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HomeMy WebLinkAboutRes2006-028 I I I Sponsored by: Wohlforth CITY OF SEWARD, ALASKA RESOLUTION 2006-28 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, PROVIDING FOR THE ISSUANCE OF LONG TERM CARE FACILITY REVENUE BONDS OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $27,000,000 FOR THE PURPOSE OF PROVIDING AMOUNTS TO FINANCE, DESIGN, ACQUIRE, CONSTRUCT AND EQUIP A LONG TERM CARE FACILITY IN THE CITY AND TO DO ALL THINGS NECESSARILY INCIDENTAL THERETO, FIXING CERTAIN COVENANTS AND PROTECTIVE PROVISIONS SAFEGUARDING THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON SAID BONDS; PROVIDING THAT ADDITIONAL LONG TERM CARE FACILITY REVENUE BONDS MAY BE ISSUED ON A PARITY WITH SUCH BONDS UPON COMPLIANCE WITH CERTAIN CONDITIONS; AND FIXING CERTAIN DETAILS OF THE BONDS. WHEREAS, the City of Seward, Alaska, (the "City") leases land and improvements for a long term care facility ("Wesley") from the Women's Division of the Board of Global Ministries of the United Methodist Church; and WHEREAS, Wesley is an aging facility that has served its useful life; and WHEREAS, the City has an agreement with Providence Health System-Washington, d/b/a Providence Health System in Alaska to operate a hospital and long term care facility; and WHEREAS, the Constitution and statutes ofthe State of Alaska and the Charter ofthe City permit the City to issue revenue bonds to finance any project which serves a public purpose which bonds are secured only by the revenues of the project and which do not constitute a debt or pledge of the faith and credit or taxing power ofthe City and which may be authorized by the Council and do not require ratification by the electors of the City; and WHEREAS, it is necessary to establish the form, conditions, covenants and method of sale of such bonds and to make provision for establishing the amount, maturities, interest rates and redemption rights and other terms thereof; NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SEWARD, ALASKA: Section 1. Purpose. The purpose ofthis resolution is to authorize the issuance and sale of not to exceed $27,000,000 of long term care facility revenue bonds, to fix the form, covenants and G:\RESOLUTIONSI2006\06-28 LTCF BONDS RES DOC Page 1 method of sale of said bonds, to provide for establishing the amount, maturities, interest rates, I redemption rights and other terms of the bonds and to fix the conditions under which additional revenue bonds may be authorized and issued on a parity with the bonds. Section 2. Definitions. As used in this resolution, unless a different meaning clearly appears from the context: "Acquired Obligations" means and includes any of the following securities, if and to the extent the same are at the time legal for investment of funds of the City: any noncallable bonds or other noncallable obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America. "Annual Debt Service Requirement" means, with respect to any particular Fiscal Year and to any specified bonds, an amount equal to (i) interest accruing during such Fiscal Year on such bonds, except to the extent such interest is to be paid from deposits in the Debt Service Subaccount from bond proceeds, (ii) the principal amount of such bonds due during such Fiscal Year for which no sinking fund installments have been established, plus (iii) the unsatisfied balance of any sinking fund installment for such bonds due during such Fiscal Year. "Arbitrage and Tax Certificate" means the certificate executed and delivered by the City at the time of issuance and delivery ofthe Bonds setting forth the City=s expectations as to the use of Bond proceeds. "Bond Account" means the Long Term Care Facility Revenue Bond Account created by Section 12 hereof. I "Bond Register" means the registration books maintained by the Registrar containing the names and addresses of the owners of the Bonds. "Bonds" means the City of Seward, Alaska, Long Term Care Facility Revenue Bonds, 2006. "Bond Year" has the meaning given such term in the Arbitrage and Tax Certificate. "Charter" means the Home Rule Charter ofthe City, as the same may be amended from time to time. "City" means the City of Seward, Alaska, a municipal corporation organized and existing under the Charter and Constitution and laws of the State of Alaska. "Code" means the Internal Revenue Code of 1986, as amended, and all applicable regulations thereunder. "Consulting Engineer" means an independent consulting engineer or engineering firm I licensed to practice in the State of Alaska, retained and appointed pursuant to Section 15(F) hereof. G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES. DOC Page 2 I I I "Council" means the general legislative authority ofthe City, as the same may be constituted from time to time. "Debt Service Subaccount" means the Debt Service Subaccount created in the Bond Account by Section 12 hereof. "Fiscal Year" means the 12-month period commencing on January 1 each year through and including December 31 of that year. "Future Parity Bonds" means any co-located hospital and long term care facility revenue bonds, notes or other obligations ofthe City, other than the Bonds, issued under a resolution wherein the City pledges that the payments to be made out of the Pledged Revenues into the Bond Account and Reserve Subaccount therein to pay and secure the payment of the principal of and interest on such revenue bonds, notes or other obligations will be on a parity with the payments required by this resolution to be made out of such Pledged Revenues into such Bond Account and Reserve Subaccount to pay and secure the payment ofthe principal of and interest on the Bonds. "Government Obligations" means any of the following: (i) any bonds or other obligations which, as to principal and interest, constitute direct obligations of, or are unconditionally guaranteed by, the United States of America; (ii) bonds, debentures, or other evidences of indebtedness issued or guaranteed by any agency or corporation which has been or may hereafter be created pursuant to an act of Congress as an agency or instrumentality of the United States of America; (iii) bonds, debentures, or other evidences of indebtedness issued or guaranteed by any agency or corporation which has been or may hereafter be created pursuant to an act of Congress as an agency or instrumentality ofthe United States of America; (iv) obligations of financial institutions insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, to the extent insured; and (v) bank certificates of deposit fully secured by obligations