HomeMy WebLinkAbout2010-017CITY OF ARLINGTON, WASHINGTON
ORDINANCE NO. 4
AN ORDINANCE of the City of Arlington, Washington, providing for the
issuance of $6,010,000 par value of Limited Tax General Obligation and
Refunding Bonds, 2010 to provide funds to pay a part of the cost of purchasing
airport land, remodeling Fire Station #46, to advance refund a portion of the
City's outstanding Limited Tax General Obligation Bonds, 2001 and to repay a
loan to Snohomish County; fixing certain terms and covenants of the bonds; and
approving the sale of the bonds to Piper Jaffray & Co. of Seattle, Washington.
Passed: August 2, 2010
This document prepared by:
Foster Pepper PLLC
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447-4400
510702846
TABLE OF CONTENTS
Page
Section1 .
Definitions...............................................................................................................2
Section2 .
Debt Capacity..........................................................................................................
4
Section 3 .
Authorization of Bonds...........................................................................................
5
Section 4 .
Description of Bonds...............................................................................................5
Section 5 .
Registration and Transfer of Bonds.........................................................................
6
Section 6 .
Payment of Bonds...................................................................................................
8
Section 7 .
Redemption Provisions and Open Market Purchase of Bonds ................................
8
Section 8 .
Notice of Redemption...........................................................................................
I I
Section 9 .
Failure To Redeem Bonds.....................................................................................12
Section10.
Pledge of Taxes.....................................................................................................12
Section 11 .
Form and Execution of Bonds...............................................................................13
Section 12 .
Duties of Bond Registrar.......................................................................................14
Section 13 .
Preservation of Tax Exemption for Interest on Bonds..........................................14
Section 14.
Designation of Bonds as "Qualified Tax -Exempt Obligations" ...........................15
Section 15 .
Refunding or Defeasance of the Bonds.................................................................15
Section 16 .
Bond Fund and Deposit of Bond Proceeds...........................................................16
Section 17 .
Approval of Bond Purchase Contract....................................................................17
Section 18 .
Refunding of the Refunded Bonds........................................................................17
Section 19 .
Call for Redemption of the Refunded Bonds ........................................................
20
Section 20 .
City Findings with Respect to Refunding.............................................................21
Section 21 .
Preliminary Official Statement Deemed Final......................................................22
Section 22 .
Undertaking to Provide Continuing Disclosure....................................................22
Section 23 .
Effective Date of Ordinance..................................................................................25
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CITY OF ARLINGTON, WASHINGTON
ORDINANCE NO.2010 - OI+
AN ORDINANCE of the City of Arlington, Washington, providing for the
issuance of $6,010,000 par value of Limited Tax General Obligation and
Refunding Bonds, 2010 to provide funds to pay a part of the cost of purchasing
airport land, remodeling Fire Station #46, to advance refund a portion of the
City's outstanding Limited Tax General Obligation Bonds, 2001 and to repay a
loan to Snohomish County; fixing certain terms and covenants of the bonds; and
approving the sale of the bonds to Piper Jaffray & Co. of Seattle, Washington.
