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HomeMy WebLinkAbout12142015 City Council Special Meeting PacketSpecial City Council Meeting December 14, 2015 City Council Chambers 6: 30 p.m. The City of Seward, Alaska December 14, 2015 Jean Bardarson Mayor Term Expires 2017 Marianna Keil Vice Mayor Term Expires 2016 Ristine Casagranda Council Member Term Expires 2016 David Squires Council Member Term Expires 2017 Dale Butts Council Member Term Expires 2016 Sue McClure Council Member Term Expires 2017 Deborah Altermatt Council Member Term Expires 2017 James Hunt City Manager Johanna Kinney City Clerk Eric Wohlforth City Attorney City of Seward, Alaska December 14, 2015 Special City Council Meetin 6: 30 p. m. Council Chambers 1. Call To Order 2. Pledge Of Allegiance 3. Roll Call 4. Citizen Comments On Any Subject Except Those Items Scheduled For Public Hearing. [Those Who Have Signed In Will Be Given The First Opportunity To Total Time For This Agenda Item.] 5. Approval Of Agenda And Consent Agenda [Approval of Consent Agenda passes all routine items indicated by asterisk (*). ConsentAgenda items are not considered separately unless a council member so requests. In the event of such a request, the item is returned to the Regular Agenda.] 6. Special Orders, Presentations And Reports — None 7. New Business A. Resolutions 1. Resolution 2015-114, Providing For The Issuance Of An Electric Revenue Refunding Bond Of The City In The Aggregate Principal Amount Of Not To Exceed $6,200,000 Refunding Certain Outstanding Electric Revenue Bonds Of The City; Fixing Certain Details Of Said Bonds And Providing For Related Matters............................................................. Pg. 5 2. Resolution 2015-115, Providing For The Issuance Of A Long Term Care Facility Revenue Refunding Bond Of The City In The Principal Amount Of Not To Exceed $25,900,000 To Refund Certain Outstanding Long Term Care Facility Revenue Bonds Of The City; Fixing Certain Details Of Such Bonds And Authorizing And Providing For Related Matters .......................... Pg. 36 3. Resolution 2015-116, Approving A Legal Services Agreement With Birch Horton Bittner & Cherot........... Pg. 67 Council Agenda Page I 8. Council Comments 9. Citizen Comments 10. Council And Administration Response To Citizen Comments 11. Adjournment City of Seward, Alaska Council Agenda December 14, 2015 Page 2 SPECIAL MEETING REQUEST Pursuant to Seward City Code 2.10.030 (2), this' is to serve as the written notice calling a Special City Council Meeting on Monday, December 14, 2015 at 6:30 p.m. for the purpose of: 1. Resolution 2015-114, Providing For The Issuance Of An Electric Revenue Refunding Bond Of The City In The Aggregate Principal Amount Of Not To Exceed $6,200,000 Refunding Certain Outstanding Electric Revenue Bonds Of The City; Fixing Certain Details Of Said Bonds And Providing For Related Matters. 2. Resolution 2015-115, Providing For The Issuance Of A Long Term Care Facility Revenue Refunding Bond Of The City In The Principal Amount Of Not To Exceed $25,900,000 To Refund Certain Outstanding Long Term Care Facility Revenue Bonds Of The City; Fixing Certain Details Of Such Bonds And Authorizing And Providing For Related Matters. 3. Resolution 2015-116, Approving A Legal Services Agreement With Birch Horton Bittner & Cherot. Signed this 11th day of December, 2015. Mayor or City Manager or 2 Council Members Upon this request the City Clerk will give due and proper notice as required by SCC 2.10.032 (No business shall be transacted other than stated above) 116 NOTICE OF SPECIAL MEETING NOTICE IS HEREBY GIVEN that the Seward City Council will meet in a special meeting on Monday, December 14, 2015 at 6:30 p.m. for the purpose of: 1. Resolution 2015-114, Providing For The Issuance Of An Electric Revenue Refunding Bond Of The City In The Aggregate Principal Amount Of Not To Exceed $6,200,000 Refunding Certain Outstanding Electric Revenue Bonds Of The City; Fixing Certain Details Of Said Bonds And Providing For Related Matters. 2. Resolution 2015-115, Providing For The Issuance Of A Long Term Care Facility Revenue Refunding Bond Of The City In The Principal Amount Of Not To Exceed $25,900,000 To Refund Certain Outstanding Long Term Care Facility Revenue Bonds Of The City; Fixing Certain Details Of Such Bonds And Authorizing And Providing For Related Matters. 3. Resolution 2015-116, Approving A Legal Services Agreement With Birch Horton Bittner & Cherot. The meeting will be conducted -in City Council Chambers, City Hall, 410 Adams Street, Seward. All interested persons are invited to attend. POSTED: Friday, December 11, 2015 City Hall bulletin board U.S. Post Office Harbormaster's Building H . JOHANNA KINNEY CITY CLERK Sponsored by: Hunt CITY OF SEWARD, ALASKA RESOLUTION 2015-114 A RESOLUTION OF THE CITY COUNCIL OF THE CITY,OF SEWARD, ALASKA, PROVIDING FOR THE ISSUANCE OF AN ELECTRIC REVENUE REFUNDING BOND OF THE CITY IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $6,200,000 REFUNDING CERTAIN OUTSTANDING ELECTRIC REVENUE BONDS OF THE CITY; FIXING CERTAIN DETAILS OF SAID BONDS AND PROVIDING FOR RELATED MATTERS WHEREAS, the City of Seward, Alaska (the "City") is a home rule city and under Section 11 of Article X of the Alaska Constitution may exercise all legislative power not prohibited by law or the Charter of the City, and it has been determined that the matters set forth in this resolution are not prohibited by law or the Charter; and WHEREAS, there is now outstanding $5,245,000 principal amount of Electric Revenue Bonds, 2008 of the City maturing on or after June 1, 2016, issued under Resolution No. 2008- 050 (the "2008 Bonds"); and WHEREAS, the Council finds that it is in the best interest of the City to provide for the refunding, including the payment of principal of and interest on, those maturities of the 2008 Bonds (the "Refunded Bonds") of which the City Manager or City Finance Director determines will produce the debt service savings specified in this resolution, by the issuance of an Electric Revenue Refunding Bond, in the aggregate principal amount of not to exceed $6,200,000 (the 'Bond"); and WHEREAS, Section 11.2(a) of the home rule Charter of the City provides that the City may issue refunding bonds without ratification of the voters; and WHEREAS, the Council finds that it is necessary and appropriate to delegate to each of the City Manager and City Finance Director authority to determine the maturity amounts, interest rates, and other details of the Bond, and to determine other matters pertaining to the Bond that are not provided for in this resolution; and WHEREAS, the Alaska Municipal Bond Bank and the City intend to enter an Amendatory Loan Agreement, which will amend the Loan Agreement dated as of July 1, 2008 (the "Loan Agreement") between the Alaska Municipal Bond Bank and the City to provide for the refunding of the Refunded Bonds through their exchange for the Bond and related matters. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OY SEWARD, ALASKA: 5 CITY OF SEWARD, ALASKA RESOLUTION 2015-114 Section 1. Purpose. The purpose of this resolution is to authorize the issuance and sale of not to exceed $6,200,000 of an Electric Revenue Refunding Bond, to fix the form, covenants, and method of sale of said bond, to provide for establishing the amount, maturities, interest rates, redemption rights and other terms of the bond and to fix the conditions under which additional revenue bonds may be authorized and issued on a parity with the bond. 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. "Amendatory Loan Agreement" means an agreement amending the terms of the Loan Agreement. "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 of the Bond setting forth the City's reasonable expectations as to the use of Bond proceeds. "Bond Account" means the Electric Revenue Bond Account as defined in Section 12 hereof. "Bond Bank" means the Alaska Municipal Bond Bank Authority. "Bond Bank Bonds" means the bonds issued by the Bond Bank, the proceeds of which will be used to, among other things, refund the Refunded Bonds. "Bond Register" means the registration books maintained by the Registrar containing the names and addresses of the owners of the Bonds. "Bond" means the City of Seward, Alaska, Electric Revenue Refunding Bond, 2016. "Bond Year" has the meaning given such term in the Arbitrage and Tax Certificate. "Charter" means the Home Rule Charter of the City, as the same may be amended from time to time. CITY OF SEWARD, ALASKA RESOLUTION 2015-114 "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 licensed to practice in the State of Alaska, retained and appointed pursuant to Section 16 hereof. "Council" means the general legislative authority of the 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 Electric revenue bonds, notes, or other obligations of the City, other than the 2008 Bonds or the Bond, 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 the Bond Account and Reserve Subaccount to pay and secure the payment of the principal of and interest on the Bond. '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 of the 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. "Gross Revenues" means all rates and charges and other income (including income from Electric Account investments), in each case derived by or for the account of the City from the ownership, leasing or operation of the System, except proceeds from the sale of bonds or notes, any grants received for the City of Seward Electric Utility and interest received and profits derived from the investment of moneys obtained from such sources or from moneys held in any fund solely to pay or secure the payment of any bonds or notes issued in connection with the System. CITY OF SEWARD, ALASKA RESOLUTION 2015-114 "Loan Agreement" means the Loan Agreement between the City and the Alaska Municipal Bond Bank, dated July 1, 2008. "Net Revenues" means, for any Fiscal Year or other period of time, the Gross Revenues and interest and profits derived from the investment of moneys held in the Bond Account during such period less Operating Expenses for such period. "Operating Expenses" means, for any Fiscal Year or other period of time, the expenses of a non -capital nature incurred for operation, maintenance or repair of the System of a non -capital nature, and shall include, without limiting the generality of the foregoing, payments required by any electric purchase agreements, source of supply expenses, fuel expenses, treatment, transmission and distribution expenses, customer accounts expenses, administrative and general expenses, insurance premiums, lease rentals, legal, regulatory, and engineering expenses, payments to pension, retirement, group life insurance, health and hospitalization funds or other employee benefit funds which are properly chargeable to current operations, interest on customers' deposits, payroll tax'expenses and any other expenses required to be paid under the provisions of this resolution or by law or permitted by standard practices for public utility systems similar to the properties and business of the System (adjusted to reflect public ownership) and applicable in the circumstances. Operating Expenses shall not include depreciation, 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 Gross Revenues or any fee or charge in lieu of City taxes. "Parity Bonds" means the 2008 Bonds, the Bond and any Future Parity Bonds. "Project" has the meaning assigned in Section 3. "Pledged Revenues" means Net Revenues and interest received and profits derived from the investment of moneys obtained from moneys held in any fund or account which secures the payment of principal of, and interest on, any Parity Bond. "Registered Owner" means the person named as the registered owner of the 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 of the Parity Bonds; (ii) 125% of the average Annual Debt Service Requirement for all Parity Bonds; and (iii) the maximum Annual Debt Service Requirement on all outstanding Parity Bonds. W CITY OF SEWARD, ALASKA RESOLUTION 2015-114 "System" means the existing electric system of the City as the same may be added to, improved and extended for as long as any Parity Bonds are outstanding, but shall not include such electric supply, transmission and distribution facilities that hereafter may be purchased, constructed or otherwise acquired by the City as a separate electric system, the revenues of which may be pledged ' to the payment of bonds issued to purchase, construct or otherwise acquire and improve such separate system. "2008 Bonds" means the City of Seward, Alaska, Electric Revenue Bonds, 2008. Section 3. Authorization of Bonds and Purpose of Issuance. The City is hereby authorized to issue and sell a revenue bond designated the City of Seward, Alaska, Electric Revenue Refunding Bond, 2016 (the 'Bond"). in the aggregate principal amount of not to exceed $6,200,000.. The proceeds of the Bond shall be used to refund the outstanding 2008 Bonds, or portion thereof, heretofore issued to pay the costs of certain additions, betterments, and extensions of the System consisting principally of replacing two diesel generators, constructing a facility to house the generators, installing automated controls for the generators, and constructing facilities to house the electric shop and City offices (the "Project"), and installing and constructing all other items incidental to the Project and to pay costs of.issuance of the Bond. The Project serves a public purpose of the City. Section 4. Date Maturities Interest Rates, and Other Details of the Bonds. The Bond shall be dated and mature on such dates not later than 2040, and shall bear interest from their date payable on such dates, and at such rates, not exceeding 6% per annum, as the Council or City Manager or Finance Director may fix and determine at or prior to the time of sale of the Bonds. The Bond 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 in such manner and with any additional designation as the Registrar deems necessary for purposes of identification. Section 5. Place and Medium of Pant. Both principal of and interest on the Bond 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, payments of principal and interest thereon shall be made as provided in the Loan Agreement. In the event that the Bond is. no longer registered in the name of the Alaska Municipal Bond Bank, interest on the Bond