supplemental hereto, which resolution or resolutions thereafter shall become a part of this resolution, for any one or more of the following purposes: (1) To add to the covenants and agreements of the City in this Resolution, other covenants and agreements thereafter to be observed, or to surrender any right or power herein reserved to or conferred upon the City. (2) To make such provisions for the purpose of curing any ambiguities or of curing, correcting or supplementing any defective provision contained in this Resolution or in regard to matters or questions arising under this Resolution as the Council may deem necessary or desirable and not inconsistent with this Resolution and which shall not adversely affect the interests of the Registered Owners of the Bonds. Any such supplemental resolution may be adopted without the consent of the Registered Owner of any of the Bonds at any time outstanding, notwithstanding any of the provisions of subsection(B) of this section. (B) With the consent of the Registered Owners of not less than 60 percent in aggregate principal amount of the Bonds at the time outstanding, the Council may adopt a resolution or resolutions supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Resolution or of any supplemental resolution; provided, however, that no such supplemental resolution shall: (1) Extend the fixed maturity of any of the Bonds, or reduce the rate of interest thereon, or extend the time of payments of interest from their due date, or reduce the amount of the principal thereof, or reduce any premium payable on the redemption thereof, without the consent of the Registered Owners of each Bond so affected; or (2) Reduce the aforesaid percentage of Registered Owners of Bonds required to approve any such supplemental resolution without the consent of the Registered Owners of all of the Bonds then outstanding. CITY OF SEWARD,ALASKA RESOLUTION 2014-065 It shall not be necessary for the consent of the Registered Owners of the Bonds under this subsection to approve the particular form of any proposed supplemental resolution, but it shall be sufficient if such consent approves the substance thereof. (C) Upon the adoption of any supplemental resolution under this section, this Resolution shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Resolution of the City and all Registered Owners of outstanding Bonds shall thereafter be subject in all respects to such modification and amendment, and all the terms and conditions of the supplemental resolution shall be deemed to be part of the terms and conditions of this Resolution for any and all purposes. (D) Bonds executed and delivered after the execution of any supplemental resolution adopted under this section may bear a notation as to any matter provided for in such supplemental resolution, and if such supplemental resolution shall so provide, new Bonds modified so as to conform, in the opinion of the City, to any modification of this Resolution contained in any such supplemental resolution may be prepared by the City and delivered without cost to the Registered Owners of the Bonds then outstanding, upon surrender for cancellation of such Bonds in equal aggregate principal amounts. Section 15. Defeasance. In the event money and/or non-callable direct obligations of, or obligations the timely payment of principal of and interest on which are unconditionally guaranteed by, the United States of America or an agency or instrumentality of the United States of America, maturing at such times and bearing interest to be earned thereon in amounts sufficient to redeem and retire any or all of the Bonds in accordance with their terms are set aside in a special trust account to effect such redemption or retirement and such moneys and the principal of and interest on such obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made to pay or secure the payment of the principal of and interest on such Bonds and such Bonds shall be deemed not to be outstanding. Section 16. Exchange of Bonds; Amendatory Loan Agreements. The Bonds shall be delivered to the Bond Bank in exchange for the Refunded Bonds. The City has been advised by the Bond Bank that bond market conditions are fluctuating and that the most favorable market conditions for the sale of the Bond Bank Bonds may not occur on the date of a regular Council meeting. The Council has determined that it would be inconvenient to hold a special meeting on short notice to approve the terms of the Bonds. Therefore, the Council hereby determines that it is in the best interest of the City to delegate the authority to approve the terms of the Bonds as provided herein. Each of the City Manager and the City Finance Director is hereby authorized to determine the aggregate principal amount, maturity amounts, interest rates, yields, dated date, principal and interest payment dates, and redemption terms, if any, for the Bonds, so that such terms of the Bonds conform to the terms of the corresponding Bond Bank Bonds; provided that (i) the principal amount of each maturity of the Bonds shall not exceed the principal amount of the portion of the corresponding maturity of the Bond Bank Bonds that is allocated to the making of a loan to the City; and (ii) the interest rate on each maturity of the Bonds shall not exceed the interest rate on the corresponding maturity of the Bond Bank Bonds. Based upon the foregoing determinations, the City Manager and the City Finance Director each is authorized to negotiate CITY OF SEWARD, ALASKA RESOLUTION 2014-065 and execute Amendatory Loan Agreements in the forms submitted to and part of the records of this meeting. The authority granted to the City Manager and City Finance Director by this section shall expire 180 days after the effective date of this Resolution. If the City Manager or City Finance Director has not executed Amendatory Loan Agreements within 180 days from the effective date of this Resolution, the Amendatory Loan Agreements may not be executed on behalf of the City without further authorization from the Council. Section 17. Official Statement. The information in a preliminary Official Statement relating to the City and the Bonds may be modified as the City Manager or City Finance Director may determine. If required by the Bond Bank, the City Manager and City Finance Director each is hereby authorized to approve the form of the preliminary