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HomeMy WebLinkAboutRes2005-057 Sponsored by: Corbridge .... CITY OF SEWARD, ALASKA RESOLUTION 2005-57 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY OF SEWARD TO ISSUE ELECTRIC REVENUE REFUNDING BONDS, 2005 IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $2,300,000 TO REFUND CERTAIN OUTSTANDING ELECTRIC REVENUE 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 ofthe Alaska Constitution may exercise all legislative power not prohibited by law or the charter ofthe 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 the principal amount of $2,265,000 of Electric Revenue Bonds, 1995 ofthe City maturing on or after June 1,2006 (the "1995 Bonds") issued under Resolution No. 95-048 ("Prior Bond Resolution") 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 ofthe 1995 Bonds (the "Refunded Bonds") whose refunding the City Manager or City Finance Director determines will produce the debt service savings specified in this resolution, by the issuance of electric revenue refunding bonds in the aggregate principal amount of not to exceed $2,300,000 (the "Bonds"); and WHEREAS, Section 11.2( a) ofthe home rule charter ofthe City provides that the City may issue revenue refunding bonds without ratification ofthe voters; and WHEREAS, Section 21 ofthe Prior Bond Resolution provides for the issuance of refunding Parity Bonds as defined therein on the conditions stated therein; 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 Bond Bank and the City intend to enter into an Amendatory Loan Agreement, which amends the Loan Agreement dated as of June 1, 1995 between the Bond Bank and - the City, to provide for the refunding ofthe Refunded Bonds through their exchange for the Bonds to be issued by the City, and related matters. NOW, THEREFORE, BE IT RESOLVED: ; ! . ...J Section 1. Definitions. The following terms shall have the following meanings in this resolution: (A) "Amendatory Loan Agreement" means the Amendatory Loan Agreement between the City and the Bond Bank, amending the Loan Agreement to provide for the refunding ofthe Refunded Bonds through their exchange for the Bonds, and related matters. (B) "Bond" or "Bonds" means any ofthe "Electric Revenue Refunding Bonds, 2005" 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 Bonds, 2005 Series One of the Bond Banle (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. (F) "City" means the City of Seward, a municipal corporation of the State of Alaska, organized as a home rule city under Title 29 of the Alaska Statutes. . ....J (G) "City Finance Director" means the Finance Director ofthe City, and any person duly authorized to act in that capacity as Interim Finance Director or Acting Finance Director. (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 ofthe City of Seward, as the same shall be duly and regularly constituted from time to time. (J) "Fiscal Year" means the 12-month period commencing January 1 each year through and including December 31 of the same year. (K) "Loan Agreement" means the Loan Agreement between the City and the Bond Bank dated as ofJune 1, 1995, as amended by the Amendatory Loan Agreement. (L) "1995 Bonds" means the $2,265,000 of Electric Revenue Bonds, 1995 of the City maturing on or after June 1, 2005. .....Ii (M) "Prior Bond Resolution" means Resolution 95-048 ofthe City. .... (N) "Refunded Bonds" means the maturities of the 1995 Bonds whose refunding is approved by the City Manager or City Finance Director under Section 13. (0) "Registered Owner" means the person named as the registered owner of a Bond in the Bond Register. (P) "Registrar" means the City Finance Director. (Q) "Resolution" means this Resolution No. 2005-57 of the City. Section 2. Authorization of Bonds and PU1])ose ofIssuance. For the purpose of effecting the refunding by exchange of the Refunded Bonds in the manner set forth hereinafter and in the Amendatory Loan Agreement, the City hereby authorizes and determines to issue and sell the Bonds in the aggregate principal amount of not to exceed $2,300,000. The Bonds are Parity Bonds as defined in the Prior Bond Resolution. The following provisions of the Prior Bond Resolution shall apply to Bonds as defined in the Prior Bond Resolution: (a) The following definitions in Section 1 thereof: ~ Acquired Obligations Annual Debt Service Requirement Arbitrage and Tax Certificate Bond Account Code Consulting Engineer Debt Service Subaccount Future Parity Bonds Government Obligations Gross Revenues Net Revenues Operating Expenses Parity Bonds Reserve Subaccount Reserve Subaccount Requirement System Electric Account (b) The following sections of the Prior Resolution: ..... Section 5. Place and Medium of Payment. Section 6. Registration. Section 7. Redemption. Section 9. Execution of Bonds. Section 10. Mutilated, Destroyed, Stolen or Lost Bonds. Section 11. Electric Account and Priority of Use of Gross Revenues. Section 12. Electric Revenue Bond Account and Subaccounts Therein. Section 13. Reserve Subaccount. Section 14. Investment of Certain Accounts. Section 15. Specific Covenants. Section 16. Parity Bonds. Section 17. Subordinate Lien Bonds. Section 18. Covenants Regarding Arbitrage and Private Activity Bonds. Section 19. Defeasance. Section 20. General Authorization to Municipal Officials. '( " i ... In addition the City covenants that it will pay into and maintain the Reserve Subaccount in the amounts required by Section 13 of the Prior Resolution to be paid into and maintained in said subaccount in the event Parity Bonds are issued. The City also covenants that it will establish, maintain and collect rates and changes sufficient to meet the same requirements as are contained in Subsection A of Section 15 of the Prior Resolution. Section 3. Obligation of Bonds. Gross Revenues and the moneys in the Electric Account are hereby pledged to the Bonds and shall be used only as provided in Section 11 and 12 of the Prior Bond Resolution. i j ....J Section 4. Designation. Maturities. Interest Rates. and Other Details of Bonds. The Bonds shall be designated "City of Seward, Alaska, Electric Revenue Refunding Bonds, 2005." 