shall be paid by check mailed (or by wire transfer to a Registered Owner of Bonds in aggregate principal amount of $1,000,000 or more who so requests) to the Registered Owners of the Bond at the addresses for such Registered Owners appearing on the Bond Register on the 15th day of the month preceding the interest and principal payment dates. Section 6. Registration. A. Bond Register. The Bond 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. .69 CITY OF SEWARD, ALASKA RESOLUTION 2015-114 B. ' Registered Ownership. The City and the Registrar, each in its discretion, may deem and treat the Registered Owner of the 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. The Bond shall be transferred only upon the Bond Register kept by the Registrar. Upon surrender for transfer or exchange of any' Bond at the office of the Registrar, with a written instrument of transferor 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 the Bond of the 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. Any Bond surrendered for transfer or exchange shall be cancelled by the Registrar. The Registrar shall not be required to transfer or exchange a Bond subject to redemption during the 15 days preceding any principal or interest payment date or the date of mailing of notice of redemption of the Bond, or any Bond after such Bond has been called for redemption. D. Registration Covenant. The City covenants that, until the Bond has been surrendered and cancelled, it will maintain a system for recording the ownership of the Bond that complies with the provisions of Section 149 of the Code. Section 7. Redemption. The Bond may be redeemed at the times and in the manner as set forth in the Loan Agreement and Bond, as the Council or City Manager or Finance Director may fix and determine at or prior to the time of sale of the Bond. Notice of any intended redemption of the Bond shall be given not less than 45 nor more than 60 daysprior to the date fixed for redemption by United States mail to registered owners of the Bond to be redeemed at their addresses as they appear on the Bond Register on the day the notice is mailed; provided, however, that for so long as the Bond is registered in the name of the Alaska Municipal Bond Bank, all notices shall be given only as provided in the Loan Agreement. The 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 principal installments of the Bond are to be redeemed, the identification (and, in the case of partial redemption, the respective principal installment amounts) of the Bond to be redeemed; fl 10 CITY OF SEWARD, ALASKA RESOLUTION 2015-114 (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 Bond is 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 Bond or portions of the Bond 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 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 of the same maturity in the amount of the unpaid principal. Any Bond which has 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 Bond. The form of the Bond shall be substantially as follows: NO. 1 UNITED STATES OF AMERICA STATE OF ALASKA CITY OF SEWARD (A Municipal Corporation of the State of Alaska) ELECTRIC REVENUE REFUNDING BOND, 2016 REGISTERED OWNER: Alaska Municipal Bond Bank PRINCIPAL AMOUNT: The City of Seward, Alaska (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, but only from the sources stated herein, the Principal Amount indicated above in the following installments on 1 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 'r I i CITY OF SEWARD, ALASKA RESOLUTION 2015-114 thereafter on the first days of each each year, at the rates per annum as follows: and of Maturity Principal Interest Date Amount Rate For so long as this Bond is owned by the Alaska Municipal Bond Bank (the "Bond Bank"), payment of principal and interest shall be made as provided in the Loan Agreement between the Bond Bank and the City. In the event that this Bond is no longer owned by the Bond Bank, payment of principal 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 consisting of twelve 30 -day months. Both principal of and interest on this Bond are payable in lawful money of the United States of America solely out of the special fund of the City known as the "Electric Revenue Bond Account" created by Section 12 of Resolution No. 95-048. This bond (the "Bond") in the aggregate principal sum of $ 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. 2015-114 (the "Bond Resolution"). The definitions contained in the Bond Resolution shall apply to capitalized terms contained herein. The Bond is being issued for the purpose of refunding bonds heretofore issued to pay cost of undertaking certain capital improvements to the City's electric system (the "System"). Principal installments maturing on or after , 20_, may be called for redemption at the option of the City on any date on and after in whole, or in part, on any date, 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, as amended by the Amendatory Loan Agreement. From and after the date fixed for redemption, interest on any principal installment of the Bond 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 Gross Revenues and the money in the Electric Account of the City and to pay into the Bond Account the various amounts required by the Bond Resolution to be paid ,8' � J CITY OF SEWARD, ALASKA RESOLUTION 2015-114 into and maintained in said Account all within the times provided in the Bond Resolution. The City has further pledged and bound itself to pay into such Electric Account as collected all Gross Revenues. The Bond is payable only from Pledged Revenues and other amounts pledged thereof under the Bond Resolution and the Bond does not constitute a general obligation of the City. The pledge of Gross Revenues and moneys in the Electric Account contained herein and in the 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 Bond Resolution. The pledge of amounts to be paid into the Bond Account is declared to be a lien and charge upon the money in the Electric Account and Gross Revenues 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 Parity Bonds or 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 that all acts, conditions, and things required by the Constitution and statutes of the State of Alaska and the Charter and resolutions of the 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 92016. CITY OF SEWARD, ALASKA Jean Bardarson, Mayor � 1"13 CITY OF SEWARD, ALASKA RESOLUTION 2015-114 ATTEST: Johanna Kinney, CMC, City Clerk (City Seal) (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, the undersigned 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 of the 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 Bond. The Bond shall be executed on behalf of the City with the manual or facsimile signature of the Mayor of the City, countersigned with the manual or facsimile signature of the Clerk. The official seal of the City shall be impressed or imprinted on the Bond. The execution of a Bond on behalf of the City by persons that at the time of the execution are duly authorized to hold the proper offices shall be valid and sufficient for all I�: CITY OF SEWARD, ALASKA RESOLUTION 2015-114 purposes, although any such person shall have ceased to hold office at the time of issuance and delivery of the Bond or shall not have held office on the date of the Bond. Section 10. Mutilated, Destroyed, Stolen, or Lost Bond. Upon surrender to the Registrar of a mutilated Bond, the City shall execute and deliver a new Bond of like maturity and principal amount. Upon filing with the Registrar of evidence, satisfactory to the City that a Bond has been destroyed, stolen, or lost and of the ownership thereof, and upon furnishing the City with indemnity satisfactory to it, the City shall execute and deliver a new Bond of like maturity and principal amount. The person requesting the 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 Bond issued pursuant to this section in substitution for a Bond alleged to be destroyed, stolen or lost shall constitute original additional contractual obligations on the part of the City, whether or not the Bond alleged to be destroyed, stolen or lost be at any time enforceable by anyone, and shall be equally and proportionately secured with any other Bond issued hereunder. Section 11. Electric Account and Priority of Use of Gross Revenues. There has been created by the City a special fund known as the "Electric Account." Gross Revenues and the moneys in the Electric Account are hereby pledged to and shall be used only for the following purposes and in the following order of priority: First, to pay Operating Expenses; Second, 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; Third, to make all payments required to be made into the Reserve Subaccount; Fourth, 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; Fifth, to make all payments required to be made into a reserve account for subordinate lien bonds; Sixth, to make all required payments of charges or fees in lieu of City taxes; and Seventh, to pay the costs of additions, betterments, improvements, and repairs to and extensions and replacements of the System, to make legally authorized payments into any other fund or account of the City, to purchase or redeem electric revenue bonds or notes of the City, or for any other proper purpose in connection with the operation of the System. Section 12. Electric Revenue Bond Account and Subaccounts Therein. In accordance with Section 12 of Resolution 95-048, there has been created a special fund of the City known as the "Electric Revenue Bond Account" (the 'Bond Account"), which fund is a trust fund to be 1+ 1G CITY OF SEWARD, ALASKA RESOLUTION 2015-114 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 three subaccounts, the Project Subaccount, 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 "Gross Revenues and the moneys in the Electric Account superior to all other charges of any kind or nature, except Operating Expenses, 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 of the Bond 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 Gross Revenues and moneys in the Electric Account or out of any other moneys legally available therefor 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 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 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 CITY OF SEWAR.D, ALASKA RESOLUTION 2015-114 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 the money in the Electric Account 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 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 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 and in the Reserve Subaccount 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. Nothing in this resolution shall prevent any Government Obligations acquired as investments of funds held under the resolution from being issued or held in book -entry form on the books of the Department of the Treasury of the 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 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 establish, maintain, and collect rates and charges for electricity and all other services or facilities furnished or supplied by the System in each Fiscal Year that will .k3 `1 CITY OF SEWARD, ALASKA RESOLUTION 2015-114 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. B. The City will at all times maintain, preserve, and keep the System 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; and will at all times operate the System in an efficient manner and at a reasonable cost. C. The City will at all times carry all-risk insurance and such other forms of insurance on such of the buildings, equipment, property, and facilities of the System as are ordinarily insured in such amounts and with such deductibles as under good business practice are ordinarily carried on 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% of the estimated replacement cost of the insurable parts of the System; or (ii) the aggregate principal amount -of the Parity 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 carry public liability insurance and such other types of insurance as are usually carried by municipal corporations 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 not expend any of the money in the Bond Account for any extensions or betterments which are not economically sound and which will not contribute to the operation of the System in an efficient and economical manner unless such extensions or betterments are required by law or by any regulatory body having valid jurisdiction. E. The City will keep and maintain proper books and accounts with respect to the operation of the System in such manner as prescribed by any authorities having jurisdiction over the System; will cause its books and accounts to be audited annually by a certified public accountant not later than 180 days following the end of each Fiscal Year, copies of which audits shall be disclosed in accordance with any continuing disclosure obligation and,, upon request, be furnished to the owners of the 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. F. 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. G. The City will not sell or otherwise dispose of the System 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 '�* 1$ CITY OF SEWARD, ALASKA RESOLUTION 2015-114 dates on which they first maybe redeemed, nor will it sell or otherwise dispose of any part of the System which is material to the production of Gross Revenues unless, in the opinion of the Consulting Engineer, the remaining System will generate Gross Revenues sufficient to enable the City to comply with the requirements of this resolution and each resolution authorizing the issuance of Future Parity Bonds. H. The City will not at any time create or permit to accrue or exist any lien or other encumbrance or indebtedness upon the System or the Gross 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, if unpaid, might become a lien or charge upon the Revenue, or any part thereof, or upon any account or subaccount in the hands of the City, prior or superior to the lien of the Parity Bonds, or which might impair the security of the Parity Bonds. I. The City will not expend any of the Gross Revenues derived by it from the operation of the System or the proceeds of any indebtedness payable from Gross Revenues for any additions, betterments, or improvements to the System which 'are not economically sound and which will not properly and advantageously contribute to the conduct of the business of the System in an efficient and economical manner. J. 