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Home My WebLink AboutRes2016-002 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2016-002 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, CONFIRMING THAT THE CITY'S MORAL OBLIGATION SET FORTH IN THE CITY'S RESOLUTION NO. 2007-050 EXTENDS TO LONG TERM CARE FACILITY REVENUE REFUNDING BONDS, AND BONDS ISSUED ON PARTY THEREWITH WHEREAS, the City of Seward, Alaska (the "City") issued $27,000,000 principal amount of Long Term Care Facility Revenue Bonds, 2008 (the "2008 Bonds") pursuant to Resolution 2006-28 (the "2006 Resolution), as amended by Resolution 2007-050 (the "2007 Resolution"); and WHEREAS, the 2007 Resolution includes a moral obligation of the City to allocate one percent (1%) of the City's sales tax revenues for healthcare purposes, including, but not limited to, payment of debt service on long term care facility revenue bonds; and WHEREAS, the City adopted Resolution 2015-115 authorizing the issuance of not to exceed $25,900,000 principal amount of a long term care facility revenue refunding bond (the "2016 Refunding Bond") for purposes of refunding all or a portion of the outstanding 2008 Bonds; and WHEREAS, by this Resolution, the City confirms that the moral obligation set forth in the 2007 Resolution applies equally to the 2008 Bonds, the 2016 Refunding Bond and any bonds issued on a parity therewith. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SEWARD, ALASKA: Section 1. The City hereby confirms that the moral obligation of the City to request, on an annual basis, allocation of one percent (1%) sales tax revenues for healthcare purposes, including payment of the principal of, and interest on long term care facility revenue bonds, applies to the 2008 Bonds, the 2016 Bond and bonds issued on a parity therewith. Section 2. The recitals to this Resolution are incorporated herein, and by this reference, are made a part hereof as if fully set forth herein. Section 3.This Resolution shall take effect immediately and endure for the life of the 2008 Bonds, the 2016 Bond and any bonds issued on a parity therewith. CITY OF SEWARD,ALASKA RESOLUTION 2016-002 PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 18th day of January, 2016. THE CITY OF SEWARD, ALASKA / . . '� • can Bardarson,Mayor AYES: Keil, Butts, McClure, Altermatt, Bardarson NOES: None ABSENT: Casagranda, Squires ABSTAIN: None ATTEST: L A/ .'JP / J e hanna Ki •- •, CMC \'ity Clerk (City Seal) . ,`,t OF SEA, 0.4 o•••n a •4 � •••11,1•1*. + -s • • • a r r •i _iii i q r l.. :/►/ ,f m i 44* 4 OF 1:,1/2,=j' 4,"34 4, a�,�e:,3:4 i41 COUNCIL AGENDA STATEMENT .�of ik.7„..oty gre Meeting Date: January 18,2016 �— Through: James Hunt, City Manager 44gs1F) From: Kristin Erchinger,Finance Director Y Agenda Item: Confirming the 1% sales tax utilization for the Long-Term Care Facility Bonds BACKGROUND&JUSTIFICATION: The City of Seward issued $27 Million principal amount of Long Term Care Facility Revenue bonds in 2008 as authorized by Resolution 2006-28, and as amended by Resolution 2007-050. These bonds were issued for the purpose of constructing and equipping the Seward Mountain Haven long-term care (LTC) facility. As of January 18,2016,the outstanding balance of said bonds is$23,250,000. At the time these bonds were issued, the Alaska Municipal Bond Bank Authority (AMBBA) required additional guarantees for repayment of these bonds beyond just the revenues of the long-term care facility. This was due in part, to the concern over the future sustainability of Alaska's cost-based reimbursement system for Medicaid as it relates to long-term care revenues. In order to provide assurance of the City's ability to repay these bonds in the event that revenues of the facility were compromised, the City agreed to pledge a portion of the 1% sales tax dedicated to healthcare. At the time the LTC bonds were issued, the City was also paying down the general obligation bonds issued by the City for construction of the hospital building. Those bonds have matured and the only capital debt outstanding related to healthcare is the Long-Term Care Facility Revenue Bonds. The AMBBA has recently solicited for new bond counsel. The new bond counsel of Orrick, Herrington & Sutcliffe LLP has less familiarity with the structure of our original bond issue and therefore requests confirmation at the time of the upcoming refunding, that the City's moral obligation to utilize the proceeds from the 1% sales tax for healthcare purposes, does include the commitment to utilize these funds, if necessary, to make debt service payments on the Long-Term Care Facility Revenue Bonds, including the Refunding Bonds. CONSISTENCY CHECKLIST: Yes No N/A 1. Comprehensive Plan(document source here): X 2. Strategic Plan(document source here): X 3. Other(list): X ATTORNEY REVIEW: X Yes No FISCAL NOTE: The City currently receives approximately $1.1 Million per year in sales tax revenues related to the 1% sales tax dedicated to healthcare. Since the LTC was built in 2008,no sales tax proceeds have been used for the purpose of paying the LTC bonds, but they could be used for this purpose if patient revenues at the facility were insufficient to cover annual debt service costs. As of January 18,2015,the cash balance in the LTC Fund is approximately $5.7 Million, including $1.9 Million in bond reserves. The City proposes to defease $3.5 Million in outstanding bonds utilizing a portion of this reserve, while retaining bond reserves as required by the Bond Refunding Resolution 2015-115. Approved by Finance Department: a/1442Z) 41,e.kiLD RECOMMENDATION: Council approve Resolution 2016-0° confirming its commitment to utilize the 1% sales tax dedicated for healthcare purposes, for the purpose of paying annual debt service payments on the Long Term Care Facility Bonds, if necessary.