HomeMy WebLinkAboutRes2020-063 Sponsored
OF SEWARD,ALASKA by: Meszaros
RESOLUTION 2020-063
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, APPROVING THE CITY OF SEWARD'S PARTICIPATION IN
A PROPOSED REFINANCING BY THE ALASKA MUNICIPAL BOND
BANK OF ITS GENERAL OBLIGATION BONDS THAT PROVIDED
FUNDS TO PURCHASE THE GENERAL OBLIGATION
LIBRARY/MUSEUM BONDS, 2011 SERIES A OF THE CITY OF
SEWARD, UNDER A LOAN AGREEMENT BETWEEN THE CITY OF
SEWARD AND THE ALASKA MUNICIPAL BOND BANK; AND
AUTHORIZING THE CITY OF SEWARD CITY MANAGER, OR
DESIGNEE, TO APPROVE A REVISED SCHEDULE OF PRINCIPAL
AND INTEREST PAYMENTS ON THE CITY OF SEWARD'S 2011A
BONDS, IN ACCORDANCE WITH THE LOAN AGREEMENT, IF THE
BOND BANK SUCCESSFULLY REFINANCES ITS BONDS
WHEREAS, the City of Seward, Alaska (the "City"), to finance a portion of the cost of
certain library and museum capital improvements, issued and sold its General Obligation
Library/Museum Bonds, 2011 Series A, in the original principal amount of $3,480,000 (the
"2011A Bond") to the Alaska Municipal Bond Bank (the "Bond Bank"), as authorized by
Resolution Nos. 2010-129 and 2011-047 of the City adopted January 24, 2011 and June 13,
2011,respectively(together, the"Bond Resolution"), on the tenns and conditions set forth in the
Bond Resolution and in a loan agreement between the City and the Bond Bank dated as of
September 1, 2011 (the"Loan Agreement"); and
WHEREAS, the Bond Bank issued and sold its General Obligation Bonds, 2011 Series
Three (the "Bond Bank Bonds"), to provide funds to purchase the 201IA Bond, as provided in
the Loan Agreement; and
WHEREAS, Section 6 of the Loan Agreement provides that payments of principal of
and interest on the 2011A Bond may be adjusted to reduce debt service on the 2011A Bond if the
Bond Bank is able to achieve debt service savings by refunding the Bond Bank Bonds; and
WHEREAS, the Bond Bank now intends to issue a series of its general obligation
refunding bonds (the "Bond Bank Refunding Bonds") for the purpose, among others, of
refunding all or a portion of the Bond Bank Bonds and achieving debt service savings; and
WHEREAS, the Council wishes to approve the City's participation in this refinancing
and to authorize the City Manager or his designee to accept a revised debt service schedule for
all or a portion of the outstanding 2011A Bond if the Bond Bank successfully refinances all or a
portion of the Bond Bank Bonds.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD, ALASKA
RESOLUTION 2020-063
CITY OF SEWARD, ALASKA that:
Section 1. Approval of Refmancing. The Council hereby approves the City's
participation in the Bond Bank's refinancing of the Bond Bank Bonds and authorizes the City
Manager or his designee to approve a revised schedule of principal payment amounts and interest
rates for all or a portion of the outstanding 2011A Bonds, in accordance with Section 6 of the
Loan Agreement, so long as the revised debt service schedule is financially advantageous to the
City. The revised schedule of debt service on the 2011A Bond and other provisions as may be
required by the Bond Bank will be set forth in an amendment to the Loan Agreement (the
"Amendatory Loan Agreement") and a refunding bond in a principal amount not to exceed
$2,895,000 (the "2020 Refunding Bond") to be issued in exchange for the 2011A Bond.
Notwithstanding, if only a portion of the 2011A Bond is refinanced, the 2011A Bond shall be
exchanged for a bond reflecting the unrefunded portion of the 2011A Bond (the "Exchanged
2011A Bond").
The City Manager or Finance Director is hereby authorized to execute and deliver the
Amendatory Loan Agreement on behalf of the City and to cause the execution and delivery of
the 2020 Refunding Bond and the Exchanged 2011A Bond as the case may be, in accordance
with the provisions of the Bond Resolution and this resolution, to the Bond Bank in exchange for
the 2011A Bond. The City Manager, Finance Director, acting Finance Director and other
appropriate officers and employees of City are also hereby authorized to provide financial
information about the City that the Bond Bank may require for the official statement for the
Bond Bank Refunding Bonds.