described in (i) and (ii) hereof. "Loan Agreement" means the Loan Agreement between the City and the Alaska Municipal Bond Bank Authority, dated as of the date of the Bonds. "Net Revenues" means, for any Fiscal Year or other period oftime, all amounts received by the City from operations ofthe co-located hospital and long term care facility sites in Seward, Alaska and deposited in the Providence Seward Medical & Care Center Account and interest and profits derived from the investment of moneys held in the Providence Seward Medical & Care Center Account less Operating Expenses for such period. "Operating Expenses" means, for any Fiscal Year or other period oftime, the expenses of a non-capital nature incurred for the co-located hospital and long-term care facilities in Seward, Alaska. Operating Expenses shall not include any allowances for depreciation or amortization or any principal, redemption price or purchase price of, or interest on, any obligations of the City incurred in connection with and payable from Pledged Revenues or any fee or charge in lieu of City taxes. G:IRESOLUTlONS\2006\06-28 LTCF BONDS RES.DOC Page 3 "Parity Bonds" means the Bonds and any Future Parity Bonds. I "Project" means a long term care facility located in the City of Seward, Alaska. "Pledged Revenues" means Net Revenues and interest received and profits derived from the investment of moneys obtained from moneys held in any fund solely to payor secure the payment of any Bonds issued under this resolution. "Registered Owner" means the person named as the registered owner of a Bond in the Bond Register. "Registrar" means the Finance Director of the City, or any successor that the Finance Director may appoint. "Reserve Subaccount" means the Reserve Subaccount created in the Bond Account by Section 12 hereof. "Reserve Subaccount Requirement" means an amount equal to the least of (i) 10% of the proceeds of sale ofthe Parity Bonds, (ii) 125% ofthe average Annual Debt Service Requirement for all Parity Bonds, and (iii) the maximum Annual Debt Service Requirement on all outstanding Parity Bonds. Section 3. Authorization of Bonds and Purpose oflssuance. The City shall issue and sell revenue bonds designated ACity of Seward, Alaska Long Term Care Facility Revenue Bonds, 2006" (the "Bonds") in the aggregate principal amount of not to exceed $27,000,000. The proceeds ofthe Bonds shall be used to pay the costs to finance, design, acquire, construct and equip the Proj ect. The Project serves a public purpose of the City. I Section 4. Date. Maturities. Interest Rates and Other Details of the Bonds. The Bonds shall be dated and mature on such dates not later than 2036, and shall bear interest from their date payable on such dates, and at such rates, not exceeding 7% per annum, as the City Manager or Finance Director may fix and determine at or prior to the time of sale of the Bonds. The Bonds shall be fully registered as to both principal and interest, shall be in the denomination of $5,000 each, or any integral multiple thereof, and shall be numbered separately in such manner and with any additional designation as the Registrar deems necessary for purposes of identification. Section 5. Place and Medium of Payment. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. For so long as all outstanding Bonds are registered in the name of the Alaska Municipal Bond Bank Authority, payments of principal and interest thereon shall be made as provided in the Loan Agreement. In the event that the I Bonds are no longer registered in the name of the Alaska Municipal Bond Bank Authority, interest G\RESOLUTIONSI2006\06-28 LTCF BONDS RES.DOC Page 4 I I I on the Bonds shall be paid by check mailed (or by wire transfer to a Registered Owner of Bonds in aggregate principal amount of$l ,000,000 or more who so requests) to the Registered Owners ofthe Bonds at the addresses for such Registered Owners appearing on the Bond Register on the 15th 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 at the principal office of the Registrar . Section 6. Registration. A. Bond Register. The Bonds shall be issued only in registered form as to both principal and interest. The Registrar shall keep, or cause to be kept, a bond register. B. Registered Ownership. The City and the Registrar, each in its discretion, may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as described in Section 5 hereof, but such registration may be transferred as herein provided. All such payments made as described in Section 5 shall be valid and shall satisfy and discharge the liability of the City upon such Bond to the extent of the amount or amounts so paid. C. Transfer or Exchange. Bonds shall be transferred only upon the Bond Register kept by the Registrar. Upon surrender for transfer or exchange of any Bond at the office ofthe Registrar, 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 its duly authorized attorney, the City shall execute and the Registrar shall deliver an equal aggregate principal amount of Bonds ofthe same maturity of any authorized denominations, subject to such reasonable regulations as the Registrar 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 cancelled by the Registrar. The Registrar shall not be required to transfer or exchange Bonds subject to redemption during the 15 days preceding any principal or interest payment date or the date of mailing of notice of redemption of such Bonds, or any Bond after such Bond has been called for redemption. D. Registration Covenant. The City covenants that, until all Bonds have been surrendered and cancelled, it will maintain a system for recording the ownership of each Bond that complies with the provisions of Section 149 of the Code. Section 7. Redemption. The Bonds may be redeemed at the times, for the redemption prices, and in such manner, as the City Manager or Finance Director may fix and determine at or prior to the time of sale of the Bonds. Notice of any intended redemption of Bonds shall be given not less than 45 nor more than 60 days prior to the date fixed for redemption by United States mail to registered owners of the Bonds to be redeemed at their addresses as they appear on the Bond Register on the day the notice is mailed; G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 5 provided, however, that for so long as the Bonds are registered in the name ofthe Alaska Municipal Bond Bank Authority, all notices shall be given only as provided in the Loan Agreement. The I requirements of this section shall be deemed to be complied with when notice is mailed as herein provided, whether or not it is actually