WHEREAS, the City of Arlington, Washington (the "City"), is in need of purchasing
airport land and remodeling Fire Station #46 (the "Projects"), and the City does not have
available sufficient funds to pay the cost; and
WHEREAS, pursuant to Ordinance No. 1267, the City of Arlington, Washington (the
"City") issued its $4,400,000 par value Limited Tax General Obligation Bonds, 2001 (the "2001
Bonds"), for the purpose of providing a portion of the funds to construct a new city hall/police
facility, make certain street improvements, construct a skate board park, and acquire land for a
fire station, and by that ordinance reserved the right to redeem the 2001 Bonds maturing on or
after October 1, 2012, prior to their maturity at any time on or after October 1, 2011, at a price of
par plus accrued interest to the date fixed for redemption; and
WHEREAS, there are presently outstanding $3,375,000 par value of 2001 Bonds
maturing on October 1 of each of the years 2012 through 2021, inclusive, and bearing various
interest rates from 4.25% to 4.90% (the "Refunded Bonds"); and
WHEREAS, it appears to the City Council that the Refunded Bonds may be refunded by
the issuance and sale of the limited tax general obligation and refunding bonds authorized herein
(the "Bonds") so that a savings will be effected by the difference between the principal and
interest cost over the life of the Bonds and the principal and interest cost over the life of the
510702846 -1-
Refunded Bonds but for such refunding, which refunding will be effected by carrying out the
Refunding Plan (as hereinafter defined); and
WHEREAS, the City has a loan outstanding (the "Loan") with Snohomish County (the
"County"), which was used to pay for the City's portion of the County's 800 MHz project; and
WHEREAS, the City Council deems it to be in the best interests of the City to issue and
sell the Bonds to pay (a) part of the costs of the Projects; (b) the cost of refunding the Refunded
Bonds; (c) to repay the Loan; and (d) the administrative costs of such refunding and the costs of
issuance and sale of the Bonds; and
WHEREAS, the Piper Jaffray & Co. of Seattle, Washington, has offered to purchase the
Bonds under the terms hereinafter set forth in the form of a bond purchase contract; NOW,
THEREFORE,
THE CITY COUNCIL OF THE CITY OF ARLINGTON, WASHINGTON, DO
ORDAIN AS FOLLOWS:
Section 1. Definitions. As used in this ordinance, the following words shall have the
following meanings:
"Acquired Obligations" means those United States Treasury Certificates of Indebtedness,
Notes, and Bonds --State and Local Government Series and other direct, noncallable obligations
of the United States of America purchased to accomplish the refunding of the Refunded Bonds
as authorized by this ordinance.
"Bond Fund" means the Limited Tax General Obligation and Refunding Bond Fund,
2010, created by this ordinance for the payment of the Bonds.
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"Bond Insurer" means Assured Guaranty Municipal Corp. (formerly known as Financial
Security Assurance Inc.), a New York stock exchange insurance company, or any successor
thereto or assignee thereof.
"Bond Register" means the books or records maintained by the Bond Registrar
containing the name and mailing address of the owner of each Bond and the principal amount
and number of Bonds held by each owner.
"Bond Registrar" means the Fiscal Agent.
"Bonds" means the $6,010,000 par value Limited Tax General Obligation and Refunding
Bonds, 2010, of the City issued pursuant to and for the purposes provided in this ordinance.
"City" means the City of Arlington, Washington, a municipal corporation duly organized
and existing under and by virtue of the laws of the State of Washington.
"Code" means the United States Internal Revenue Code of 1986, as amended, and
applicable rules and regulations promulgated thereunder.
"County" means Snohomish County, Washington.
"DTC" means the Depository Trust Company, New York, New York.
"Escrow Agent" means a bank or trust company appointed by the Finance Director to
serve as trustee or escrow agent or any successor trustee or escrow agent.
Agent.
"Escrow Agreement" means the Escrow Agreement between the City and the Escrow
"Fiscal Agent" means the fiscal agent of the State of Washington, as the same may be
designated by the State from time to time.
"Insurance Policy" means the bond insurance policy issued by the Bond Insurer insuring
the payment of the Bonds
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"Letter of Representations" means the Blanket Issuer Letter of Representations dated
July 15, 1997, between the City and DTC, as it may be amended from time to time.
The Loan" means the outstanding loan with the County which was used to pay for the
City's portion of the County's 800 MHz project.
"MSRB" means the Municipal Securities Rulemaking Board.
"Projects" means the purchasing airport land and remodeling Fire Station #46.
"Refunded Bonds" means the outstanding Limited Tax General Obligation Bonds, 2001,
of the City maturing in the years 2012 through 2021, inclusive, issued pursuant to Resolution
No. 1267, the refunding of which has been provided for by this ordinance.
"Refunding Plan" means:
(a) the placement of sufficient proceeds of the Bonds which,
with other money of the City, if necessary, will acquire the Acquired
Obligations to be deposited, with cash, if necessary, with the Escrow
Agent;
(b) the payment of the principal of and interest on the
Refunded Bonds when due up to and including October 1, 2011, and the
call, payment, and redemption on October 1, 2011, of all of the then -
outstanding Refunded Bonds at a price of par; and
(c) the payment of the costs of issuing the Bonds and the costs
of carrying out the foregoing elements of the Refunding Plan.
"SEC" means the United States Securities and Exchange Commission.