and the final Official Statement for the Bond Bank Bonds as each pertains to the City and the Bonds. Section 18. Authority of Officers. The Mayor, the City Manager, the City Finance Director, and the City Clerk are, and each of them hereby is, authorized and directed to do and perform all things and determine all matters not determined by this Resolution, to the end that the City may carry out its obligations under the Bonds and this Resolution. Section 19. Miscellaneous. (A) All payments made by the City of, or on account of, the principal of or interest on the Bonds shall be made on the several Bonds ratably and in proportion to the amount due thereon, respectively, for principal or interest as the case may be. (B) No recourse shall be had for the payment of the principal of or the interest on the Bonds or for any claim based thereon or on this Resolution against any member of the Council or officer of the City or any person executing the Bonds. The Bonds are not and shall not be in any way a debt or liability of the State of Alaska or of any political subdivision thereof, except the City, and from the Pledged Revenues as stated on the Bonds, and do not and shall not create or constitute an indebtedness or obligation, either legal, moral or otherwise, of said state or of any political subdivision thereof, except the City, and from the Pledged Revenues as stated on the Bonds. Section 20. Continuing Disclosure. The City acknowledges that, under Rule 15c2-12 of the Securities and Exchange Commission (the "Rule"), the City may now or in the future be an "obligated person" with respect to bonds issued by the Bond Bank. In accordance with the Rule and as the Bond Bank may require the City shall enter into a continuing disclosure agreement and undertake to provide certain financial information and operating data as set forth in the Amendatory Loan Agreements. Notwithstanding any other provision of this Resolution, failure of the City to comply with the continuing disclosure agreement shall not be considered a default of the City's obligations under this Resolution or the Bonds; however, the beneficial owner of any Bond or Bond Bank Bond may bring an action for specific performance, to cause the City to comply with its obligations under this section. CITY OF SEWARD, ALASKA RESOLUTION 2014-065 L.. Section 21. Severability. If any one or more of the provisions of this Resolution shall be declared by any court of competent jurisdiction to be contrary to law, then such provision shall be null and void and shall be deemed separable from the remaining provisions of this Resolution and shall in no way affect the validity of the other provisions of this Resolution or of the Bonds. Section 22. Effective Date. This Resolution shall take effect 30 days following adoption by the Seward City Council. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 11`" day of August, 2014. THE CITY OF SEWARD, ALASKA Pail! 2 : J can Bardarson, Mayor AYES: Casagranda, Terry, Squires, Butts, Darling, Bardarson NOES: None ABSENT: Keil ABSTAIN: None ATTEST: 1 C . /.. Jo anna Kim, CMC it Clerk (City Seal) **$ OF SEke *** •y 6 . --o- t g • • SEAL 1:4 i 0 ♦ * p 4 O Agenda Statement of SFw Meeting Date: August 11, 2014 To: Seward City Council 4&AsKP Through: Jim Hunt, City Manager From: Kristin Erchinger, Finance Director 1 Agenda Item: Refunding 2005 and 2006 Harbor Revenue Bonds BACKGROUND & JUSTIFICATION: On June 27, 2005, the Seward City Council approved Resolution 2005-058 authorizing the issuance of$1.5 Million in Harbor Revenue bonds for the purpose of extending E, F and J Floats, and moving the fuel float and X Float. The outstanding balance of that bond is $1,005,000. Approximately$75,000 of this bond will not be refunded. On January 9, 2006, the City Council approved Resolution 2006-05 authorizing the issuance of $4.5 Million in Harbor Revenue bonds for the purpose of constructing the new south harbor floats (M, N, 0, P, Q) and upland amenities. The outstanding balance of that bond is $2,615,000. Approximately$425,000 of this bond will not be refunded. The goal of refunding is to realize net present value savings from refinancing the bonds. According to IRS regulations, bonds may only be advance refunded once, so it is important to carefully choose the timing of the refunding to ensure that we do not miss out on additional potential savings which may come from postponing a refunding. The Alaska Municipal Bond Bank has invited the City of Seward to participate in a bond refunding, based on current market conditions and the potential to achieve an estimated $228,595 net present value ("NPV") savings ($79,646 from refunding the 2005 Bonds and $148,949 from refunding the 2006 Bonds), net of all costs. The intent is to issue the new bonds for the same approximate maturity as the old bonds, with the exception that maturities must be extended four months to sync up the bond payment schedule with the other participants in the bond issue. The 2005 bonds will mature in October 2025 and the 2006 bonds will mature in October 2026. The City utilized the services of its financial advisor, Don Grimes, to analyze the wisdom of the timing of the refunding. A summary of Mr. Grimes' analysis is attached, with a strong recommendation to proceed with the refinancing. Generally, the City will look favorably upon a refunding when it can achieve a NPV savings of at least 3%. In this case, the refunding is expected to achieve a NPV savings of 9.2% for the 2005 Bonds and 5.7% for the 2006 Bonds, making them good candidates for refunding. INTENT: To refund the 2005 and 2006 Harbor Bonds in order to reduce the lifetime cost of debt service. CONSISTENCY CHECKLIST: Yes No N/A 1. Comprehensive Plan (document source here): X 2. Strategic Plan (document source here): X 3 Other (list): Resolution 2000-94, Resolution 2005-58 and Resolution 2006-05. FISCAL NOTE: The combined savings of this refunding is $228,595, which results in annual debt service savings of approximately $22,859. Savings will benefit the Harbor Enterprise Fund and improve the ability of the harbor to finance replacement the older float systems in the harbor basin. Approved by Finance Department: At.,../i;>144444.11 ATTORNEY REVIEW: Yes X No RECOMMENDATION: Approve Resolution 2014- 0 Improvement Revenue Refunding Bonds in the principal amount not to authorizing exceed $3,675,000Harbor