received by the Registered Owner. All official notices of redemption shall be dated and shall state: (a) the redemption date; (b) the redemption price; (c) if fewer than all outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed; (d) that on the redemption date the redemption price will become due and payable upon each such bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date; and ( e) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal office of the Registrar. Notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Registrar I at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. Upon surrender for any partial redemption of any Bond, there shall be prepared for the Registered Owner a new Bond or Bonds ofthe same maturity in the amount of the unpaid principal. All Bonds which have been redeemed shall be cancelled and destroyed by the Registrar and shall not be reissued. If any Bond shall be duly presented for payment and funds have not been duly provided by the City on such applicable date, then interest shall continue to accrue thereafter on the unpaid principal thereof at the rate stated on such Bond until it is paid. Section 8. Form of Bonds. The form of the Bonds shall be substantially as follows: No. $ UNITED STATES OF AMERICA CITY OF SEWARD, ALASKA LONG TERM CARE FACILITY REVENUE BOND, 2006 REGISTERED OWNER: I G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 6 L I I I PRINCIPAL AMOUNT: The City of Seward, Alaska (the "City"), a municipal corporation of the State of Alaska, hereby acknowledges itselfto owe and for value received promises to pay to the Registered Owner identified above, or its registered assigns, but only from the sources stated herein, the Principal Amount indicated above in the following installments on of each of the following years, and to pay, from the sources stated herein, interest on such installments from the date hereof, payable on , 20_ and semiannually thereafter on the first days of each and of each year, at the rates per annum as follows: Maturity Date Principal Amount Interest Rate For so long as this Bond is owned by the Alaska Municipal Bond Bank Authority (the "Authority"), payment of principal and interest shall be made as provided in the Loan Agreement between the Authority and the City. In the event that this Bond is no longer owned by the Authority, payment of principal of and interest on this Bond will be made by check or draft mailed by first class mail to the registered owner at the address appearing on the bond register of the City, provided that the final installment of principal and interest on this Bond will be payable at the office of the City Finance Director (the "Registrar") upon surrender of this Bond. Interest shall be computed on the basis of a 360-day year composed of twelve 30-day months. Both principal of and interest on this bond are payable in lawful money ofthe United States of America solely out of the special fund of the City known as the "Long Term Care Facility Revenue Bond Account" created by Section 12 of Resolution No. 2006- This bond is one of an issue of bonds (the ABonds@) of like date and tenor except as to number, rate of interest, and date ofmaturity, aggregating the principal sum of$ and is issued pursuant to the Constitution and statutes of the State of Alaska and the Charter and duly adopted resolutions and ordinances of the City, including Resolution No. 2006-_ (the "Bond Resolution"). The definitions contained in the Bond Resolution shall apply to capitalized terms contained herein. The Bonds are being issued for the purpose of financing, acquiring, designing, constructing and equipping a long term care facility in Seward, Alaska. Bonds maturing on or after , 20_, may be called for redemption at the option of the City on any date on and after in whole on any date, or in part in increments of $5,000 with maturities to be selected by the City and by lot within a maturity, at a price of par plus accrued interest to the date of redemption. Notice of any such intended redemption shall be given as provided in the Loan Agreement. G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 7 From and after the date fixed for redemption, interest on any Bonds so called for redemption shall cease to accrue, provided funds for such redemption are on deposit in the Bond Account. The City does hereby pledge and bind itself to set aside out of Pledged Revenues of the City and to pay into the Bond Account the various amounts required by the Bond Resolution to be paid into and maintained in said Account all within the times provided in the Bond Resolution. The Bonds are payable only from Pledged Revenues and other amounts pledged thereof under this Resolution and the Bonds do not constitute a general obligation of the City. The pledge of Pledged Revenues contained herein and in the Bond Resolution may be discharged by making provision, at any time, for the payment ofthe principal of and interest on this Bond in the manner provided in the Bond Resolution. The pledge of amounts to be paid into the Bond Account is hereby declared to be a lien and charge upon the Pledged Revenues superior to all other charges of any kind or nature and equal in rank to the lien and charge thereon for amounts pledged to the payment of any Future Parity Bonds hereafter issued. I The City has further bound itself to maintain the Project in good condition and repair, to operate the same in an efficient manner and at a reasonable cost, and use its best efforts such that it will provide Pledged Revenues in an amount equal to at least the amount of the Annual Debt Service I Requirement for such year on all outstanding Parity Bonds. It is hereby certified that all acts, conditions and things required by the Constitution and statutes ofthe State of Alaska and the Charter and resolutions ofthe City to be done precedent to and in the issuance of this bond have happened, been done and performed. IN WITNESS WHEREOF, the City of Seward, Alaska, has caused this bond to be executed with the manual or facsimile signature of its Mayor and to be countersigned with the manual or facsimile signature of its Clerk and the official seal of the City to be impressed or imprinted hereon, as of this _ day of , 2006. CITY OF SEWARD, ALASKA Mayor COUNTERSIGNED: City Clerk G:IRESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 8 I I I I (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (Please insert Social Security or taxpayer identification number of transferee) (Please print or typewrite name and address, including zip code of Transferee) the within bond and does hereby irrevocably constitute and appoint of , or its successor, as Registrar, to transfer said bond on the books kept for registration thereof with full power of substitution in the premises. DATED: NOTE: The signature on this Assignment must correspond with the name ofthe registered owner as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. SIGNATURE GUARANTEED: Section 9. Execution of Bonds. The Bonds shall be executed on behalf ofthe City with the manual or facsimile signature of the Mayor of the City, countersigned with the manual or facsimile signature ofthe Clerk. The official seal ofthe City shall be impressed or imprinted on each Bond. The execution of a Bond on behalf of the City by persons that at the time ofthe 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 issuance and delivery ofthe Bond or shall not have held office on the date ofthe Bond. Section 10. Mutilated. Destroyed. Stolen or Lost Bonds. 