Section 2. Debt Capacity. The assessed valuation of the taxable property within the
City as ascertained by the last preceding assessment for City purposes for the calendar year 2010
is $2,239,257,103, and the City has outstanding general indebtedness evidenced by limited tax
general obligation bonds, notes and interlocal financing agreements, in the principal amount of
$12,857,859 incurred within the limit of up to 1-1/2% of the value of the taxable property within
the City permitted for general municipal purposes without a vote of the qualified voters therein,
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and no unlimited tax general obligation bonds incurred within the limit of up to 2 1/2% of the
value of the taxable property within the City.
Section 3. Authorization of Bonds. The City shall borrow money on the credit of the
City and issue negotiable limited tax general obligation and refunding bonds evidencing that
indebtedness in the amount of $6,010,000, to provide the fiends to pay a portion of the costs of
the Projects, to refund the Refunded Bonds pursuant to the Refunding Plan, to repay the Loan
and pay the costs of issuance and sale of the bonds (the "costs of issuance"), The general
indebtedness to be incurred shall be within the limit of up to 1-1/2% of the value of the taxable
property within the City permitted for general municipal purposes without a vote of the qualified
voters therein.
Section 4. Description of Bonds. The bonds shall be called Limited Tax General
Obligation and Refunding Bonds, 2010, of the City (the "Bonds"); shall be in the aggregate
principal amount of $6,010,000; shall be dated as of the date of their initial delivery; shall be in
the denomination of $5,000 or any integral multiple thereof within a single maturity; shall be
numbered separately in the manner and with any additional designation as the fiscal agent of the
State of Washington (as the same may be designated by the State of Washington from time to
time) (the "Bond Registrar") deems necessary for purposes of identification; shall bear interest
(computed on the basis of a 360-day year of twelve 30-day months) payable semiannually on
each June 1 and December 1, commencing December 1, 2010, to the maturity or earlier
redemption of the Bonds; and shall mature on December 1 in years and amounts and bear interest
at the rates per annum as follows:
Maturity Years
2010
2011
2012
Amounts
Interest Rates
$ 35,000
2.00%
90,000
2.00
360,000
3.00
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Maturity Years
Amounts
Interest Rates
2013
$ 370,000
3.00%
2014
390,000
3.00
2015
390,000
4.00
2016
410,000
4.00
2017
430,000
4.00
2018
450,000
4.00
2019
475,000
4.00
2020
490,000
4.00
2020
415,000
3.375
2021
455,000
4.00
2025
250,000
4.00
2030
615,000
4.60
2030
385,000
5.00
Section 5. Registration and Transfer of Bonds. The Bonds shall be issued only in
registered form as to both principal and interest and shall be recorded on books or records
maintained by the Bond Registrar (the "Bond Register"). The Bond Register shall contain the
name and mailing address of the owner of each Bond and the principal amount and number of
each of the Bonds held by each owner.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized
denomination of an equal aggregate principal amount and of the same interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to
the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee.
The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days
preceding any principal payment or redemption date.
The Bonds initially shall be registered in the name of Cede & Co., as the nominee of The
Depository Trust Company, New York, New York ("DTC"). The Bonds so registered shall be
held in fully immobilized form by DTC as depository in accordance with the provisions of a
Blanket Issuer Letter of Representations dated July 15, 1997 between the City and DTC (as it
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may be amended from time to time, the "Letter of Representations"). Neither the City nor the
Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for
whom they act as nominees with respect to the Bonds regarding accuracy of any records
maintained by DTC or DTC participants of any amount in respect of principal of or interest on
the Bonds, or any notice which is permitted or required to be given to registered owners
hereunder (except such notice as is required to be given by the Bond Registrar to DTC).
For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its
successor depository shall be deemed to be the registered owner for all purposes hereunder and
all references to registered owners, bondowners, bondholders or the like shall mean DTC or its
nominee and, except for the purpose of the City's undertaking herein to provide continuing
disclosure, shall not mean the owners of any beneficial interests in the Bonds. Registered
ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to
any successor of DTC or its nominee, if that successor shall be qualified under any applicable
laws to provide the services proposed to be provided by it; (ii) to. any substitute depository
appointed by the City or such substitute depository's successor; or (iii) to any person if the
Bonds are no longer held in immobilized form.
Upon the resignation of DTC or its successor (or any substitute depository or its
successor) from its functions as depository, or a determination by the City that it no longer
wishes to continue the system of book entry transfers through DTC or its successor (or any
substitute depository or its successor), the City may appoint a substitute depository. Any such
substitute depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it.