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, transfers, and assurances as may be necessary or desirable for better assuring, conveying, granting, pledging, assigning, and confirming all and singular the rights, Gross Revenues, and other funds, moneys, and securities pledged or assigned under this resolution, or intended so to be, or which the City may become bound to pledge or assign. K. The City is duly authorized under all applicable laws to issue the Bond and to adopt this resolution and to pledge the Gross 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 Gross 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 Resolution 95-048 and this resolution, and all corporate or other action on the part of the City to that end has been and will be duly and validly taken. The Bond and the provisions of this resolution are and will be the valid and legally enforceable obligations of the City in accordance with their terms and the terms of this resolution. The City shall at all times, to the extent permitted by law, defend, preserve, and protect the pledge of the Gross 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. L. The City has, and will have so long as any Parity Bonds are outstanding, good right and lawful power to operate, maintain, and repair the System and to fix and collect rates, fees, and other charges to the use and sale of the capacity, output, or services of the System. -1-& 1C) CITY OF SEWARD, ALASKA RESOLUTION 2015-114 M. 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. At the time of the issuance of the Bond, the City shall have on file a certificate executed by a Consulting Engineer experienced in the construction and operation of municipal utilities (which certificate may not be dated more than 30 days prior to the date of delivery of the Bonds) showing that in his or her professional opinion the "annual income available for revenue bond debt service," as hereinafter set forth, shall be at least equal to 1.30 times the maximum Annual Debt Service Requirement on all outstanding Parity Bonds and the Bond. Such "annual income available for revenue bond debt service" shall be determined by adding the following: A. 'The Net Revenues for any 12 consecutive months out of the 24 months immediately preceding the month of delivery of the Bond. B. The Net Revenues derived from those customers of the System that have become customers during such 12 -consecutive -month period or thereafter and prior to the date of such certificate, adjusted to reflect an estimate of a full year's Net Revenues from each such customer to the extent such Net Revenues were not included in (A) above. C. The estimated annual Net Revenues to be derived from any person, firm, association, private- or municipal corporation under any executed contract for electric service, which Net Revenues were not included in any of the sources of Net Revenues described in this section. D. The estimated annual Net Revenues to be derived from the operation of any additions or improvements to or extensions of the System under construction but not completed at the time of such certificate and not being paid for out of the proceeds of sale of the Bond, and which Net Revenues are not otherwise included in any of the sources of Net Revenues described in this section. E. The estimated Net Revenues to be derived from the operation of any additions and improvements to or extensions of the System being paid for out of the proceeds of sale of the Bond. In the event the City will not derive any Gross Revenues as a result of the construction of the additions, improvements, or extensions being made or to be made to the System within the provisions of subparagraphs (D) and (E) immediately above, the estimated Operating Expenses of such additions, improvements, and extensions shall be deducted from such "annual income available for revenue bond debt service." CITY OF SEWARD, ALASKA RESOLUTION 2015-114 The computation of "annual income available for revenue bond debt service" shall be adjusted to reflect the electric rates and charges effective on the date ' of such certificate or approved by the regulatory authority with jurisdiction to become effective thereafter if there has been any change in such rates and charges put into effector so approved during or after such 12 - consecutive -month base period. Notwithstanding the preceding provisions of this section, the certificate of the Consulting Engineer 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 the Bonds, was equal to at least 1.30 times the maximum Annual Debt Service required to be paid in any Fiscal Year succeeding the date of issuance of the Bond and all outstanding Parity Bonds. Further, notwithstanding the preceding provisions of this Section 16, the Future Parity Bonds may be issued if the City shall have on file a certificate of the Consulting Engineer stating his or her opinion that the Net Revenues for the next full Fiscal Year after the initial operation of any additions or improvements to or extensions of the System being paid for out of the proceeds of the Future Parity Bonds will be at least equal to 1.30 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 the Future Parity Bonds there is no deficiency in the Debt Service Subaccount or Reserve Account. Section 17. Subordinate Lien Bonds. Nothing contained herein shall prevent the City from issuing revenue bonds or notes which are a charge upon Gross Revenues and the moneys in the Bond Account subordinate or inferior to the payments required herein to be made therefrom into the Debt Service Subaccount and Reserve Subaccount, or from issuing electric revenue bonds to refund maturing bonds for the payment of which moneys are not otherwise available. Section 18. Covenants Regarding Arbitrage and Private Activity Bonds. The City hereby covenants that it will not make any use of the proceeds of sale of the Bond or any other funds of the City which may be deemed to be proceeds of such a Bond pursuant to Section 148 of the Code which will cause the Bond to be an "arbitrage bond" 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 Bond. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bond to constitute a "private activity bond" 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 Bond 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 1-? q.` CITY OF SEWARD, ALASKA RESOLUTION 2015-114 and retire the Bond in accordance with its terms are set aside in a special trust 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 of the principal of and interest on such a Bond, and the Bond shall cease to be entitled to any lien, benefit, or security of this resolution except the right to receive the funds so set aside and pledged, and such Bond shall be deemed not to be outstanding hereunder or under any other resolution authorizing the issuance of Future Parity Bonds. For so long as the Bond Bank is -the Registered Owner for any Parity Bonds, the City will give 30 days' notice to the Bond Bank of any defeasance. Section 20. General Authorization. to Municipal Officials. The Mayor, City Manager, Finance Director, and City Clerk are hereby authorized to do everything necessary to complete such sale and to deliver the Bond 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 of this 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 of the 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 CITY OF SEWARD, ALASKA RESOLUTION 2015-114 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 of the Parity Bonds then outstanding. (3) Remove the pledge and lien of this resolution on Pledged Revenues. 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 of the City under this resolution and all owners of the 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. Exchange of Bonds-, Amendatory Loan Agreement. The Bond shall be delivered to the Bond Bank in exchange for the Refunded Bonds. The City has been advised by the Bond Bank that bond market conditions are fluctuating and that the most favorable market conditions for the sale of the Bond Bank Bonds may not occur on the date of a regular Council meeting. The Council has determined that it would be inconvenient to hold a special meeting on short notice to approve the terms of the Bond. Therefore, the Council hereby determines that it is in the best interest of the City to delegate the authority to approve the terms of the Bond as provided herein. Each of the City Manager and the City Finance Director is hereby authorized to determine the aggregate principal amount, principal installment amounts, interest rates, yields, dated date, principal and interest payment dates, and redemption terms, if any, for the Bond, so that such terms of the Bond conform to the terms of the corresponding Bond Bank Bonds; provided that (i) the principal installments of the Bond shall not exceed the principal amount of the portion of the corresponding maturity of the Bond Bank Bonds that is allocated to the refunding of the Refunded Bonds; and (ii) the interest rate on each principal installment of the Bond shall not exceed the interest rate on the corresponding maturity of the Bond Bank Bonds. Based upon the foregoing determinations, the City Manager and the City Finance Director each A 13 CITY OF SEWARD, ALASKA RESOLUTION 2015-114 is authorized to negotiate and execute an Amendatory Loan Agreement in the form submitted to and part of the records of this meeting. The authority granted to the City Manager and City Finance Director by this section shall expire 180 days after the effective date of this resolution. If the City Manager or City Finance Director has not executed 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 23. Authority of Officers. The Mayor, the City Manager, the City Finance Director, and the City Clerk are, and each of them hereby is, authorized and directed to do and perform all things and determine all matters not determined by this resolution, to the end that the City may carry out its obligations under the Bond and this resolution. Section 24. Miscellaneous. A. All payments made by the City of, or on account of, the principal of or interest on the Bond shall be made on the Bond ratably and in proportion to the amount due thereon, respectively, for principal or interest as the case may be. B. No recourse shall be had for the payment of the principal of or the interest on the Bond 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 Bond. The Bond is not and shall not be in any way a debt or liability of the State of Alaska or of any political subdivision thereof, except the City, and from the Pledged Revenues as stated on the Bond, and do not and shall not create or constitute an indebtedness or obligation, either legal, moral or otherwise, of said state or of any political subdivision thereof, except the City, and from the Pledged Revenues as stated on the Bond. Section 25. Continuing Disclosure. The City acknowledges that, under Rule 15c2-12 of the Securities and Exchange Commission (the "Rule"), the City may now or in the future be an "obligated person" with respect to bonds issued by the Bond Bank. In accordance with the Rule and as the Bond Bank may require the City shall enter into a continuing disclosure agreement and undertake to provide certain financial information and operating data as set forth in the Amendatory Loan Agreements. Notwithstanding any other provision of this resolution, failure of the City to comply with the continuing disclosure agreement shall not be considered a default of the City's obligations under this resolution or the Bond; however, the beneficial owner of any Bond or Bond Bank Bond may bring an action for specific performance, to cause the City to comply with its obligations under this section. Section 26. Sevekability. 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 of this resolution or of the Bond. Section 27. Incorporation of Recitals. The Recitals set forth in this resolution are hereby incorporated in, and made a part of, this resolution. 20 '1. L -i CITY OF SEWARD, ALASKA RESOLUTION 2015-114 Section 28. Effective Date. This resolution shall take effect immediately. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 10 day of December, 2015. AYES: NOES: ABSENT: ABSTAIN: ATTEST: Johanna Kinney, CMC City Clerk (City Seal) THE CITY OF SEWARD, ALASKA Jean Bardarson, Mayor .2A -�,5 Council Agenda Statement Meeting Date: December 14, 2015 To: City Council Through: Jim Hunt, City Manag From: Kristin Erchinger, Finance Director Agenda Item: Refunding 2008 Electric Revenue Bonds BACKGROUND & JUSTIFICATION: On June 9, 2008, the Seward City Council approved Resolution 2008-50 authorizing the issuance of $6 million of Electric Enterprise Fund revenue bonds for the purpose of providing amounts to acquire, construct and install necessary additions and improvements to the City's diesel electric generation system, and to do all things incidental thereto. As of December 31, 2015, the outstanding balance on the bonds is $5,245,000. The City Council authorized the refunding of these bonds in March, 2015 (Resolution 2015-017). The administration has made two attempts to refinance these bonds in 2015, but given the unfavorable interest rate environment, negative arbitrage made market conditions unfavorable. The. Alaska Municipal Bond Bank (AMBBA) will be going to the market to sell bonds mid-January 2016, and we seek Council authorization to test market conditions for refunding these bonds. The timing of the refunding is important because of the low interest rate environment, combined with the expectation of prolonged low oil prices which could place further pressure on borrowing costs for Alaskan entities. Current market conditions result in an estimated net present value (NPV) savings of approximately $350,000, net of all costs, over the life of this bond. This estimate is based on an estimated true interest cost of 3.62%, and an overall NPV savings of 7.22%. Generally, the City looks favorably on a refunding when it can achieve a NPV savings of at least 3%, and a savings of 7.22% makes these bonds good candidates for refunding. 