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 G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 9 destroyed, stolen or lost and of the ownership thereof, and upon furnishing the City with indemnity I satisfactory to it, the City shall execute and deliver a new Bond of like maturity and principal amount. The person requesting the authentication and delivery of a new Bond pursuant to 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. Any Bonds issued pursuant to this section in substitution for Bonds alleged to be destroyed, stolen or lost shall constitute original additional contractual obligations on the part of the City, whether or not the Bonds alleged to be destroyed, stolen or lost be at any time enforceable by anyone, and shall be equally and proportionately secured with all other Bonds issued hereunder. Section 11. Priority ofU se of Pledged Revenues. Pledged Revenues are hereby pledged to and shall be used only for the following purposes and in the following order of priority: First, to make all payments, including sinking fund payments, required to be made into the Debt Service Subaccount for the payment of the principal of and interest on Parity Bonds; Second, to make all payments required to be made into the Reserve Subaccount; Third, to make all payments, including sinking fund payments, required to be made into a subordinate lien debt service account for the payment of the principal of and interest on any subordinate lien bonds; Fourth, to pay the costs of financing, acquiring, designing, constructing and equipping the I Project, to purchase or redeem long term care facility revenue bonds or notes ofthe City, or for any other proper purpose in connection with the ownership of the Project. Section 12. Long Term Care Facility Revenue Bond Account and Subaccounts Therein. There is hereby created a special fund ofthe City known as the "Long Term Care Facility Revenue Bond Account" (the "Bond Account"), which fund is a trust fund to be drawn upon for the sole purpose of paying the principal of and interest and premium, if any, on all Parity Bonds. The Bond Account consists of two subaccounts, the Debt Service Subaccount and the Reserve Subaccount. Amounts pledged to be paid into the Bond Account are hereby declared to be a lien and charge upon Pledged Revenues superior to all other charges of any kind or nature and equal in rank to the charge thereon to pay and secure the payment of the principal of and interest on all Parity Bonds. From and after the time of issuance and delivery ofthe Bonds and as long thereafter as any of the same remain outstanding, the City hereby irrevocably obligates and binds itself to set aside and pay into the Debt Service Subaccount out of Pledged Revenues on or before the 20th day of each month the following: A. Such amounts, in approximately equal monthly installments, as will be sufficient to accumulate the amount required to pay the interest scheduled to become due on Parity Bonds on the next interest payment date; and I G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page IO I I I B. Such amounts, in approximately equal monthly installments, as will be sufficient to accumulate (i) the principal amount of Parity Bonds due for which no sinking fund installments have been established, plus (ii) the unsatisfied balance of any sinking fund installment for Parity Bonds, in each case during the next 12 months. Moneys in the Debt Service Subaccount may be held in cash or invested in Government Obligations which investments mature prior to the time such money is required for the payment of the principal of or interest on the Parity Bonds. All interest earned on and profits derived from such investments shall remain in and become a part of the Debt Service Subaccount. Section 13. Reserve Subaccount. The City hereby covenants and agrees that it will at the time of issuance of the Bonds cause amounts to be paid into the Reserve Subaccount such that the total amount in the Reserve Subaccount will be equal to the Reserve Subaccount Requirement. The City further covenants and agrees that it will set aside and pay into the Reserve Subaccount amounts from Pledged Revenues, commencing with the first month following the closing and delivery of the Bonds, so that the amount on deposit in the Reserve Subaccount will at all times be at least equal to the Reserve Subaccount Requirement. The City further covenants and agrees that in the event it issues any Future Parity Bonds hereafter it will provide in each resolution authorizing the same that at the time of issuance of such Future Parity Bonds payments will be made into the Reserve Subaccount such that the total amount of such payments together with the money already in the Reserve Subaccount will be equal to the Reserve Subaccount Requirement. The City further covenants and agrees that it will at all times maintain therein an amount at least equal to the Reserve Subaccount Requirement until there is a sufficient amount in the Bond Account and Reserve Subaccount to pay the principal of, premium, if any, and interest on all outstanding Parity Bonds, at which time the money in the Reserve Subaccount may be used to pay such principal, premium, if any, and interest; provided, however, that moneys in the Reserve Subaccount may be withdrawn, or set aside in a special account in the Bond Account pursuant to Section 19 of this resolution, to pay (with or without other available funds) the principal, premium, if any, and interest on all of the outstanding Parity Bonds of any single issue or series payable out of the Bond Account, so long as the moneys remaining on deposit in the Reserve Subaccount are at least equal to