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HomeMy WebLinkAboutRes2015-115 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: 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. 2 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, 3 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 4 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 Payment. 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. 5 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 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: 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 and semiannually thereafter on the first days of each and of each year, at the rates per annum as follows: 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. 7 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. 8 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. I 9 CITY OF SEWARD,ALASKA RESOLUTION 2015-115 I 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; 10 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 11 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 Subaccount by the withdrawal of cash therefrom. Any deficiency created in the Reserve Subaccount by reason of any such withdrawal shall then be made up from Pledged Revenues first available therefor after making necessary provision for the required payments into the Debt Service Subaccount. Investments in the Reserve Subaccount shall be valued at amortized cost except 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. 12 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 13 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 14 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. 15 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. 16 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: 17 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. 18 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 19 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. THE CITY OF SEWARD, ALASKA an Bardarson, Mayor AYES: Casagranda, Keil, Squires, Butts, McClure, Altermatt, Bardarson NOES: None ABSENT: None ABSTAIN: None 20 CITY OF SEWARD, ALASKA RESOLUTION 2015-115 ATTEST: .iIA.: ./A ØL . / / Johanna Kinnf, C, City Clerk (Ci, eal) z! Fa a e'er ':i l '�f� • e• ikk I I 21 Council Agenda Statement e of sFw Meeting Date: December 14, 2015 ;j4I: `S To: City Council eP Through: Jim Hunt, City Manai ■ From: Kristin Erchinger, Finance Director k01° Agenda Item: Refunding Long-Term Care Facility 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:%Lr, �j� 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$25,900,000, authorizing the execution of a loan agreement between the City of Seward and the Alaska Municipal Bond Bank, authorizing the sale of such bonds, and providing for related matters. 5$