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 AMBBA. INTENT• To refund the Electric Enterprise Fund Revenue 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 (2020 Comp Plan): X 2. Strategic Plan: X 3. Other: Resolution 2008-50; Resolution 2015-17 X FISCAL NOTE: This action is intended to result in a reduction in annual debt costs from approximately $394,000 to $365,000, for an estimated net present value savings of $350,000. The final maturity of these bonds is expected to change from June 2038 to December 2038. The maximum requested amount of the refunding is $6,200,000 to account for the fact that the refunding escrow accounts must pay interest through the call dates rather than just the outstanding principal amounts being refunded. Approved by Finance Department: ATTORNEY REVIEW: Yes X No RECOMMENDATION: Approve City Council Resolution 2015- 114, authorizing the City of Seward to issue refunding revenue bonds in a principal amount not to exceed $6,200,000, 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. VI 10" litch Associates, Inco 1 1 1 1 1 Katy Freeway, Suite 820 Houston, TX 77079-2118 Office 713.467.73.4 Toll ]Free 888.726.2779 Fax 713.467.3448 April 24, 2015 Honorable Mayor and City Council Members City of Seward, Alaska 410 Adams Street Seward, Alaska 99664 Attention: Kristin Erchinger, Finance Director Re: Proposed Refunding of 2008 Bond Issues for LTC Facilties and Electric Department Ladies and Gentlemen: The Council has previously established its intent to consider refunding a portion of its 2008 bonds which were issued to construct its Long -Term Care Facility and to pay certain capital costs of its Electric Department. The Refunding Bonds would be issued through the Alaska Municipal Bond Bank Authority in a manner similar to the two series of 2005 bonds which were successfully advance refunded in October, 2014 at considerable net present savings. While the proposed savings of this refinancing are less than the 2014 refunding issue on a percentage basis of net present value, the absolute dollar savings are significantly greater as a result of the substantial size of the 2015 proposed refunding. Based on the latest numerical analysis. as of April 7, 2015 (a summary of which is attached), the estimated net present value savings are $1,466,310 for the combined issues and represent approximately 6.04% compared to the amount of bonds refunded. The technique to accomplish the advance refunding is the same as the 2014 issue — the bonds in both cases are not yet currently callable as the original bonds gave the investor ten years of call protection. In order to accomplish the refunding, an escrow account must be established to service the bonds being refunded through their respective call dates. This creates substantial "negative arbitrage" because yields on allowable escrow securities (non -callable U.S. Treasury obligations) to the first call date are only about .8% (less than 1%) compared to the true interest cost on the new bonds of approximately 3.153% to 3.527%. This negative arbitrage is currently estimated to be about $1.4 million which is just under the net present value savings projected at $1.466 million (net of all costs and the negative arbitrage). This negative arbitrage is paid for through the use of premium bonds whereby the new bonds have a significantly higher coupon than the reoffering yields to investors. All of these factors are taken into account in the calculation of estimated net present value savings. �s www.]BIitchAssocgates.com B31itch Associates, Inc. 11111 Katy Freeway, Suite 820 Houston, TX 77079-2118 ®dice 713.467.7344 Toll Free 888.726.2779 Fax 713.467.3448 City of Seward, Alaska April 24, 2015 Page 2 After everything is taken into account, the April 7, 2015 illustration is estimated to save the City a total of approximately $73,851 annually on a net present value basis As on the previous refunding in 2014, the City is only allowed one advance refunding under current tax rules and regulations. It is important therefore to carefully determine when to enter into such a transaction. We would suggest that as a general rule the City establish a threshold level of net present value savings of at least 5% on the par value of the refunded bonds This proposed refunding currently exceeds this threshold. Another consideration some issuers use is that the net present value savings should at least equal the negative arbitrage to the call date which this analysis achieves but not by a great margin. Based on all these considerations, we would recommend moving forward with this financing but make the final decision when the numbers are more established The Finance Director and City Manager have been given the authority to make this final decision with the advice of its counsel and we recommend that we continue to prepare for this transaction. Sincerely, Blitch Associates, Inc. By Don W. Grimes, Sr. Vice President V�J' www. BlitchAssociate s. corm AMENDATORY LOAN AGREEMENT THIS AMENDATORY LOAN AGREEMENT, dated as of the day of 2016, between the Alaska Municipal Bond Bank (the "Bank"), a body corporate and politic constituted as an instrumentality of the State of Alaska (the "State") exercising public and essential governmental functions, created pursuant to the provisions of Chapter 85, Title 44, Alaska Statutes, as amended (the "Act"), having its principal place of business at Juneau, Alaska, and the City of Seward, Alaska, a municipal corporation organized and existing under the Home Rule Charter of the City and the Constitution and laws of the State (the "City"): WITNESSETH: WHEREAS, pursuant to the Act, the Bank is authorized to issue bonds and to loan money (the "Loans") to governmental units; and WHEREAS, the City is a "Governmental Unit" as defined in the General Bond Resolution of the Bank hereinafter mentioned and was authorized to accept a Loan from the Bank, evidenced by its municipal bond; and WHEREAS, to provide for the issuance of bonds of the Bank to obtain from time to time money with which to make and/or refinance municipal Loans, the Bank adopted its General Obligation Bond Resolution on July 13, 2005, as amended (the "General Bond Resolution"); and WHEREAS, the Board of the Bank approved certain modifications to the General Bond Resolution, effective on the date when all bonds issued under the terms of the General Bond Resolution prior to February 19, 2013 cease to be outstanding; and WHEREAS, on July 30, 2008 the Bank made a Loan to the City from proceeds of the Bank's .General Obligation Bonds, 2008 Series One (the "2008 Series Two Bonds") in the amount of $6,000,000, evidenced by a Loan Agreement dated as of July 1, 2008 (the "Loan Agreement") between the Bank and the City; and WHEREAS, the Bank's 2008 Series Two Bonds were issued pursuant to the terms of the Bank's General Bond Resolution, as amended, and as supplemented by a series resolution; and WHEREAS, as security for repayment of the Loan, the City issued its City of Seward, Alaska Electric Revenue Bond, 2008, dated July 30, 2008 (the "Municipal Bond") of which the Bank is the registered owner; and WHEREAS, the Bank has determined that refunding a portion of the 2008 Series Two Bonds will result in a debt service savings thereon and on the Municipal Bond; and WHEREAS, pursuant to the terms of the General Bond Resolution, on December 15, 2015 the Bank adopted Series Resolution No. 2015-05 (the "Series Resolution" and together with the General Bond Resolution, the "Bond Resolution") authorizing the issuance of its General Obligation and Refunding Bonds, 2016 Series One, one portion of which (the "Refunding Bonds"), is for the purpose of refunding a portion of the Bank's outstanding 2008 Series Two Bonds; and WHEREAS, to effect the proposed refunding and resulting debt service savings on the Municipal Bond, and to conform the terms of the Loan Agreement to the current practices of the Bank, it is necessary to amend the terms of the Loan Agreement and the Municipal Bond as provided herein. NOW, THEREFORE, the parties agree as follows: 1. The Bank will refund a portion of the outstanding 2008 Series Two Bonds as provided in the Series Resolution. The amounts of the principal installments of the Municipal Bond corresponding to the refunded maturities of the 2008 Series Two Bonds, and the interest payable thereon, shall be adjusted pro rata in accordance with the debt service payable on the Refunding Bonds. The Municipal Bond henceforth shall mature in the principal amounts and bear interest at the rates per annum as stated on Exhibit A appended hereto. 2. Section 2 of the Loan Agreement is amended to include the following paragraph: The City represents that the City Resolution remains in full force and effect and that the City it has duly adopted all necessary ordinances or resolutions, including Resolution No. ,adopted by the City Council on December 14, 2015 (the "City Refunding Resolution" and together with the City Resolution, the "Resolutions"), and has taken or will take all proceedings required by law to enable it to enter into this Amendatory Loan Agreement and to issue its refunding Municipal Bond to the Bank and that the refunding Municipal Bond will constitute a special revenue obligation of the City all duly authorized by, such Resolutions. 3. The refunding Municipal Bond shall be subject to optional prepayment prior to maturity on and after the same date, and on the same terms as the Refunding Bonds may be subject to optional redemption. 4. Section 16 of the Loan Agreement is amended by replacing the current language with the following Subsection (a): "(a) The City agrees that if its bonds constitute ten percent (10%) or more of the outstanding principal of municipal bonds held by the Bank under its General Bond Resolution, it shall provide the Bank for inclusion in future official statements, upon request, financial information generally of the type included in Appendix D of the Bank's Official Statement, dated 2016, under the heading "Summaries of Borrowers Representing 10% or More of Outstanding Principal of Bonds Issued Under the 2005 General Bond Resolution" to the Official Statement and attached hereto as Exhibit B. "The City further agrees that if its bonds constitute ten percent (10%) or more of the outstanding principal of municipal bonds held by the Bank under its General Bond Resolution, it shall execute a continuing disclosure agreement prepared by the Bank for purpose of Securities and Exchange Commission Rule 15c2-12, adopted under the Securities and Exchange Act of 1934." 5. A new Subsection 16(b) is added to the Loan Agreement, as follows: Page 2 ,3l "(b) The City agrees that it shall file, on an annual basis, its audited financial statements with the Municipal Securities Rulemaking Board not later than two hundred ten (210) days after the end of each fiscal year of the City for the term of the Municipal Bond and any refunding Municipal Bond. The City agrees filings under this Subsection 16(b) shall be made in connection with CUSIP Nos. 01179P, 011798 and 01179R. Additional or alternate CUSIP number(s) may be added from time to time by written notice from the Bank to the City. The City agrees that if it shall receive from the Bank CUSIP number(s) in addition to those set forth in this Subsection then it shall make its filings using both CUSIP numbers herein stated and any additional CUSIP number(s). 6. Section 22 is hereby renumbered "Section 25," and a new Section 22 is added to the Loan Agreement, as follows: The City hereby agrees to keep and retain, until the date six years after the retirement of the Municipal Bond, or any bond issued to refund the Municipal Bond, or such longer period as may be required by the City's record retention policies and procedures, records with respect to the investment, expenditure and use of the proceeds derived from the sale of its Municipal Bond, including without limitation, records, schedules, bills, invoices, check registers, cancelled checks and supporting documentation evidencing use of proceeds, and investments and/or reinvestments of proceeds. The City agrees that all records required by the preceding sentence shall be made available to the Bank upon request. 7. A new Section 23 is added to the Loan Agreement, as follows: The City hereby agrees that it shall fully fund, at the time of loan funding, its debt service reserve fund (in an amount equal to $ ) which secures payment of principal and interest on its Municipal Bond, and that such fund shall be held in the name of the City with the Trustee. The City further agrees that the yield on amounts held in such debt service reserve account shall be restricted to a yield not in excess of percent. 8. A new Section 24 is added to the Loan Agreement, as follows: (a) The City hereby certifies that all Municipal Bond proceeds, except for those proceeds that are accounted for as transferred proceeds in the arbitrage certificate for its refunding Municipal Bond, have been expended prior to the date hereof. (b) The City hereby certifies that all required rebate calculations relating to the Municipal Bond have been timely performed and that the City has remitted any necessary amount(s) to the Internal Revenue Service. (c) The City hereby certifies that the Municipal Bond, or any portion thereof, has not previously been advance refunded. �� Page 3 IN WITNESS WHEREOF, the parties hereto have executed this Amendatory Loan Agreement as of the date first set forth above. ALASKA MUNICIPAL BOND BANK DEVIN J. MITCHELL Executive Director CITY OF SEWARD, ALASKA By: Its: 33 Page 4 10 )EXHIBIT A City of Seward, Alaska Electric Revenue Refunding Bond, 2016 Principal Sum of $ Principal Payment Date Principal Interest (June 1, 20 ) Amount Rate Principal installments shall be payable on June 1 in each of the years, and in the amounts set forth above. Interest on the Municipal Bond shall be payable on June 1, 2016 and December 1, 2016 on June 1 and December 1 of each year thereafter. Prepayment Provisions: The Municipal Bond principal installments are not subject to prepayment prior to maturity. Optional Prepayment: The Municipal Bond principal installments due on or after 1, 20_ are subject to prepayment in whole or in part at the option of the [City] [Borough] on any date on or after 1,20 at a price of 100% of the principal amount thereof to be prepaid, plus accrued interest to the date of prepayment. 