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If (i) DTC or its successor (or substitute depository or its successor) resigns from its
functions as depository, and no substitute depository can be obtained, or (ii) the City determines
that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any
person as provided herein and the Bonds no longer shall be held in fully immobilized form.
Section 6. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Interest on the Bonds shall be paid by
checks or drafts of the Bond Registrar mailed on the interest payment date to the registered
owners at the addresses appearing on the Bond Register on the 15th day of the month preceding
the interest payment date or, if requested in writing by a registered owner of $1,000,000 or more
in principal amount of Bonds prior to the applicable record date, by wire transfer on the interest
payment date. Principal of the Bonds shall be payable upon presentation and surrender of the
Bonds by the registered owners to the Bond Registrar. Notwithstanding the foregoing, for as
long as the Bonds are registered in the name of DTC or its nominee, payment of principal of and
interest on the Bonds shall be made in the manner set forth in the Letter of Representations.
Section 7. Redemption Provisions and Open Market Purchase of Bonds. Bonds
maturing in the years 2010 through 2019, inclusive, shall be issued without the right or option of
the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right
and option to redeem the Bonds maturing on or after December 1, 2020, prior to their stated
maturity dates at any time on or after June 1, 2020, as a whole or in part (within one or more
maturities selected by the City and randomly within a maturity in such manner as the Bond
Registrar shall determine), at par plus accrued interest to the date fixed for redemption.
Term Bonds maturing on December 1, 2020 with an interest rate of 3.375% and on
December 1, 2030 with an interest rate of 4.60%, are subject to extraordinary call prior to their
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stated maturity dates at any time on or after December 1, 2013, as a whole or in part, at par plus
accrued interest to the date fixed for redemption, solely from federal grants for the purchase of
land for the airport.
2020 Term Bond (with December 1, 2013 call date)
Mandatory Redemption Years Mandatory Redemption Amounts
* Maturity.
2011
$ 35,000
2012
35,000
2013
40,000
2014
40,000
2015
40,000
2016
40,000
2017
45,000
2018
45,000
2019
45,000
2020*
50,000
2030 Term Bond (with December 1, 2013 call date)
Mandatory Redemption Years
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030*
* Maturity.
Mandatory Redemption Amounts
$ 50,000
50,000
55,000
55,000
60,000
65,000
65,000
70,000
70,000
75,000
Bonds maturing in 2025 and 2030 are Term Bonds and, if not redeemed under the
optional redemption provisions set forth above or purchased in the open market under the
provisions set forth below, shall be called for redemption randomly (in such manner as the Bond
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Registrar shall determine) at par plus accrued interest on December 1 in years and amounts as
follows:
2025 Term Bonds
Mandatory Redemption Years Mandatory Redemption Amounts
* Maturity.
2022
$ 60,000
2023
60,000
2024
65,000
2025*
65,000
2030 Term Bonds
Mandatory Redemption Years
2026
2027
2028
2029
2030*
* Maturity.
Mandatory Redemption Amounts
$ 70,000
75,000
75,000
80,000
85,000
If the City redeems under the optional redemption provisions, purchases in the open
market or defeases Term Bonds, the par amount of the Term Bonds so redeemed, purchased or
defeased (irrespective of their actual redemption or purchase prices) shall be credited against one
or more scheduled mandatory redemption amounts for those Term Bonds. The City shall
determine the manner in which the credit is to be allocated and shall notify the Bond Registrar in
writing of its allocation at least 60 days prior to the earliest mandatory redemption date for that
maturity of Term Bonds for which notice of redemption has not already been given.
Portions of the principal amount of any Bond, in installments of $5,000 or any integral
multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is
redeemed, upon surrender of that Bond to the Bond Registrar, there shall be issued to the
registered owner, without charge therefor, a new Bond (or Bonds, at the option of the registered
510702846 -1 0-
owner) of the same maturity and interest rate in any of the denominations authorized by this
ordinance in the aggregate principal amount remaining unredeemed.
Notwithstanding the foregoing, for as long as the Bonds are registered in the name of
DTC or its nominee, selection of Bonds for redemption shall be in accordance with the Letter of
Representations.
The City further reserves the right and option to purchase any or all of the Bonds in the
open market at any time at any price acceptable to the City plus accrued interest to the date of
purchase.
All Bonds purchased or redeemed under this section shall be canceled.