the Reserve Subaccount Requirement on all of the remaining outstanding Parity Bonds. The City may, from time to time, transfer from the Reserve Subaccount to the Debt Service Subaccount amounts in excess of the Reserve Subaccount Requirement. In the event there shall be a deficiency in the Debt Service Subaccount for meeting maturing installments of either principal of or interest on the Parity Bonds, such deficiency shall be made up from the Reserve Subaccount by the withdrawal of cash therefrom. Any deficiency created in the Reserve Subaccount by reason of any such withdrawal shall then be made up from Pledged Revenues first available therefor after making necessary provision for the required payments into the Debt Service Subaccount. Investments in the Reserve Subaccount shall be valued at amortized cost except G:\RESOLUTJONS\2006\06-28 LTCF BONDS RES.DOC Page 11 that in the event of a deficiency in the Reserve Subaccount caused by the withdrawal or transfer of moneys therefrom the amount of such deficiency shall be determined by valuing all investments in I the Reserve Subaccount at the then market value. All money in the Reserve Subaccount may be kept in cash or invested in Government Obligations. Such investments shall mature not later than the last maturity of the Parity Bonds outstanding at the time of their purchase. Interest on any such investments and/or any profits realized from the sale thereof shall be deposited in and become a part of the Debt Service Subaccount. Section 14. Investment of Certain Accounts. Moneys held in the Bond Account shall be invested and reinvested to the fullest extent practicable in Government Obligations which mature not later than at such times as shall be necessary to provide moneys when needed for payments to be made from such Accounts, and in the case of the Reserve Subaccount not later than fifteen years from the date of such investment. Nothing in this resolution shall prevent any Government Obligations from being issued or held in book-entry form on the books of the Department of the Treasury ofthe United States. Obligations purchased as an investment of moneys in any Account or Subaccount created under this resolution shall be deemed at all times to be a part of such Account or Subaccount and any profit realized from the liquidation of such investment shall be credited to such Account or I Subaccount and any loss resulting from the liquidation of such investment shall be charged to the respective Account or Subaccount. In computing the amount in any Account or Subaccount created under this resolution for any purpose provided in this resolution, obligations purchased as an investment of moneys therein shall be valued at cost plus interest accrued and unpaid at the date of computation. Section 15. Specific Covenants. The City hereby covenants with the owners of each of the Parity Bonds for so long as any of the same remain outstanding as follows: A. The City will use its best efforts to maintain and collect Net Revenues in each Fiscal Year that will provide Pledged Revenues in an amount equal to the amount of the Annual Debt Service Requirement for such year on all outstanding Parity Bonds. B. The City will at all times maintain, preserve and keep the Project and every part and parcel thereof in good repair, working order and condition; will from time to time make or cause to be made all necessary and proper repairs, renewals and replacements thereto so that the business carried on in connection therewith may be properly and advantageously conducted. C. The City will at alrtimes carry all-risk insurance and such other forms of insurance on such ofthe buildings, equipment, property and facilities of the Project as are ordinarily insured in I such amounts and with such deductibles as under good business practice are ordinarily carried on G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 12 I I I such buildings, equipment, property and facilities but such insurance shall in all events be in an amount at least equal to the lessor of (i) 80% ofthe estimated replacement cost ofthe insurable parts ofthe Project or (ii) the aggregate principal amount ofthe Bonds then outstanding, in each case such all-risk insurance shall include, but not be limited to, hazards such as fire, water, lightning, tornado, windstorm, hail, explosion, riot, civil commotion, vandalism and malicious mischief, aircraft and vehicles, excluding flood, tidal wave, wavewash, subsidence, or earthquake insurance. In addition to the above insurance, the City shall also require any operator to carry liability insurance and such other types of insurance as are usually carried for operating like properties. All such insurance shall be carried with responsible insurers and the policies shall be payable to the City. D. The City will keep and maintain proper books and accounts with respect to the operation ofthe Proj ect in such manner as prescribed by any authorities having jurisdiction over the Project; will cause its books and accounts to be audited annually be a certified public accountant not later than 180 days following the end of each Fiscal Year, copies of which audits shall, upon request, be furnished to the owners ofthe Parity Bonds. Said audit shall show whether or not the City has in all respects performed and complied with the covenants set forth in this resolution, including the payments into the Debt Service Subaccount and Reserve Subaccount provided for herein. E. All employees and agents of the City collecting or handling money of the City in connection with the management and operation of the System shall be bonded in an amount commensurate with the funds they handle and in an amount sufficient to protect the City from loss. F. The City will not sell or otherwise dispose ofthe Project unless contemporaneously with such sale or disposal there shall be paid from the Bond Account a sum sufficient to pay the principal of and interest on all Parity Bonds then outstanding to the date or dates on which they first may be redeemed, nor will it sell or otherwise dispose of any part ofthe Project which is material to the production of Pledged Revenues unless, in the opinion of the Consulting Engineer, the remaining Project will generate Pledged Revenues sufficient to enable the City to comply with the requirements of this resolution. G. The City will not at any time create or permit to accrue or exist any lien or other encumbrance or indebtedness upon the Project or the Pledged Revenues, or any part thereof, or upon any Account or Subaccount created hereunder, prior or superior to the lien thereon