3y Page A-1 EXHIBIT B OHSUSA:764260974.2 Page B -I Sponsored by: Hunt CITY OF SEWARD, ALASKA RESOLUTION 2015-115 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, PROVIDING FOR THE ISSUANCE OF A LONG TERM CARE FACILITY REVENUE REFUNDING BOND OF THE CITY IN THE. PRINCIPAL AMOUNT OF NOT TO EXCEED $25,900,000 TO REFUND CERTAIN OUTSTANDING LONG TERM CARE FACILITY REVENUE BONDS OF THE CITY; FIXING CERTAIN DETAILS OF SUCH BONDS AND AUTHORIZING AND PROVIDING FOR RELATED MATTERS WHEREAS, the City of Seward, Alaska (the "City") is a home rule city and under Section 11 of Article X of the Alaska Constitution may exercise all legislative power not prohibited by law or the Charter of the City, and it has been determined that the matters set forth in this resolution are not prohibited by law or the Charter; and WHEREAS, there is now outstanding $23,250,000 principal amount of Long Term Care Facility of the City maturing on or after April 1, 2016, issued under Resolution No. 2006-28 (the "2008 Bonds"); and WHEREAS, the Council finds that it is in the best interest of the City to provide for the refunding, including the payment of principal of and interest on, those maturities of the 2008 Bonds (the "Refunded Bonds") of which the City Manager or City Finance Director determines will produce the debt service savings specified in this resolution, by the issuance of a Long Term Care Facility Revenue Refunding Bond in the aggregate principal amount of not to exceed $25,900,000 (the 'Bond"); and WHEREAS, Section 11.2(a) of the home rule Charter of the City provides that the City may issue refunding bonds without ratification of the voters; and WHEREAS, the Council finds that it is necessary and appropriate to delegate to each of the City Manager and City Finance Director authority to determine the maturity amounts, interest rates, and other details of the Bond, and to determine other matters pertaining to the Bond that are not provided for in this resolution; and WHEREAS, the Alaska Municipal Bond Bank and the City intend to enter an Amendatory Loan Agreement, which amends the Loan Agreement dated as of April 1, 2008 (the "Loan Agreement") between the Alaska Municipal Bond Bank and the City to provide for the refunding of the Refunded Bonds through their exchange for the Bond and related matters. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SEWARD, ALASKA: 3� CITY OF SEWARD, ALASKA RESOLUTION 2015-115 Section 1. Purpose. The purpose of this resolution is to authorize the issuance and sale of not to exceed $25,900,000 of a Long Term Care Facility Revenue Refunding Bond, to fix the form, covenants, and method of sale of said bond, to provide for establishing the amount, maturities, interest rates, 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 bond. 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. "Amendatory Loan Agreement" means an agreement amending the terms of the Loan Agreement. "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 of the Bond setting forth the City's reasonable expectations as to the use of Bond proceeds. "Bond Account" means the Long Term Care Facility Revenue Bond Account created by Section 12 hereof. "Bond Bank" means the Alaska Municipal Bond Bank Authority. "Bond Bank Bonds" means the bonds issued by the Bond Bank, the proceeds of which will be used to, among other things, refund the Refunded Bonds. "Bond Register" means the registration books maintained by the Registrar containing the names and addresses of the owners of the Bond. "Bond" means the City of Seward, Alaska, Long Term Care Facility Revenue Refunding Bond, 2016. "Bond Year" has the meaning given such term in the Arbitrage and Tax Certificate. "Charter" means the Home Rule Charter of the City, as the same may be amended from time to time. brl CITY OF SEWARD, ALASKA RESOLUTION 2015-115 "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 licensed to practice in the State of Alaska, retained and appointed pursuant to Section 15(F) hereof. "Council" means the general legislative authority of the 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 of the City, other than the Bond, 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 the Bond Account and Reserve Subaccount to pay and secure the payment of the principal of and interest on the Bond. "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 of the 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, dated April 1, 2008. "Net Revenues" means, for any Fiscal Year or other period of time, all amounts received by the City from operations of the co -located hospital and long term care facility sites in Seward, T% CITY OF SEWARD, ALASKA RESOLUTION 2015-115 Alaska and deposited in the Providence Seward Medical and Care Center Account and interest and profits derived from the investment of moneys held in the Providence Seward Medical and Care Center Account less Operating Expenses for such period. "Operating Expenses" means, for any Fiscal Year or other period of time, 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. "Parity Bonds" means the 2008 Bonds, the Bond and any Future Parity Bonds. "Project" means the 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 or account which secures the payment of principal of, and interest on, any Parity Bonds. "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 of the Parity Bonds; (ii) 125% of the average Annual Debt Service Requirement for all Parity Bonds; and (iii) the maximum Annual Debt Service Requirement on all outstanding Parity Bonds. "2008 Bonds" means the City of Seward, Alaska, Long Term Care Facility Revenue Bonds, 2008. Section 3. Authorization of Bond and Purpose of Issuance. The City is hereby authorized to issue and sell revenue bonds designated the City of Seward, Alaska, Long Term Care Facility Revenue Refunding Bond, 2016 (the 'Bond") in the aggregate principal amount of not to exceed $25,900,000. The proceeds of the Bond shall be used to refund the outstanding 2008 Bonds, or portion thereof, heretofore issued for the Project and to pay costs of issuance of the Bond. The Project serves a public purpose of the City. Section 4. Date Maturities Interest Rates, and Other Details of the Bond. The Bond shall be dated and mature on such dates not later than 2040, and shall bear interest from its date 39 CITY OF SEWARD, ALASKA RESOLUTION 2015-115 payable on such dates, and at such rates, not exceeding 6% per annum, as the Council or City Manager or Finance Director may fix and determine at or prior to the time of sale of the Bond. The Bond 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 in such manner and with any additional designation as the Registrar deems necessary for purposes of identification. Section 5. Place and Medium of Pant. Both principal of and interest on the Bond shall be payable in lawful money of the United States of America. For so long as any outstanding Bond is registered in the name of the Alaska Municipal Bond Bank, payments of principal and interest thereon shall be made as provided in the Loan Agreement. In the event that the Bond is no longer registered in the name of the Alaska Municipal Bond Bank, interest on the Bond shall be paid by check mailed (or by wire transfer to a Registered Owner of Bond in aggregate principal amount of $1,000,000 or more who so requests) to the Registered Owners of the Bond at the addresses for such Registered Owners appearing on the Bond Register on the 15th day of the month preceding the interest and principal payment dates. Section 6. Registration. A. Bond Register. The Bond 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. The Bond shall be transferred only upon the Bond Register kept by the Registrar. Upon surrender for transfer or exchange of any Bond at the office of the 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 the Bond of the 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. Any Bond surrendered for transfer or exchange shall be cancelled by the Registrar. The Registrar shall not be required to transfer or exchange a Bond 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 Bond, or any Bond after such Bond has been called for redemption. g�0 CITY OF SEWARD, ALASKA RESOLUTION 2015-115 D. Registration Covenant. The City covenants that, until the Bond has been surrendered and cancelled, it will maintain a system for recording the ownership of the Bond that complies with the provisions of Section 149 of the Code. Section 7. Redemption. The Bond may be redeemed at the times, for the redemption prices, and in such manner, as the Council or City Manager or Finance Director may fix and determine at or prior to the time of sale of the Bond. Notice of any intended redemption of The Bond 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 Bond to be redeemed at their addresses as they appear on the Bond Register on the day the notice is mailed; provided, however, that for so long as the Bond is registered in the name of the Alaska Municipal Bond Bank, all notices shall be given only as provided in the Loan Agreement. The 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 principal installments of the Bond are to be redeemed, the identification (and, in the case of partial redemption, the respective principal installment amounts) of the Bond 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 Bond is 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 Bond or portions of the Bond 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 Bond or portions of the Bond shall cease to bear interest. Upon surrender of such Bond for redemption in accordance with said notice, such Bond shall be paid by the Registrar 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 of the same maturity in the amount of the unpaid principal. Any Bond which has 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 Bond. The form of the Bond shall be substantially as follows: "6� I CITY OF SEWARD, ALASKA RESOLUTION 2015-115 UNITED STATES OF AMERICA STATE OF ALASKA CITY OF SEWARD (A Municipal Corporation of the State of Alaska) NO. 1 LONG TERM CARE FACILITY REVENUE REFUNDING BOND, 2016 REGISTERED OWNER: PRINCIPAL AMOUNT: Alaska Municipal Bond Bank The City of Seward, Alaska (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, but only from the sources stated herein, the Principal Amount indicated above in the following installments on 1 of each of the following years, and to nay, from the sources stated herein, interest on such installments from the date hereof, payable on thereafter on the first days of each each year, at the rates per annum as follows: 20_ and semiannually and of Maturity Principal Interest Date Amount Rate For so long as this Bond is owned by the Alaska Municipal Bond Bank (the 'Bond Bank"), payment of principal and interest shall be made as provided in the Loan Agreement between the Bond Bank and the City. In the event that this Bond is no longer owned by the Bond Bank, payment of principal 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 consisting of twelve 30 -day months. Both principal of and interest on this Bond are payable in lawful money of the United States of America 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. 2015-115. CITY OF SEWARD, ALASKA RESOLUTION 2015-115 This bond (the 'Bond") in the aggregate principal sum of $ 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. 2015-115 (the 'Bond Resolution"). The definitions contained in the Bond Resolution shall apply to capitalized terms contained herein. The Bond is being issued for the purpose of refunding bonds heretofore issued to pay the costs of financing, acquiring, designing, constructing, and equipping the long term care facility located in Seward, Alaska. Principal installments maturing on or after , 20_, may be called for redemption at the option of the City on any date on and after in whole, or in part, on any date, with maturities to be selected by the City 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, as amended by the Amendatory Loan Agreement. From and after the date fixed for redemption, interest on any principal installment of the Bond 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 Bond is payable only from Pledged Revenues and other amounts pledged thereof under the Bond Resolution and the Bond does 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 of the 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 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 Parity Bonds or Future Parity Bonds hereafter issued. 