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. A portion of the principal of the Bonds shall mature annually commencing on a date in or after 2006 and continuing no later than 2035 as selected by the City Manager and the Finance Director. The Bonds shall bear interest from their date, payable commencing on a date not later than twelve months after the issuance thereof and semi-annually thereafter in each year. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. 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 Agreement. ; ..J Section 5. Optional Redemption. The Bonds are subject to optional redemption by the City as described in the Loan Agreement. ..... 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 ofthe State of Alaska) NO. $ ELECTRIC REVENUE REFUNDING BOND, 2005 REGISTERED OWNER: 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, 200_ and semiannually thereafter on the 1 st days of _ and of each year, at the rates per annum as follows: Year Principal Amount Interest 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 Agreement between the Bond Bank and the City, dated as of June 1, 1995, as amended by the Amendatory Loan Agreement dated , 2005 (the "Loan Agreement"). 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 ofthe close of business on the fifteenth day of the month preceding 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 oftwelve 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. J This Bond is one of the Electric Revenue Refunding Bonds, 2005 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 electric revenue bonds issued by the City, and is issued under Resolution 20OS-57 of the City entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD AUTHORIZING THE CITY OF SEWARD TO ISSUE ELECTRIC REVENUE REFUNDING BONDS, 2005 IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $2,300,000 TO REFUND CERTAIN OUTSTANDING ELECTRIC REVENUE BONDS OF THE CITY, FIXING CERTAIN DETAILS OF SUCH BONDS AND AUTHORIZING THEIR SALE AND PROVIDING FOR RELATED MATTERS (the "Resolution"). This Bond is subject to redemption prior to maturity as described in the Loan Agreement. This Bond is transferable as provided in the Resolution, (i) only upon the bond register ofthel City, and (ii) upon surrender of this Bond together with a written instrument of transfer duly .....I 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 therefore 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. The City does hereby pledge to the holder of this Bond and bind itself to set aside out of Gross Revenues and the money in the Electric Account ofthe City and to pay into the Bond Account the various anlounts required by the Prior Bond Resolution to be paid into and maintained in the Bond Account all within the times provided in the Prior Bond Resolution. The City has further pledged and bound itself to pay into such Electric Account as collected all Gross Revenues. The pledge of Gross Revenues and moneys in the Electric Account contained herein and in the Prior Bond Resolution may be discharged by making provision, at any time, for the payment of the principal of and interest on this Bond in the manner provided in the Prior Bond Resolution. The pledge of amounts to be paid out of the Electric Account into the Bond Account is hereby declared to be a lien and charge upon the money in the Electric Account and Gross Revenues I -l ..... superior to all other charges of any kind or nature except Operating Expenses (other than payments in lieu of City taxes) and equal in rank to the lien and charge thereon for amounts pledged to the payment of any Future Parity Bonds hereafter issued. The City has further bound itself to maintain the System in good condition and repair to operate the same in an efficient manner and at a reasonable cost, and to establish, maintain and collect rates and charges for electric service and all other services or facilities furnished or supplied by the System in each fiscal year for as long as any Parity Bonds are outstanding that will provide Net Revenues in an amount equal to at least 1.30 times the amount of the Annual Debt Service Requirement for such year on all outstanding Parity Bonds. 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 ofthe 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 itsrerk' all as of the. day of 2005. / /~? " . A T T EST: ",UIIII'" ......" Or S~~"'#. ...... ~--{ ......... '4"':~ $ v ..::of\POPl:'.".':>'() ~ . .. ,,~v- .""V'~. "=' Johanna Dollerhide, Acting City Cler~ f"'" - :0\ i .. , SEAL . · :.: :.: : ~ : . - . -.- .- -:a ..~ l ~ ~ (~~".~1v"1 ,\C)...~" ,"r' $ '..... sl ~ -. c;: .. ~ lti -c}'~::~'~~'O~I~~~~j;o."''i Section 7. Execution. The Bonds sn~~tfl~~d in the name ofthe City by the Mayor or her 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 ofthe Bond or shall not have held office on the date of the Bond. (City Seal) .... Section 8. Designation of Refunded Bonds. The City Manager and the City Finance Director each is authorized to designate which maturities ofthe 1995 Bonds authorized to be refunded in this I Resolution shall be refunded, provided that the refunding of the 1995 Bonds so designated shall .J realize a debt service savings of at least $180,000, net of all issuance costs and underwriting discount, on a present value basis. Section 9. 