for the payment of the Parity Bonds, and will pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, ifunpaid, might become a lien or charge upon the Pledged Revenues, or any part thereof, or upon any Account or Subaccount in the hands of the City, prior or superior to the lien ofthe Parity Bonds or which might impair the security ofthe Parity Bonds. H. The City will not expend any of the Pledged Revenues or the proceeds of any indebtedness payable from Pledged Revenues for any additions, betterments or improvements to the Project which are not economically sound and which will not properly and advantageously contribute to the conduct of the business of the Project in an efficient and economical manner. GIRESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 13 1. At any and all times the City shall, as far as it may be authorized by law, make, do, execute, acknowledge, and deliver all further resolutions, acts, deeds, conveyances, assignments, I transfers, and assurances as may be necessary or desirable for better assuring, conveying, granting, pledging, assigning, and confirming all and singular the rights, revenues, and other funds, moneys, and securities pledged or assigned under the resolution, or intended so to be, or which the City may become bound to pledge or assign. J. The City is duly authorized under all applicable laws to create and issue the Bonds and to adopt this resolution and to pledge the Pledged Revenues and other funds, moneys, and securities purported to be pledged by this resolution in the manner and to the extent provided in this resolution. The Pledged Revenues and other funds, moneys, and securities so pledged are and will be free and clear of any pledge, lien, charge, or encumbrance thereon or with respect thereto prior to, or of equal rank with, the pledge and assignment created by this resolution, and all corporate or other action on the part ofthe City to that end has been and will be duly and validly taken. The Bonds and the provisions of this resolution are and will be the valid and legally enforceable obligations ofthe City in accordance with their terms and the terms ofthis resolution. The City shall at all times, to the extent permitted by law, defend, preserve, and protect the pledge of the Pledged Revenues and the other funds, moneys, and securities pledged under this resolution and all the rights of the Bondholders under this resolution against all claims and demands of all persons whomsoever. K. The City has, and will have so long as any Parity Bonds are outstanding, good right, and lawful power to maintain and repair the Project and to collect fees and other charges related to I the Project. L. The City shall do and perform or cause to be done and performed all acts and things required to be done or performed by or on behalf of the City under the laws of the State of Alaska and this resolution. Section 16. Parity Bonds. In all events the City may issue Future Parity Bonds to finance, design, acquire, construct and equip other facilities for hospital and long term care services in Seward, Alaska. The City hereby covenants with the owners of each ofthe Parity Bonds for so long as the same remain outstanding that it will not issue any bonds having a greater or equal lien on Pledged Revenues to pay and secure the payment of the principal of and interest on such bonds than the lien created thereon to pay and secure the payment of the principal of and interest on the Parity Bonds except that the City reserves the right to issue Future Parity Bonds as follows: A. For the purpose of acquiring, designing, constructing, equipping and installing facilities for healthcare related services or additions, betterments and improvements to and extensions of, acquiring necessary property and equipment for, or making necessary replacements or repairs to the Proj ect, for funding interest and reserves and for the purpose of refunding at or prior to their redemption or maturity any outstanding revenue bonds or notes ofthe City that have a lien on Pledged Revenues for the payment ofthe principal thereof and interest thereon junior and inferior to the lien on Pledged Revenues for the payment ofthe principal of and interest on the Bonds and upon I compliance with the following conditions: G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 14 I I I (1) The City will covenant in each resolution authorizing the issuance of Future Parity Bonds that it will pay into and maintain in the Reserve Subaccount the amounts required by Section 13 ofthis resolution to be paid into and maintained in said Subaccount in the event Future Parity Bonds are issued. The City also will covenant in each such resolution that it will maintain and collect Net Revenues sufficient to meet the same requirements as are contained in subsection A of Section 15 of this resolution; (2) At the time ofthe issuance of such Future Parity Bonds the City shall have on file a certificate from a Consulting Engineer showing that the "annual income available for revenue bond debt service," as hereinafter set forth, shall be at least equal to 1.20 times the maximum Annual Debt Service Requirement on all outstanding Parity Bonds and the Future Parity Bonds being issued. Such "annual income available for revenue bond debt service" shall be determined by adding the following: (i) The historical Pledged Revenues for any 12 consecutive months out of the 24 months immediately preceding the month of delivery of the Future Parity Bonds being issued. (ii) The estimated annual Pledged Revenues to be derived from the operation of any additions or improvements to or extensions of the facilities under construction but not completed at the time of such certificate and not being paid for out of the proceeds of sale of such Future Parity Bonds being issued, and which Pledged Revenues are not otherwise included in any of the sources of Pledged Revenues described in this subsection (2). (iii) The estimated Pledged Revenues to be derived from the operation of any additions and improvements to or extensions of the facilities being paid for out of the proceeds of sale of such Future Parity Bonds being issued. The computation of "annual income available for revenue bond debt service" shall be adjusted to reflect the Net Revenues on the date of such certificate. Notwithstanding the preceding provisions of this subparagraph (2), the certificate referred to above shall not be required if one-half of Pledged Revenues, verified from certain financial statements of the City, for a period of any consecutive two out of the three Fiscal Years immediately preceding