Section 8. Notice of Redemption. While the Bonds are held by DTC in book -entry
only form, any notice of redemption shall be given at the time, to the entity and in the manner
required by DTC in accordance with the Letter of Representations, and the Bond Registrar shall
not be required to give any other notice of redemption. If the Bonds cease to be in book -entry
only form, the City shall cause notice of any intended redemption of Bonds to be given by the
Bond Registrar not less than 30 nor more than 60 days prior to the date fixed for redemption by
first-class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the
address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and
the requirements of this sentence shall be deemed to have been fulfilled when notice has been
mailed as so provided, whether or not it is actually received by the owner of any Bond.
In the case of an optional redemption, the notice may state that the City retains the right
to rescind the redemption notice and the related optional redemption of Bonds by giving a notice
of rescission to the affected registered owners at any time prior to the scheduled optional
redemption date. Any notice of optional redemption that is so rescinded shall be of no effect,
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and the Bonds for which the notice of optional redemption has been rescinded shall remain
outstanding.
Interest on Bonds called for redemption shall cease to accrue on the date fixed for
redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the
call. In addition, the redemption notice shall be mailed within the same period, postage prepaid,
to the MSRB, to any nationally recognized rating agency which at the time maintains a rating on
the Bonds at the request of the City, and to such other persons and with such additional
information as the City shall determine, but these additional mailings shall not be a condition
precedent to the redemption of Bonds.
Section 9. Failure To Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or call date, the City shall be obligated to pay interest on that Bond at
the same rate provided in the Bond from and after its maturity or call date until that Bond, both
principal and interest, is paid in full or until sufficient money for its payment in full is on deposit
in the bond redemption fund hereinafter created and the Bond has been called for payment by
giving notice of that call to the registered owner thereof.
Section 10. Pledge of Taxes. For as long as any of the Bonds are outstanding, the City
irrevocably pledges to include in its budget and levy taxes annually within the constitutional and
statutory tax limitations provided by law without a vote of the electors of the City on all of the
taxable property within the City in an amount sufficient, together with other money legally
available and to be used therefor, to pay when due the principal of and interest on the Bonds, and
the full faith, credit and resources of the City are pledged irrevocably for the annual levy and
collection of those taxes and the prompt payment of that principal and interest.
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Section 11. Form and Execution of Bonds. The Bonds shall be prepared in a form
consistent with the provisions of this ordinance and state law and shall be signed by the Mayor
and City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of
the City or a facsimile reproduction thereof shall be impressed or printed thereon.
Only Bonds bearing a Certificate of Authentication in the following form, manually
signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
benefits of this ordinance:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Arlington, Washington,
Limited Tax General Obligation and Refunding Bonds, 2010, described in the
Bond Ordinance.
WASHINGTON STATE FISCAL AGENT
Bond Registrar
an
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that the
Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the
benefits of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to be an officer of
the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are
authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless
may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall
be as binding on the City as though that person had continued to be an officer of the City
authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person
510702846 -1 3 -
who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds,
although he or she did not hold the required office on the date of issuance of the Bonds.
Section 12. Duties of Bond Registrar. The Bond Registrar shall keep, or cause to be
kept, sufficient books for the registration and transfer of the Bonds, which shall be open to
inspection by the City at all times. The Bond Registrar is authorized, on behalf of the City, to
authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of the
Bonds and this ordinance, to serve as the City's paying agent for the Bonds and to carry out all of
the Bond Registrar's powers and duties under this ordinance.
The Bond Registrar shall be responsible for its representations contained in the Bond
Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the
owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the
extent permitted by law, may act as depository for and permit any of its officers or directors to
act as members of, or in any other capacity with respect to, any committee formed to protect the
rights of Bond owners.
Section 13. Preservation of Tax Exemption for Interest on Bonds. The City covenants
that it will take all actions necessary to prevent interest on the Bonds from being included in
gross income for federal income tax purposes, and it will neither take any action nor make or
permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the
Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be
included in gross income for federal income tax purposes. The City also covenants that it will, to
the extent the arbitrage rebate requirement of Section 148 of the Internal Revenue Code of 1986,
as amended (the "Code"), is applicable to the Bonds, take all actions necessary to comply (or to
be treated as having complied) with that requirement in connection with the Bonds, including the
51070284 6 -14-
calculation and payment of any penalties that the City has elected to pay as an alternative to
calculating rebatable arbitrage, and the payment of any other penalties if required under Section
148 of the Code to prevent interest on the Bonds from being included in gross income for federal
income tax purposes.