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 Requirement for such year on all outstanding Parity Bonds. Is 0 CITY OF SEWARD, ALASKA RESOLUTION 2015-115 It is hereby certified that all acts, conditions, and things required by the Constitution and statutes of the State of Alaska and the Charter and resolutions of the 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 2016. CITY OF SEWARD, ALASKA Jean Bardarson, Mayor ATTEST: Johanna Kinney, CMC, City Clerk (City Seal) (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, the undersigned 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. '9' q H CITY OF SEWARD, ALASKA RESOLUTION 2015-115 Dated: NOTE: The signature on this Assignment must correspond with the name of the 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 Bond. The Bond shall be executed on behalf of the City with the manual or facsimile signature of the Mayor of the City, countersigned with the manual or facsimile signature of the Clerk. The official seal of the City shall be impressed or imprinted on the Bond. The execution of a Bond on behalf of the City by persons that 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 issuance and delivery of the Bond or shall not have held office on the date of the 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 destroyed, stolen, or lost and of the ownership thereof, and upon furnishing the City with indemnity satisfactory to it, the City shall execute and deliver a new Bond of like maturity and principal amount. The person requesting the 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 Bond issued pursuant to this section in substitution for a Bond alleged to be destroyed, stolen or lost shall constitute original additional contractual obligations on the part of the City, whether or not the Bond alleged to be destroyed, stolen or lost be at any time enforceable by anyone, and shall be equally and proportionately secured with any other Bond issued hereunder. Section 11. Priority of Use 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; A � 0J CITY OF SEWARD, ALASKA RESOLUTION 2015-115 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 Project, to purchase or redeem long term care facility revenue bonds or notes of the 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 has been created a special fund of the 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 of the Bond 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 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 Bond 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 K�y CITY OF SEWARD, ALASKA RESOLUTION 2015-115 closing and delivery of the Bond, 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 Subaccourit 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 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 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. R qrl CITY OF SEWARD, ALASKA RESOLUTION 2015-115 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 of the 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 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 all times carry all-risk insurance and such other forms of insurance on such of the buildings, equipment, property, and facilities of the Project as are ordinarily insured in such amounts and with such deductibles as under good business practice are ordinarily carried on 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% of the estimated replacement cost of the insurable parts of the Project; or (ii) the aggregate principal amount of the 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 of the Project in such manner as prescribed by any authorities having jurisdiction over the Project; will cause its books and accounts to be audited annually by 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 of the Parity Bonds. Said audit shall show whether or not the City has in all respects performed and complied with the covenants set forth 1.3' � 00 CITY OF SEWARD, ALASKA RESOLUTION 2015-115 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 Project 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 of the 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 maybe redeemed, nor will it sell or otherwise dispose of any part of the 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, if unpaid, 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 of the Parity Bonds, or which might impair the security of the 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. I. 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, 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 issue the Bond 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 of the City to that end has been and will be duly and validly taken. The Bond and the provisions of this resolution are and will be the valid and legally X49 CITY OF SEWARD, ALASKA RESOLUTION 2015-115 enforceable obligations of the City in accordance with their terms and the terms of this 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 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 of the 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 Project, 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 of the City that have a lien on Pledged Revenues for the payment of the principal thereof and interest thereon junior and inferior to the lien on Pledged Revenues for the payment of the principal of and interest on the Bonds and upon compliance with the following conditions: (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 of this 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 of the 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. CITY OF SEWARD, ALASKA RESOLUTION 2015-115 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. (3) Notwithstanding the preceding provisions of subparagraph (A)(2), the Consulting Engineer Certificate referred to above shall not be required if 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 of this subparagraph (2), Future 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 operation of any additions or improvements to or extensions of the Project 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 of the 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. 1651 CITY OF SEWARD, ALASKA RESOLUTION 2015-115 C. 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. Section 18. Covenants Regarding Arbitrage and Private Activity Bonds. The City hereby covenants that it will not make any use of the proceeds of sale of the Bond or any other funds of the City which may be deemed to be proceeds of such a Bond pursuant to Section 148 of the Code which will cause the Bond to be an "arbitrage bond" 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 Bond) and the applicable regulations thereunder throughout the term of the Bond. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bond to constitute a "private activity bond" 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 the Bond in accordance with its terms are set aside in a special trust 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 of the principal of and interest on the Bond, and the Bond shall cease to be entitled to any lien, benefit or security of this resolution except the right to receive the funds so set aside and pledged, and the Bond 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 of the Bond, the proper officials of the City are hereby authorized and directed to do everything necessary to complete such sale and to deliver the Bond 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 of this resolution, for anyone or more of the following purposes: X51 CITY OF SEWARD, ALASKA RESOLUTION 2015-115 (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 of the 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 of the Parity Bonds then outstanding; or (3) Remove the pledge and lien of this resolution on Pledged Revenues. 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 of the City under this resolution and all owners of the 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. � �3 CITY OF SEWARD, ALASKA RESOLUTION 2015-115 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. Exchange of Bonds; Amendatory Loan Agreement. The Bond shall be delivered to the Bond Bank in exchange for the Refunded Bonds. The City has been advised by the Bond Bank that bond market conditions are fluctuating and that the most favorable market conditions for the sale of the Bond Bank Bonds may not occur on the date of a regular Council meeting. The Council has determined that it would be inconvenient to hold a special meeting on short notice to approve the terms of the Bond. Therefore, the Council hereby determines that it is in the best interest of the City to delegate the authority to approve the terms of the Bond as provided herein. Each of the City Manager and the City Finance Director is hereby authorized to determine the aggregate principal amount, principal installment amounts, interest rates, yields, dated date, principal and interest payment dates, and redemption terms, if any, for the Bond, so that such terms of the Bond conform to the terms of the corresponding Bond Bank Bonds; provided that (i) the principal amount of each maturity of the Bond shall not exceed the principal amount of the portion of the corresponding maturity of the Bond Bank Bonds that is allocated to the refunding of the Refunded Bonds; and (ii) the interest rate on each principal installment of the Bond shall not exceed the interest rate on the corresponding maturity of the Bond Bank Bonds. Based upon the foregoing determinations, the City Manager and the City Finance Director each is authorized to negotiate and execute an Amendatory Loan Agreement in the form submitted to and part of the records of this meeting. The authority granted to the City Manager and City Finance Director by this section shall expire 180 days after the effective date of this resolution. If the City Manager or City Finance Director has not executed 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 23. Authority of Officers. The Mayor, the City Manager, the City Finance Director, and the City Clerk are, and each of them hereby is, authorized and directed to do and perform all things and determine all matters not determined by this resolution, to the end that the City may carry out its obligations under the Bond and this resolution. Section 24. Miscellaneous. A. All payments made by the City of, or on account of, the principal of or interest on the Bond shall be made on the Bond ratably and in proportion to the amount due thereon, respectively, for principal or interest as the case may be. B. No recourse shall be had for the payment of the principal of or the interest on the Bond or for any claim based thereon or on this resolution against any member of the Councilor Ma CITY OF SEWARD, ALASKA RESOLUTION 2015-115 officer of the City or any person executing the Bond. The Bond is not and shall not be in any way a debt or liability of the State of Alaska or of any political subdivision thereof, except the City, and from the Pledged Revenues as stated on the Bond, and do not and shall not create or constitute an indebtedness or obligation, either legal, moral or otherwise, of said state or of any political subdivision thereof, except the City, and from the Pledged Revenues as stated on the Bond. Section 25. Continuing Disclosure. The City acknowledges that, under Rule 15c2-12 of the Securities and Exchange Commission (the "Rule"), the City may now or in the future be an "obligated person" with respect to bonds issued by the Bond Bank. In accordance with the Rule and as the Bond Bank may require the City shall enter into a continuing disclosure agreement and undertake to provide certain financial information and operating data as set forth in the Amendatory Loan Agreements. Notwithstanding any other provision of this resolution, failure of the City to comply with the continuing disclosure agreement shall not be considered a default of the City's obligations under this resolution or the Bond; however, the beneficial owner of any Bond or Bond Bank Bond may bring an action for specific performance, to cause the City to comply with its obligations under this section. Section 26. 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 of this resolution or of the Bond. Section 27. Incorporation of Recitals. The Recitals set forth in this resolution are hereby incorporated in, and made a part of, this resolution. Section 28. Effective Date. This resolution shall take effect immediately. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14th day of December, 2015. AYES: NOES: ABSENT: ABSTAIN: THE CITY OF SEWARD, ALASKA Jean Bardarson, Mayor 2,0% CITY OF SEWARD, ALASKA RESOLUTION 2015-115 ATTEST: Johann Kinney, CMC, City Clerk (City Seal) - -2t 5� Council Agenda Statement Meeting Date: December 14, 2015 To: City Council Through: Jim Hunt, City Mana er From: Kristin Erchinger, Finance Director Aizenda Item: Refunding Long -Term Care Facilitv Revenue Bonds BACKGROUND & JUSTIFICATION: On March 13, 2006, the Seward City Council approved Resolution 2006-28 authorizing the issuance of $27 million of Long -Term Care Facility revenue bonds for the purpose of providing amounts to design, acquire, construct, and equip Seward Mountain Haven long-term care facility. As of December 31, 2015, the outstanding balance on the bonds is $23,250,000. The City Council authorized the refunding of these bonds March 11, 2015 (Resolution 2015-018). The administration has made two attempts to refinance these bonds in 2015, but given the unfavorable interest rate environment, negative arbitrage made market conditions unfavorable. The Alaska Municipal Bond Bank (AMBBA) will be going to the market to sell bonds mid-January 2016, and we seek Council authorization to test market conditions for refunding these bonds. The timing of the refunding is important because of the low interest rate environment, combined with the expectation of prolonged low oil prices which could place further pressure on borrowing costs for Alaskan entities. Current market conditions result in an estimated net present value (NPV) savings of approximately $1.46 Million, net of all costs, over the life of this bond. This estimate is based on an estimated true interest cost of 3.21 %, and an overall NPV savings of 7.14%. Generally, the City looks favorably on a refunding when it can achieve a NPV savings of at least 3%, and a savings of 7.14% makes these bonds good candidates for refunding. 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 AMBBA. INTENT: To refund the Long -Term Care Facility Revenue 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 (2020 Comp Plan): X 2. Strategic Plan: X 3. Other: Resolution 2006-28; Resolution 2015-18 X FISCAL NOTE: This action is intended to result in a reduction in annual debt costs from approximately $1.97 Million to $1.82 Million, for an estimated net present value savings of $1.46 Million. The final maturity of these bonds is expected to change from April 2033 to December 2033. The maximum requested amount of the refunding is $25,900,000 to account for the fact that the refunding escrow accounts must pay interest through the call dates rather than -just the outstanding principal amounts being refunded. Approved by Finance Department: �� ATTORNEY REVIEW: Yes X No RECOMMENDATION: Approve City Council Resolution 2015- 115, authorizing the City of Seward to issue refunding revenue bonds in a principal amount not to exceed $25,900,000, 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. 5C6 li": tc`h Ass-,:- c -:-t:0 YJ c . fl 7 4b7.'73I� F'r�°� ?. 