the issuance and delivery of such Future Parity Bonds, was equal to at least 1.20 times the maximum Annual Debt Service required to be paid in any Fiscal Year succeeding the date of issuance of such Future Parity Bonds on all outstanding Parity Bonds and the Future Parity Bonds being issued. Further, notwithstanding the preceding provisions ofthis subparagraph (2), Future GIRESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 15 Parity Bonds may be issued if the City shall have on file a certificate from a Consulting Engineer stating that the Pledged Revenues for the next full Fiscal Year after the initial I operation of any additions or improvements to or extensions ofthe System being paid for out of the proceeds of the Future Parity Bonds will be at least equal to 1.20 times the maximum Annual Debt Service Requirement on all outstanding Parity Bonds and the Future Parity Bonds being issued and that at the time of the issuance of such Future Parity Bonds there is no deficiency in the Debt Service Subaccount or Reserve Subaccount. B. For the purpose of refunding at or prior to their redemption or maturity any part or all ofthe then outstanding Parity Bonds if the issuance of such refunding Future Parity Bonds does not require a greater amount to be paid out of Pledged Revenues for principal and interest over the life of such refunding Future Parity Bonds being refunded, and if the conditions required in subsections (a)(1) and (a)(3) of this section are complied with. Proceeds of Parity Bonds to be used to fund interest or reserves shall be deposited in the Debt Service Subaccount or the Reserve Subaccount, as the case may be. Section 17. Subordinate Lien Bonds. Nothing contained herein shall prevent the City from issuing revenue bonds or notes which are a charge upon Pledged Revenues subordinate or inferior to the payments required herein to be made therefrom into the Debt Service Subaccount and Reserve Subaccount, or from issuing long term care facility revenue bonds to refund maturing bonds for the payment of which moneys are not otherwise available. I Section 18. Covenants Regarding Arbitrage and Private Activity Bonds. The City hereby covenants that it will not make any use ofthe proceeds of sale ofthe Bonds or any other funds ofthe City which may be deemed to be proceeds of such Bonds pursuant to Section 148 of the Code which will cause the Bonds to be Aarbitrage bonds@ within the meaning of said section and the regulations applicable thereunder. The City will comply with the requirements of Section 148 of the Code (or any successor provision thereof applicable to the Bonds) and the applicable regulations thereunder throughout the term of the Bonds. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bonds to constitute Aprivate activity bonds@ under Section 141 of the Code. The City will take any action determined by the City, after consultation with its bond counsel, to be legal and practicable and required to be taken by the City under future federal laws or regulations in order to maintain the exemption of the interest on the Bonds from federal income taxation. Section 19. Defeasance. In the event that money and/or Acquired Obligations maturing at such time or times and bearing interest to be earned thereon in amounts sufficient to redeem and retire any or all ofthe Bonds in accordance with their terms are set aside in a special trust account in the Bond Account to effect such redemption or retirement and such money and the principal of and interest on such obligations are irrevocably set aside and pledged for such purpose, then no further payments need to be made into the Bond Account for the payment ofthe principal of and interest on I such Bonds, and such Bonds shall cease to be entitled to any lien, benefit or security of this G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 16 I I I resolution except the right to receive the funds so set aside and pledged, and such Bonds shall be deemed not to be outstanding hereunder or under any other resolution authorizing the issuance of Future Parity Bonds. Section 20. General Authorization to Municipal Officials. After the sale ofthe Bonds, the proper officials ofthe City are hereby authorized and directed to do everything necessary to complete such sale and to deliver the Bonds to the purchaser thereof upon payment of the purchase price thereof. Section 21. Amendatory and Supplemental Resolutions. A. The Council from time to time and at any time may pass a resolution or resolutions supplemental hereof, which resolution or resolutions thereafter shall become a part ofthis resolution, for anyone or more of the following purposes: (1) To add to the covenants and agreements of the City contained 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 interest of the owners of the Parity Bonds. Any such supplemental resolution of the Council may be adopted without the consent of the owner of any Parity Bonds at any time outstanding, notwithstanding any of the provisions of subsection B of this section. B. With the consent ofthe owners of not less than 60% in aggregate principal amount of the Parity Bonds at the time outstanding, the Council may pass 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 Parity Bonds, or reduce the rate of interest thereon, or reduce the amount or change the date of any sinking fund installment requirement, 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 owner of each Parity Bond so affected; or (2) Reduce the aforesaid percentage of owners of Parity Bonds required to approve any such supplemental resolution without the consent of the owners of all ofthe Parity Bonds then outstanding; or G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 17 (3) Remove the pledge and lien ofthis resolution on Pledged Revenues. I It shall not be necessary for the consent of the owners of Parity Bonds under this subsection B to approve the particular form of any proposed supplemental resolution, but it shall be sufficient if such consent shall approve the substance thereof. C. Upon the passage of any supplemental resolution pursuant to the provisions of this section, this resolution shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations ofthe City under this resolution and all owners ofthe Parity Bonds outstanding hereunder shall thereafter be determined, exercised and enforced thereunder, subject in all respects to such modification and amendment, and all the terms and conditions of any such supplemental resolution shall be deemed to be part of the terms and conditions of this resolution for any and all purposes. D. Parity