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 ofthe interest on the Bonds from gross income for federal income tax purposes. The City covenants that it will make no use ofthe proceeds ofthe 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 10. 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 anyone or more ofthe 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 shalI not adversely affect the interests of the Registered Owners ofthe Bonds. ....i 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 ofpayments of interest from their due date, or reduce the amount ofthe 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 ofthe Registered Owners of all of the Bonds then outstanding. 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 ofthis 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 11. Exchange of Bonds: Amendatory Loan Agreement. 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 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 ofthe Bonds shall not exceed the interest rate on the corresponding maturity ofthe Bond Bank Bonds. Based upon the foregoing determinations, the City Manager and the City Finance Director each is authorized to negotiate and execute an Amendatory Loan Agreement. 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 an Amendatory Loan Agreement within 180 days from the effective date of this Resolution, the Amendatory Loan Agreement may not be executed on behalf of the City without further authorization from the Council. ... Section 12. Official Statement. The information in a preliminary Official Statement ofthe 1 Bond Bank relating to the City and the Bonds may be modified as the City Manager or City Finance ...,I Director may determine. 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 pertain to the City and the Bonds. Section 13. 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 execute a Continuing Disclosure Statement and 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 14. Miscellaneous. No recourse shall be had for the payment ofthe principal of or the interest on the Bonds or for any claim based thereon or on this Resolution against any member of the Councilor 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 do not and shall not create or constitute an indebtedness or obligation, either legal, moral or otherwise, of the State or of any political subdivision thereof, except the City. Section 15. Severability. If anyone 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 ofthis Resolution or of the Bonds. . f ...J Section 16. Effective Date. This resolution shall take effect 30 days following adoption by the Seward City Council. PASSED AND APPROVED by the City Council ofthe city of Seward, Alaska this 27th day of June, 2005. l t '- - .,,::::_------ Branson, Vice Mayor ITY OF SEWARD, ALASKA ? AYES: NOES: ABSENT: ABSTAIN: Valdatta, Clark, Dunham, Branson None Amberg, Lorenz, Shafer None .... ilo.o .... .... CITY OF SEWARD, ALASKA RESOLUTION 2005-57 ATTEST: Johanna Dollerhide, Acting City Cl;;-<- (City Seal) \,""11'", ,...." Or SE::v."", ~.. t<..~ .......... ~~ I, l (},"fF'#O~"', <:) \. ....~ ~'.'- : I~ -+- ~ ~ -. AL ~ . =.: BE :.: .. . . .. .. . . .. ~ \ -+- i · ... .y .. !II ~ I.fl.'.::'u", ..~......:;r.1 I.....?f~...~.'I....~<O ...... -'P~ 1: OF p..\.: "I' ,'....."", Agenda Statement Meeting Date: June 27, 2005 To: Mayor Shafer and Council Members Through: Clark Corbridge, City Manager From: Melody Moline, Acting Finance Director Agenda Item: Refinancing the 1995 Electric Revenue Bond BACKGROUND & JUSTIFICATION: The City has examined the current interest rate environment, and the estimated net present value savings of the refunding. It appears as though we can maximize refunding savings at this time. The Alaska Municipal Bond Bank agrees that the 1995 Electric Revenue Bond is a good candidate for refinancing given the current interest rate environment. In the process of their review, it was determined that the City of Seward could potentially realize a net present value savings of at least $180,000 by refunding the aggregate principal amount of not to exceed $2,300,000. The attached resolution gives the administration a 180-day period in which to finalize an amended loan agreement with the Bond Bank should the current interest rate environment be favorable enough to realize at least a $180,000 net present value savings, net of bond issue costs, to the City. In the event that the refunding does not realize at least $180,000 savings to the City, the City will not pursue the refunding. The City must carefully consider the decision to refund in order to avoid lost opportunity costs of refunding at a future date when the refunding may potentially net a higher overall savings. However, long-term interest rates are at historic low levels and the market conditions make it a good opportunity for realizing a $180,000 savings. CONSISTENCY CHECKLIST: Yes No 1. Comprehensive Plan ___ ___ 2. Strategic Plan ___ ___ 3. Other ___ ___ 4. Not Applicable _X_ ___ FISCAL NOTE: The City administration will pursue the refunding of the 1995 Electric Revenue Bond only if there is a net present value savings of at least $180,000, net of bond issue costs. Approved by Finance Department _______________________________ RECOMMENDATION: Approve Resolution 2005-57 authorizing the City of Seward to issue electric revenue refunding bonds in the principal amount of not to exceed $2,300,000 by amending the terms of the 1995 Bonds, authorizing the execution of an amendment to the loan agreement between the City of Seward and the Alaska Municipal Bond Bank, authorizing the sale of such bonds, and providing for related matters.