Section 14. Designation of Bonds as "Qualified Tax -Exempt Obligations." The City
has determined and certifies that (a) the Bonds are not "private activity bonds" within the
meaning of Section 141 of the Code; (b) the reasonably anticipated amount of tax-exempt
obligations (other than private activity bonds and other obligations not required to be included in
such calculation) which the City and any entity subordinate to the City (including any entity that
the City controls, that derives its authority to issue tax-exempt obligations from the City, or that
issues tax-exempt obligations on behalf of the City) will issue during the calendar year in which
the Bonds are issued will not exceed $30,000,000; and (c) the amount of tax-exempt obligations,
including the Bonds, designated by the City as "qualified tax-exempt obligations" for the
purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds are
issued does not exceed $30,000,000. The City designates the Bonds as "qualified tax-exempt
obligations" for the purposes of Section 265(b)(3) of the Code.
Section 15. RefundinQ or Defeasance of the Bonds. The City may issue refunding
bonds pursuant to the laws of the State of Washington or use money available from any other
lawful source to pay when due the principal of and interest on the Bonds, or any portion thereof
included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such
then -outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay the
costs of the refunding or defeasance. If money and/or "government obligations" (as defined in
chapter 39.53 RCW, as now or hereafter amended) maturing at a time or times and bearing
510702846 -1 5 -
interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or
defease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased
Bonds (hereinafter called the "trust account"), then all right and interest of the owners of the
defeased Bonds in the covenants of this ordinance and in the funds and accounts obligated to the
payment of the defeased Bonds shall cease and become void. The owners of defeased Bonds
shall have the right to receive payment of the principal of and interest on the defeased Bonds
from the trust account. The City shall include in the refunding or defeasance plan such
provisions as the City deems necessary for the random selection of any defeased Bonds that
constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be
given to the owners of the defeased Bonds and to such other persons as the City shall determine,
and for any required replacement of Bond certificates for defeased Bonds. The defeased Bonds
shall be deemed no longer outstanding, and the City may apply any money in any other fund or
account established for the payment or redemption of the defeased Bonds to any lawful purposes
as it shall determine.
If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance
of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for
notices of redemption of Bonds.
Section 16. Bond Fund and Deposit of Bond Proceeds. There is created and
established in the office of the Finance Director a special fund designated as the Limited Tax
General Obligation and Refunding Bond Fund, 2010 (the "Bond Fund"), for the purpose of
paying principal of and interest on the Bonds. All taxes collected for and allocated to the
payment of the principal of and interest on the Bonds shall be deposited in the Bond Fund.
510702846 - 1 6-
The principal proceeds and premium, if any, received from the sale and delivery of the
Bonds other than the amount necessary to refund the Refunded Bonds, shall be paid into the
project account designated by the Finance Director (the "Project Fund") and used for the
purposes specified in Section 2 of this ordinance, including repayment of the Loan. Until needed
to pay the costs of the Projects, to repay the Loan and costs of issuance of the Bonds, the City
may invest principal proceeds temporarily in any legal investment, and the investment earnings
may be retained in the Project Fund and be spent for the purposes of that fund.
Section 17. Approval of Bond Purchase Contract. Piper Jaffray & Co. of Seattle,
Washington, has presented a purchase contract (the "Bond Purchase Contract") to the City
offering to purchase the Bonds under the terms and conditions provided in the Bond Purchase
Contract. The City Council finds that entering into the Bond Purchase Contract is in the City's
best interest and therefore accepts the offer contained therein and authorizes its execution by City
officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Contract, with the approving legal opinion of Foster Pepper
PLLC, municipal bond counsel of Seattle, Washington, regarding the Bonds.
The proper City officials are authorized and directed to do everything necessary for the
prompt delivery of the Bonds to the purchaser and for the proper application and use of the
proceeds of the sale thereof.
Section 18. Refunding of the Refunded Bonds.
(a) Appointment of Escrow Agent. The Finance Director is authorized to appoint a
bank or trust company to act as Escrow Agent.