Bonds executed and delivered after the execution of any supplemental resolution adopted pursuant to the provisions of 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 Parity Bonds so modified as to conform, in the opinion of the Council, to any modification of this resolution contained in any such supplemental resolution, may be prepared by the City and delivered without cost to the owners of Parity Bonds then outstanding, upon surrender for cancellation of such Parity Bonds in equal aggregate principal amounts. Section 22. Disposition ofthe Proceeds of Sale ofthe Bonds. The proceeds received from the sale of the Bonds (exclusive of accrued interest which shall be paid into the Debt Service Subaccount) shall be deposited into the fund ofthe City designated by the Finance Director and shall be used to pay all costs allocable to the issuance of the Bonds and to undertake improvements authorized by Section 3 of this resolution. I Section 23. Loan Agreement and Continuing Disclosure. The City Manager and Finance Director are each authorized to enter into a Loan Agreement with the Alaska Municipal Bond Bank Authority providing for and relating to the sale of the Bonds to the Alaska Municipal Bond Bank Authority, and a Continuing Disclosure Certificate, and the City Manager and Finance Director are each authorized to cause the same to be executed and delivered on behalf of the City. Section 24. Severability. If anyone or more of the covenants or agreements provided in this resolution to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements shall be null and void and shall be deemed separable from the remaining covenants and agreements in this resolution and shall in no way affect the validity of the other provisions ofthis resolution or ofthe Bonds. Section 25. Effective Date. This resolution shall become effective immediately provided I that no Parity Bonds shall be issued under this resolution until 30 days from the date hereof. G:\RESOLUTIONS\2006\06-28 LICF BONDS RES.DOC Page 18 I I I PASSED AND APPROVED by the City Council ofthe City of Seward, Alaska, this 13th day of March, 2006. THE CITY OF SEWARD, ALASKA Ltc-~ Vanta Shafer, Mayor AYES: NOES: ABSENT: ABSTAIN: Valdatta, Dunham, Lorenz, Schafer, Thomas, Bardarson, Shafer None None None ATTEST: ---'~/n ~J h'>C\ J:.~S: ~cf\ - ~, City Clerk ",Inn,,,,, (City Seal) ,~,\, Ot= 8[;11/'-"" ~ ~~.............;.r;,.y.L\ "; I c}....c?POJtq~..?.o ~ !lj .',0 '~. ~ ~ :'~~ -0- ().~ "-: ~ . . - = · \' SE1\L !.:: , . .. - -.-:- ~ . . .. ,,- ~...~ ....q,.... ~ -"'-~ "'/~~ 1 \~..., ,-3"$ ,~qOFI~\J..~~~\t ~"'II""~ G:\RESOLUTIONS\2006\06-28 LTCF BONDS RES.DOC Page 1 9 Council Agenda Statement Meeting Date: March 13, 2006 Through: Clark Corbridge, City Manager From: Kristin Erchinger, Finance Director Agenda Item: Long-Term Care Facility Revenue Bonds BACKGROUND & JUSTIFICATION The City of Seward entered into an agreement with the Women’s Division of Global Ministries of the United Methodist Church effective April 9, 2003, to lease the existing Wesley Rehabilitation and Care Center, for the purposes of co-locating the local hospital and long-term care facilities. The City of Seward entered into a Management and Operating Agreement with Providence Health System Alaska, to operate the co-located Providence Seward Medical and Care Center, effective April 9, 2003, with the understanding that the City would make every effort to expedite the replacement of the dilapidated long-term care facility, which had exceeded its useful life. The City was awarded a $1.6 million grant from the Denali Commission in September, 2004, to plan and design the new long-term care facility. At this time, the project has completed the 35% schematic design phase, with site work expected to start in May, 2006. Project completion is estimated in October, 2007. The project will consist of five buildings; four residential homes each providing ten private rooms with bathrooms, and one commons building to house therapies, administrative offices, and building maintenance facilities. The City of Seward has engaged the services of Anderson Cronen & Lohr Healthcare Consultants, LLC, and Financial Consultants of Alaska, to perform the pro forma financial projections for the co-located facility (including capital construction costs.) Preliminary analyses demonstrate the financial viability of the co-located entity, including its ability to cover the costs of annual debt service on the new facility. The City intends to issue $25 million in Revenue Bonds to be repaid through revenues of the co-located entity, and since a substantial portion of user fees come from Medicaid reimbursements, the revenue stream for repayment is considered stable. A final pro forma analysis will be conducted for inclusion in the Bond Bank Application seeking financing for the project. The City of Seward has $5,075,000 in outstanding general obligation bond debt on the 1996 Hospital Bonds, as of January 1, 2006. These bonds were backed by the full faith and credit of the City, and were intended to be repaid through a one percent sales tax implemented in 1982, which generates approximately $800,000 annually. The current annual debt service payments on this bond range from $742,000 to $848,000 per year, with the bonds maturing in April, 2013. Upon maturity of these bonds, it is possible that this revenue stream could be used to offset healthcare facility costs, if necessary. CONSISTENCY CHECKLIST Where applicable, this agenda statement is consistent with the Seward City Code, Charter, Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures. Comprehensive Plan (2006): The Comprehensive Plan supports expanding health care capacity in the community: We value effective, accessible, and affordable healthcare (Health Care, Vol. I) Explore a new long-term care facility (Vol. I) Strategic Plan (1999): The Strategic Plan supports maintaining and enhancing medical services (page 19). Other: Resolution 2006- Long-Term Care Facility Revenue Bonds Page Two FISCAL NOTE The City intends to issue $25 million in Revenue Bonds, with revenues from the co-located hospital and long- term care facility supporting repayment of the debt service. Annual debt payments on the bonds are estimated to be between $1.8 and $2.1 million, depending on the final amortization period selected for repayment. Approved by Finance: ___________________________________ RECOMMENDATION City Council approve Resolution 2006- , authorizing the City of Seward to issue Revenue Bonds in a principal amount not to exceed $25,000,000, 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.