Section 2. Tax Matters. The 2011A Bond was issued on a tax-exempt basis under
Section 103 of the Internal Revenue Code of 1986, as amended. Subject to applicable law, the
2020 Refunding Bond may be issued on a tax-exempt or taxable basis, as determined by the City
Manager, Finance Director, or acting Finance Director. The Exchanged 2011A Bond shall retain
its original tax treatment under the Code.
Section 3. General Authorization. The City Manager, Finance Director, acting Finance
Director, City Clerk, City Attorney, and any other appropriate officers, agents, attorneys and
employees of the City are each hereby authorized and directed to cooperate with the Bond Bank
and to take such steps, do such other acts and things, and execute such letters, certificates,
agreements, papers, financing statements, assignments or instruments as in their judgment may
be necessary, appropriate or desirable to carry out the terms and provisions of, and complete the
transactions contemplated by,this Resolution.
Section 4. Prior Acts. Any and all acts heretofore taken by officers, agents, attorneys
and employees of the City in connection with refinancing all or a portion of the 2011A Bond are
hereby ratified and confirmed.
CITY OF SEWARD, ALASKA
RESOLUTION 2020-063
Section 5. Recitals. The recitals to this resolution are hereby incorporated into this
resolution as if fully set forth herein.
Section 6. This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this
10`1'day of August, 2020.
1 Al
THE TTY O . ' ' : ' D, • LASKA
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Christy Te 'Mayor op
AYES: Crites, Baclaan, McClure, Butts, Seese, Osenga, Terry
NOES: None
ABSENT: None
LABSTAIN: None
ATTEST:
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Brenda J. Ballo , MMC
City Clerk
(City Seal)%.• of se Iv h, •.,
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Agenda Statement •
Meeting Date: August 10,2020
To: City Council
Through: Scott Meszaros, City Manager
From: Sam Hickok, Acting Finance Director 46010
Agenda Item: Refunding 2011 General Obligation Library/Museum Bonds
BACKGROUND & JUSTIFICATION:
On January 24, 2011, the Seward City Council approved Resolution 2010-129 authorizing the
issuance of not to exceed $3,730,000 of General Obligation bonds for the purpose of constructing
the new Library/Museum building. Subsequently, on June 13, 2011 the Seward City Council
approved Resolution 2011-047 amending resolution 2010-129 to reduce the principal amount of
the bonds to not exceed$3,700,000. The actual principal amount issued was $3,480,000.
Interest rates remain at historic low levels. A recent analysis by the Alaska Municipal Bond Bank,
determined that the outstanding Library/Museum bond is a candidate for net present value savings
of approximately $279,443 over the life of the bond. This is equal to an annual savings of
approximately$17,465.
Generally, the City looks favorably on a refunding when it can achieve a NPV savings of at least
3%;this analysis shows a potential savings of approximately 11%.The intent is to issue new bonds
for the same approximate maturity as the old bonds, with a slight adjustment to synchronize the
bond repayment schedule with the AMBB.
INTENT•
To refund the General Fund General Obligation bonds in order to reduce lifetime borrowing costs
of debt. The refunding is not intended to extend maturities unless a minor extension is required to
sync up the bond payment schedule with other participants in the bond issuance.
CONSISTENCY CHECKLIST: Yes No N/A
1. Comprehensive Plan: X
2. Strategic Plan: X
3. Other: Resolution 2010-129 and 2011-047 X
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FISCAL NOTE:
This action is intended to result in a reduction in annual debt costs of approximately $17,465
(current annual debt costs are approximately $247,000), for an estimated net present value savings
of$279,443. Since this is a General Obligation Bond, we will see the savings in the debt service
department of the General Fund. Future budgets will factor in the savings over the remaining life
of the bond.
Approved by Finance Department: `
ATTORNEY REVIEW: Yes X No
This information was prepared and reviewed by Cynthia Cartledge of Jermain, Dunnagan &
Owens, sew as the Ci 's bond counsel on this rug.
RECOMMENDATION:
Approve City Council Resolution 2020-063 authorizing the City of Seward to issue refunding
General Obligation bonds in a principal amount not to exceed$2,895,000, authorizing the
execution of a loan agreement between the City of Seward and the Alaska Municipal Bond
Bank, authorizing the sale of such bonds, and providing for related matters.
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