2'7 7_14673,48: April 24, 2015 Honorable Mayor and City Council Members City of Seward, Alaska 410 Adams Street Seward, Alaska 99664 Attention: Kristin Erchinger, Finance Director Re: Proposed Refunding of 2008 Bond Issues for LTC Facilties and Electric Department Ladies and Gentlemen: The Council has previously established its intent to consider refunding a portion of its 2008 bonds which were issued to construct its Long -Term Care Facility and to pay certain capital costs of its Electric Department. The Refunding Bonds would be issued through the Alaska Municipal Bond Bank Authority in a manner similar to the two series of 2005 bonds - which were successfully advance refunded in October, 2014 at considerable net present savings. While the proposed savings of this refinancing are less than the 2014 refunding issue on a percentage basis of net present value, the absolute dollar savings are significantly greater as a result of the substantial size of the, 2015 proposed refunding. Based on the latest numerical analysis as of April 7, 2015 (a summary of which is attached), the estimated net present value savings are $1,466,310 for the combined issues and represent approximately 6.04% compared to the amount of bonds refunded. The technique to accomplish the advance refunding is the same as the 2014 issue — the bonds in both cases are not yet currently callable as the original bonds gave the investor ten years of call protection. In order to accomplish the refunding, an escrow account must be established to service the bonds being refunded through their respective call dates. This creates substantial "negative arbitrage" because yields on allowable escrow securities (non -callable U.S. Treasury obligations) to the first call date are only about .8% (less than 1%) compared to the true interest cost on the new bonds of approximately 3.153% to 3.527%. This negative arbitrage is currently estimated to be about $1.4 million which is just under the net present value savings projected at $1.466 million (net of all costs and the negative arbitrage). This negative arbitrage is paid for through the use of premium bonds whereby the new bonds have a significantly higher coupon than the reoffering yields to investors. All of these factors are taken into account in the calculation of estimated net present value savings. vvw�v B1xtch. s8aei�a ves. rn. B litc h. A 7I:] . I T' ��v y, u-1�te 820 1 -TO ©z ,. TX 7707211 O ffi'cl(Z 713.4673344 T�11; Fre6.88 -.726.2779 Fox 713:x-6.7 3 City of Seward, Alaska April 24, 2015 Page 2 After everything is taken into account, the April 7, 2015 illustration is estimated to save the City a total of approximately $73,851 annually on a net present value basis As on the previous refunding in 2014, the City is only allowed one advance refunding under current tax rules and regulations. It is important therefore to carefully determine when to enter into such a transaction. We would suggest that as a general rule the City establish a threshold level of net present value savings of at least 5% on the par value of the refunded bonds. This proposed refunding currently exceeds this threshold. Another consideration some issuers use is that the net present value savings should at least equal the negative arbitrage to the call date which this analysis achieves but not by a great margin. Based on all these considerations, we would recommend moving forward with this financing but make the final decision when the numbers are more established. The Finance Director and City Manager have been given the authority to make this final decision with the advice of its counsel and we recommend that we continue to prepare for this transaction. Sincerely, Blitch Associates, Inc. By Don W. Grimes, Sr. Vice President �6 Yyyv v B1: tch A ss o,c ia tes.,c,Om:. AMENDATORY LOAN AGREEMENT THIS AMENDATORY LOAN AGREEMENT, dated as of the _ day of 2016, between the Alaska Municipal Bond Bank (the "Bank"), a body corporate and politic constituted as an instrumentality of the State of Alaska (the "State") exercising public and essential governmental functions, created pursuant to the provisions of Chapter 85, Title 44, Alaska Statutes, as amended'(the "Act"), having its principal place of business at Juneau, Alaska, and the City of Seward, Alaska, a municipal corporation organized and existing under the Home Rule Charter of the City and the Constitution and laws of the State (the "City"): WITNESSETH: WHEREAS, pursuant to the Act, the Bank is authorized to issue bonds and to loan money (the "Loans") to governmental units; and WHEREAS, the City is a "Governmental Unit" as defined in the General Bond Resolution of the Bank hereinafter mentioned and was authorized to accept a Loan from the Bank, evidenced by its municipal bond; and WHEREAS, to provide for the issuance of bonds of the Bank to obtain from time to time money with which to make and/or refinance municipal Loans, the Bank adopted its General Obligation Bond Resolution on July 13, 2005, as amended (the "General Bond Resolution"); and WHEREAS, the Board of the Bank approved certain modifications to the General Bond Resolution, effective on the date when all bonds issued under the terms of the General Bond Resolution prior to February 19, 2013 cease to be outstanding; and WHEREAS, on April 15, 2008 the Bank made a Loan to the City from proceeds of the Bank's General Obligation Bonds, 2008 Series One (the "2008 Series One Bonds") in the amount of $27,000,000, evidenced by a Loan Agreement dated April 1, 2008 (the "Loan Agreement") between the Bank and the City; and WHEREAS, the Bank's 2008 Series One Bonds were issued pursuant to the terms of the Bank's General Bond Resolution, as amended and supplemented by a series resolution; and WHEREAS, as security for repayment of the Loan, the City issued its City of Seward, Alaska Long Term Care Facility Revenue Bonds, 2008, dated April 15, 2008 (the "Municipal Bond") of which the Bank is the registered owner; and WHEREAS, the Bank has determined that refunding a portion of the 2008 Series One Bonds will result in a debt service savings thereon and on the Municipal Bond; and WHEREAS, pursuant to the terms of the General Bond Resolution, on December 15, 2015 the Bank adopted Series Resolution No. 2015-05 (the "Series Resolution" and together with the General Bond Resolution, the "Bond Resolution") authorizing the issuance of its General Obligation and Refunding Bonds, 2016 Series One, one portion of which (the "Refunding Bonds"), is for the purpose of refunding a portion of the Bank's outstanding 2008 Series One Bonds; and WHEREAS, to effect the proposed refunding and resulting debt service savings on the Municipal Bond, and to conform the terms of the Loan Agreement to the current practices of the Bank, it is necessary to amend the terms of the Loan Agreement and the Municipal Bond as provided herein. NOW, THEREFORE, the parties agree as follows: 1. The Bank will refund a portion of the outstanding 2008 Series One Bonds as provided in the Series Resolution. The amounts of the principal installments of the Municipal Bond corresponding to the refunded maturities of the 2008 Series One Bonds, and the interest payable thereon, shall be adjusted pro rata in accordance with the debt service payable on the Refunding Bonds. The Municipal Bond henceforth shall mature in the principal amounts and bear interest at the rates per annum as stated on Exhibit A appended hereto. 2. Section 2 of the Loan Agreement is amended to include the following paragraph: The City represents that the City Resolution remains in full force and effect and that the City it has duly adopted all necessary ordinances or resolutions, including Resolution No. adopted by the City Council on December 14, 2015 (the "City Refunding Resolution" and together with the City's Resolution, the "Resolutions"), and has taken or will take all proceedings required by law to enable it to enter into this Amendatory Loan Agreement and to issue its refunding Municipal Bond to the Bank and that the refunding Municipal Bond will constitute a special revenue obligation of the City all duly authorized by, such Resolutions. 3. The refunding Municipal Bond shall be subject to optional prepayment prior to maturity on and after the same date, and on the same terms as the Refunding Bonds may be subject to optional redemption. 4. Section 16 of the Loan Agreement is amended by replacing the current language with the following Subsection (a): "(a) The City agrees that if its bonds constitute ten percent (10%) or more of the outstanding principal of municipal bonds held by the Bank under its General Bond Resolution, it shall provide the Bank for inclusion in future official statements, upon request, financial information generally of the type included in Appendix D of the Bank's Official Statement, dated 2016, under the heading "Summaries of Borrowers Representing 10% or More of Outstanding Principal of Bonds Issued Under the 2005 General Bond Resolution" to the Official Statement and attached hereto as Exhibit B. "The City further agrees that if its bonds constitute ten percent (10%) or more of the outstanding principal of municipal bonds held by the Bank under its General Bond Resolution, it shall execute a continuing disclosure agreement prepared by the Bank for purpose of Securities and Exchange Commission Rule 15c2-12, adopted under the Securities and Exchange Act of 1934." 5. A new Subsection 16(b) is added to the Loan Agreement, as follows: . 2 Page 2 "(b) The City agrees that it shall file, on an annual basis, its audited financial statements with the Municipal Securities Rulemaking Board not later than two hundred ten (2 10) days after the end of each fiscal year of the City for the term of the Municipal Bond and any refunding Municipal Bond. The City agrees filings under this Subsection 16(b) shall be made in connection with CUSIP Nos. 01179P, 011798 and 01179R. Additional or alternate CUSIP number(s) may be added from time to time by written notice from the Bank to the City. The City agrees that if it shall receive from the Bank CUSIP number(s) in addition to those set forth in this Subsection then it shall make its filings using both CUSIP numbers herein stated and any additional CUSIP number(s). 6. Section 22 is hereby renumbered "Section 25," and a new Section 22 is added to the Loan Agreement, as follows: The City hereby agrees to keep and retain, until the date six years after the retirement of the Municipal Bond, or any bond issued to refund the Municipal Bond, or such longer period as may be required by the City's record retention policies and procedures, records with respect to the investment, expenditure and use of the proceeds derived from the sale of its Municipal Bond, including without limitation, records, schedules, bills, invoices, check registers, cancelled checks and supporting, documentation evidencing use of proceeds, and investments and/or reinvestments of proceeds. The City agrees that all records required by the preceding sentence shall be made available to the Bank upon request. 7. A new Section 23 is added to the Loan Agreement, as follows: The City hereby agrees that it shall fully fund, at the time of loan funding, its debt service reserve fund (in an amount equal to $ ) which secures payment of principal and interest on its Municipal Bond, and that such fund shall be held in the name of the City with the Trustee. The City further agrees that the yield on amounts held in such debt service reserve account shall be restricted to a yield not in excess of percent. 8. A new Section 24 is added to the Loan Agreement, as follows: (a) The City hereby certifies that all Municipal Bond proceeds, except for those proceeds that are accounted for as transferred proceeds in the arbitrage certificate for its refunding Municipal Bond, have been expended prior to the date hereof. (b) The City hereby certifies that all required rebate calculations relating to the Municipal Bond have been timely performed and that the City has remitted any necessary amount(s) to the Internal Revenue Service. (c) The City hereby certifies that the Municipal Bond, or any portion thereof, has not previously been advance refunded. IN WITNESS WHEREOF, the parties hereto have executed this Amendatory Loan Agreement as of the date first set forth above. ALASKA MUNICIPAL BOND BANK �� Page 3 DEVIN J. MITCHELL Executive Director CITY OF SEWARD, ALASKA Its: 64 Page 4 EXHIBIT A City of Seward, Alaska Long Term Facility Revenue Refunding Bond, 2016 Principal Sum of $ Principal Payment Date ( 1, 20 ) Principal Interest Amount Rate Principal installments shall be payable on April 1 in each of the years, and in the amounts set forth above. Interest on the Municipal Bond shall be payable on April 1, 2016, and thereafter on 1 and 1 of each year. Prepayment Provisions: The Municipal Bond principal installments are not subject to prepayment prior to maturity. Optional Prepayment: The Municipal Bond principal installments due on or after 1, 20_ are subject to prepayment in whole or in part at the option of the [City] [Borough] on any date on or after 1,20 , at a price of 100% of the principal amount thereof to be prepaid, plus accrued interest to the date of prepayment. l 5 Page A-1 EXHIBIT B (P�O Page B-1 OHSUSA:764257379.2 Sponsored by: Hunt CITY OF SEWARD, ALASKA RESOLUTION 2015-116 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, APPROVING A LEGAL SERVICES AGREEMENT WITH BIRCH HORTON BITTNER & CHEROT WHEREAS, the city has need of professional -legal services in a wide variety of settings including employment relations, contracting, real property transactions, ordinance and resolution drafting, environmental and financial matters, as well as more generalized services to the city; and WHEREAS, it is in the public interest to engage the services of a law firm with the required areas of expertise and experience in municipal law issues; and WHEREAS, the city's current firm Wohlforth, Brecht & Cartledge is dissolving by year end; and WHEREAS, at their October 26, 2015 meeting, the'City Council directed staff to issue a Request For Proposals to provide legal services; and WHEREAS, in November, 2015, the city advertised for such Request For Proposals, advertising in the Alaska Dispatch News; and WHEREAS, five proposals were received from legal firms; and WHEREAS, at a special meeting on December 3, 2015, the scoring committee comprised of members of the City Council, City Administration, and the City Clerk scored the proposals, selecting three applicants to interview on December 7, 2015; and WHEREAS, at a special meeting on December 7, 2015, the City Council voted to enter into contract negotiations and conduct reference checks with the legal firm Birch Horton Bittner & Cherot. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The legal services agreement, as substantially presented at this meeting is hereby approved. Section 2. This resolution shall take effect immediately. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 140'day of December, 2015. b1 Agenda Statement Meeting Date: December 14, 2015 To: City Council Through: Jim Hunt, City Manager From: Johanna Kinney, City Clerk Agenda Item: Approving a legal services agreement with Birch Horton Bittner & Cherot. BACKGROUND & JUSTIFICATION: Due to the dissolving of the city's current legal firm Wohlforth, Brecht & Cartledge, the city was faced with obtaining new legal representation for the first time in over twenty years. The City Council directed staff to prepare a Request For Proposal for such legal services and five proposals were received. Upon preliminary scoring and interviewing throughout the month of November and December, the City Council has selected the law firm of Birch Horton Bittner & Cherot (BHBC) to negotiate a contract for legal services. The contract included in this agenda packet is negotiated and signed by BHBC. The agreed upon rate schedule is $215 per hour for Shareholders and Lead Attorney Will Earnhart, $195.00 for Associates, and $120.00 per hour for Paralegals/Law Clerks. INTENT: CONSISTENCY CHECKLIST: Yes No N/A City Charter (document source here): 2.1 (b) "The appointive officers of the city are the city manager, the city clerk and the city attorney. " 1. 2.5 The compensation of all elective officers and board members, the city manager, the city clerk and the city attorney shall be established by X the council. " 5.6 "The city attorney shall act as the legal advisor or and be res onsible to the council. " 2. City Code (document source here): 2.20.040 — City Attorney X FISCAL NOTE: The Funding for city legal services is a budget fund approved in the 2016-2017 Budget. No Approved by Finance Department: ATTORNEY REVIEW: Yes No—X. RECOMMENDATION: Council approve Resolution 2015-116, a legal services agreement with Birch Horton Bittner & Cherot. ('09 LEGAL SERVICES AGREEMENT This AGREEMENT dated and effective this 140` day of . December, 2015 is made between the CITY: OF SEWARD (the "City") and the law firm Birch H:ortonBittner & Cherot (the "Law Finn"). 1. LEGAL SERVICES TO BE PROVIDED. The Law Firm agrees to serve as the attorney and to provide., on request, legal advice andservicesas necessary to. the City Council and: City administration. For budgetary Is and financial planning, the purposes of budgetar - controls 1 1. .. c .. provision of legal services under this agreement will be considered a City departmental function With the normal budgetary restraints. For each annual budget cycle, and as required during the fiscal year, the City attorney shall -prepare, with approval of the City manager, a budget for services for the fiscal year. The City Manager shall be responsible for overall budget compliance in the same manner as other City departments. Billings by the Law Finn under a budget line item are not to exceed the budgeted amount without the -required appropriation.by the City: Council. 2. SCOPE OF SERVICES. The: Law Firmishall act as City attorney of the City; shall represent the City in all civil and criminal proceedings except those matters which may be assigned by the City to other counsel, and shall act as legal advisor to and be attorney and counsel for the City Council and city manager: in all matters of law affecting the City. Except on an emergency basis (e.g., responding -to litigation seeking emergency relief). the Law Virin is not to provide or bill for any -legal services without first obtaining the approval of the City. Such approval may be provided by the Cit Manager up to the limits established by Pro -Y 9. the City Code: but shall appropriate, consist of specific City Coun6il authorization ,411 also, where when an additional appropriation is required. Where possible, categories of legal services shall be identified annually in the budget process and included:in the City legal services budget. When that is not possible (e.g., when the City is the sub) ect of litigation commenced after the beginning of the fiscal year), The City Manager shall request the City attorney to prepare an outline form budget f6r a matter which shall be submitted by the City Manager to the Council approval; . ali . The City administration will provide the Council with regular financial `information at least quarterl Alp budgeted amounts, 1. y showing the actual expenses year to, date, a comparison to the and such other information as the Council may request in order to monitor both the extent and expense ..Of legal services. 3. FEES FOR SERVICES". Services provided under'this agreement will- be based on hourly rates for the various members of the Law Firm as set forth in the. rate schedule: attached as Exhibit A. The rates set forth in Exhibit A shall be subject to renegotiation between the City and the Law Finn no more frequently than once every two years. There will be no charge for responding to telephone calls from the Mayor, Council Members or senior administrators of the City seeking basic legal information concerning their functionsand responsibilities, where the. CITY OF -SEWARD/ LEGAL SERVICES AGREEMENT response requires minimal research effort.: There. will be no charge for travel time, 'as such, work actually preformed for the City while traveling will be billed at the applicable hourly rate. Direct out-of-pocket expenses shall be:charged at actual costs. Law Firm billing will: be separated into matters for billing purposes. The Law Firm will not bill for any services aside from those listed without -first obtaining approval from the City. That approval will be reflected on forms developed by the Law Firm and the City administration and may, where appropriate,, include estimated project budgets and other information. Itemized monthly billii g k0b* rmation shall include all of the following items: The date the service: is rendered The individual who performed the service The time spent preforming the service A narrative description of the service The hourly rate of the: individual who performed the service An extension of the above items showing the cost (rate multiplied by the time) for 'the specific service. In addition, the Law Firm will provide a one-page summary, sheet each month showing by project account code (using City account codes): the various projects and :cost of each. This summary will be. provided: for information to the Council :each month. The Law Firm will not bill for regular incidental charges such as telephone; copy, of facsimile. The Law Firm will not bill for extraordinary expenses (such .as a. Major copying project.) without-p''rior approval from the City Manager. In.order to preserve the attorney-client privilege, or whereit would be in the: best: intertest. of the City to utilize the attorney work product doctrine to protect the legal interest of the City, the Law Firm may include shares and cost for experts or :others who work on :behalf of the City but •only upon prior approval consent :of the. City. Biliirigs 'for those services will be separately itemized and the Law Firm will not chane .any mark-up or administrative fees for administering those projects. The Law Firm will send the City itemized bills on a monthly basis and :payment is due within thirty (30) days :of receipt of the billing. Interest. at the rate of :10.5% per year with accrue on unpaid invoices after sixty (60) days. The. Law irm will. -cooperate and assist the City's auditors in review :and analysis of the City's legal services, cost, including :those incurred by .outside counsel. The above provisions do not' apply to any services of the Law Firm .as the City'a bond counsel. Fees for bond counsel services will be negotiated separately for each bond financing. transaction where the Law Firm is engaged as bond counsel. :4. RESPONSIBLE OR LEAD ATTORNEY. For purposes of the City Charter and other :requirements, William Earnhart will be the:designated City attorney. He may, in his discretion, assign City matters to other attorneys or legal assistants in the Law Firm for handling work under his supervision. CITY OF :SEWARD/ LEGAL SERVICES AGREEMENT rl'< 5. Monthly :Reports: The Law Firm will provide the Council, at least monthly; a written report on all legal matters and issues involving the City. The Law (firm will be. responsible for obtaining information on matters handled by outside counsel (such as insurance company appointed counsel) and will coordinatethe annual audit letter preparation for: the City. The monthly reports are to be considered subject to the attorney-client privilege unless that privilege is waived by council. 6. Insurance and Indemnification. ................. A. The: firm shall maintain in good standing the insurance described below:::Before rendering any services under'this contract; the firm shall furnish the City Manager with proof'of the insurance. B. The firm shall provide the: follow ng:types of insurance. The City of Seward shall be named as additional insured on all. insurance policies: except Professional Liability :and Worker's Compensation policies. All policies shall have a thirty day notice of cancellation clause. 1. Workers'Compensation $1:00,000 Employer's Liability. and Worker's Compensation as required by Alaska State. Workers' Compensation Statutes. z Professional Liability Agree to provide layer's professional liability insurance for all periods under the contract and provide an extended reporting period endorsement after the end of the contract for three years. Without request by the City, the firm shall provide proof of insurance during the contract period and proof of:such endorsement after the end of the contract. The firms' carrier must agree to: notify the City thirty days before cancellation of insurance or of theextended reporting period endorsement. The insurance shall provide coverage for claims up to a minimum amount of $1,000;000 per claim. 7. Permits, Laws, and Taxes. The firm shall acquire and maintain in good standing all permits, licenses, and other entitlements necessary to: its performance under this contract. All actions taken .by the firm under this contract shall comply with all applicable law to include without limitation, statutes,, ordinances, rules, and regulations. CITY OF SEWARD/ LEGAL SERVICES AGREEMENT Ml & TER. M OF AGREEMENT. This agreement will take effect this 14th day of December, 2015, and shall- continue from year to year until terminated by either party. The City may terminate this agreement at any time: and for any reason. The Law Firm may not terminate this agreement without first giving ninety (90) days' written notice. City of Seward _. ...... .............. . By: Jiro Hunt Title: City Manager Date: :.:...::...... . ATTEST: Johanna Kinney, CMC City Clerk (City Seal) CITY OF SEWARD/ LEGAL SERVICES AGREEMENT 9� EXHIBIT A FEESCHEDULE A. Hourly costs. Shareholders/Members/Will Earnhart: $215.00 per hour Associates: $195.00 per hour Paralegals/Law Clerks: $120.00 per hour Attorneys will be available on-call for telephonic participation in meetings without charge for "standby" time. There will be no charge for responding to telephone calls from the Mayor, Council Members or senior administrators of the City seeking basic legal information concerning their functions and responsibilities, where the response requires minimal research effort. B. Travel costs. The firm will not charge for travel to and from Seward for one Council meeting each month (12 trips). Thereafter, our fee will be one-half of our normal rate for travel time for each roundtrip. All costs and expenses will be charged at actual cost. C. Bond Counsel. The above provisions do not apply to any services of the Firm as the City's bond counsel. Fees for bond counsel services will be negotiated separately for each bond financing transaction where the Firm is engaged as bond counsel. D. Expenses. For out-of-pocket expenses incurred in the course of representation, Seward would be billed the actual cost where applicable, or in the event services are contracted for in bulk, a reasonable allocation of expenses for such services. Such expenses include expedited mail, filing and recording fees, computerized research fees, and travel expenses. The Firm will not bill for administrative staff time or word processing services. The Firm will not bill for regular incidental charges such as telephone or facsimile. The Firm will not bill for extraordinary expenses (such as a major copying project) without prior approval from the City Manager. In order to preserve the attorney-client privilege, or where it would be in the best interest of the City to utilize the attorney work product doctrine to protect the legal interest of the City, the Firm may include charges and cost for experts or others who work on behalf of the City but only upon prior approval consent of the City. Billings for those services will be separately itemized and the firm will not charge any mark-up or administrative fees for administering those projects. City of Seward Legal Services Contract Resolution 2015-116 D �Ce m �� r,,2 O'15 SuuWDecember 201'5 January 2016 rto Te Th Fr 5a SuMo,:TuWe;fh Fr Sia 1 2 ". 3 , 4.', 5 1 2 6 7- 8 9.10 11 12 3' `4 ,.5 6: 7 8 9 13 14.15-16 17 18.19 10 11.12:13 14 15 16 20 21 22.23 .24..25 26 17;18.19;20 21 22 23 27 28.29 30. 31 24 25.26.27 28 29 30 Monday Tuesday Wednesday Thursday Friday Nov 30 Dec 1 2 3 4 6:00pm P&Z WS; Flooc 12:OOpm �a'Seward RecrF' 4:00pm CC Special Mt( 7:00pm P&Z Mtg; City w 0 0 m O Z 7 8 9 10 11 11:00am CCSpc Mtg 12:00pm PACAB Mtg n a 0 14 15 16 17 18 6:30pm SpcCCMtg 12:00pm PACAB Work 5 7:00pm CC Mtg 6:30pm HP Mtg & WS 00 v u 21 22 23 24 25 12:00pm Merry Christmi j Merry Christmas; OfficLn N i N N N O 28 29 30 31 Jan 1, 16 C 00 N U Ol 0 Nnnri Rirhov 1 12/11/2015 2:35 PM January 2016 February 2016 s J Onua ry 2 016 SUM q ;TuWe Th Er Sa : Surto TuWe Th Fr Sa 1 �,2` 1 '2 3 4 5 6 3 4 5 6 7 -8 .9 7 8 9 10 11 12 13 10 11.12 13'14'•15,16 14-15.16 17 18 19 20 1748,19'20 21, 22.23 - - 21 22 23 24 25 26 27 24 25.26 27•. 28'29 30 31 . t Monday Tuesday Wednesday Thursday Friday Dec 28 29 30 31 Jan 1, 16 Happy New Year, OR N Ol 0 4 5 6 7 8 12:00pm PACAB Mtg v c m 11 12 13 14 15 7:00pm CC Mtg Ln c 18 19 20 21 22 6:00pm P&Z WS 12:00pm PACAB Work S N N i CO ,-i C 25 26 27 28 29 7:00pm CC Mtg rn N N C IO Nanri Rirhav 7 12/11/2015 2:35 PM February 2016 March 2016 Februa 2016 Surto-TuWe Th ,Fr Sa SuMo TuWe:Th 'Fr. Sa 1' 2 3 4;.5 6', 1' 2.3 4 '5 -7. 8'••9 1011 12-13 6''7,,:8 '910 11 12 14 15.16 17, 18'19 20 13:14115,16 17.18 19 21.22 23 24 25-26,27'20. 21;: 22.23 24 25 26 28-29 27 ;2829 30 31 Monday Tuesday Wednesday Thursday Friday Feb 1 2 3 4 5 7:00pm P&Z Mtg; City 12:00pm PACAB Mtg tn .o w LL 8 9 10 11 12 7:00pm CC Mtg N 1- i 00 ll 15 16 17 18 19 6:00pm P&Z WS 12:00pm PACAB Work 5 o, v LL 22 23 24 25 126 7:00pm CC Mtg N i N N Gl LL 29 Mar 1 2 13 14 v o, N Ol LL Nanci Richey 3 1L/11/Lu1S L:SS Fm