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(b) Use of Bond Proceeds, Acquisition of Acquired Obligations. A sufficient amount
of the proceeds of the sale of the Bonds shall be deposited immediately upon the receipt thereof
with the Escrow Agent and used to discharge the obligations of the City relating to the Refunded
Bonds under Ordinance No. 1267 by providing for the payment of the amounts required to be
paid by the Refunding Plan. To the extent practicable, such obligations shall be discharged fully
by the Escrow Agent's simultaneous purchase of the Acquired Obligations, bearing such interest
and maturing as to principal and interest in such amounts and at such times so as to provide,
together with a beginning cash balance, if necessary, for the payment of the amount required to
be paid by the Refunding Plan. The Acquired Obligations are listed and more particularly
described in the Escrow Agreement between the City and the Escrow Agent, but are subject to
substitution as set forth below. Any Bond proceeds or other money deposited with the Escrow
Agent not needed to purchase the Acquired Obligations and provide a beginning cash balance, if
any, and pay the costs of issuance of the Bonds shall be returned to the City at the time of
delivery of the Bonds to the initial purchaser thereof and deposited in the Project Fund to pay
costs of the Projects.
(c) Substitution of Acquired Obligations. Prior to the purchase of any Acquired
Obligations by the Escrow Agent, the City reserves the right to substitute other direct,
noncallable obligations of the United States of America ("Substitute Obligations") for any of the
Acquired Obligations and to use any savings created thereby for any lawful City purpose if, (a)
in the opinion of Foster Pepper PLLC, the City's bond counsel, the interest on the Bonds and the
Refunded Bonds will remain excluded from gross income for federal income tax purposes under
Sections 103, 148, and 149(d) of the Code, and (b) such substitution shall not impair the timely
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payment of the amounts required to be paid by the Refunding Plan, as verified by a nationally
recognized independent certified public accounting firm.
After the purchase of the Acquired Obligations by the Escrow Agent, the City reserves
the right to substitute therefor cash or Substitute Obligations subject to the conditions that such
money or securities held by the Escrow Agent shall be sufficient to carry out the Refunding Plan,
that such substitution will not cause the Bonds or the Refunded Bonds to be arbitrage bonds
within the meaning of Section 148 of the Code and regulations thereunder in effect on the date of
such substitution and applicable to obligations issued on the issue dates of the Bonds and the
Refunded Bonds, as applicable, and that the City obtain, at its expense: (1) a verification by a
nationally recognized independent certified public accounting firm acceptable to the Escrow
Agent confirming that the payments of principal of and interest on the substitute securities, if
paid when due, and any other money held by the Escrow Agent will be sufficient to carry out the
Refunding Plan; and (2) an opinion from Foster Pepper PLLC, bond counsel to the City, its
successor, or other nationally recognized bond counsel to the City, to the effect that the
disposition and substitution or purchase of such securities, under the statutes, rules, and
regulations then in force and applicable to the Bonds, will not cause the interest on the Bonds or
the Refunded Bonds to be included in gross income for federal income tax purposes and that
such disposition and substitution or purchase is in compliance with the statutes and regulations
applicable to the Bonds. Any surplus money resulting from the sale, transfer, other disposition,
or redemption of the Acquired Obligations and the substitutions therefor shall be released from
the trust estate and transferred to the City to be used for any lawful City purpose.
(d) Administration of Refunding Plan. The Escrow Agent is authorized and directed
to purchase the Acquired Obligations (or substitute obligations) and to make the payments
510702846 -1 9-
required to be made by the Refunding Plan from the Acquired Obligations (or substitute
obligations) and money deposited with the Escrow Agent pursuant to this ordinance. All
Acquired Obligations (or substitute obligations) and the money deposited with the Escrow Agent
and any income therefrom shall be held irrevocably, invested and applied in accordance with the
provisions of Ordinance No. 1267, this ordinance, chapter 39.53 RCW and other applicable
statutes of the State of Washington and the Escrow Agreement. All necessary and proper fees,
compensation, and expenses of the Escrow Agent for the Bonds and all other costs incidental to
the setting up of the escrow to accomplish the refunding of the Refunded Bonds and costs related
to the issuance and delivery of the Bonds, including bond printing, verification fees, bond
counsel's fees, and other related expenses, shall be paid out of the proceeds of the Bonds.
(e) Authorization for Escrow Agreement. To carry out the Refunding Plan provided
for by this ordinance, the Mayor or Finance Director of the City is authorized and directed to
execute and deliver to the Escrow Agent an Escrow Agreement setting forth the duties,
obligations and responsibilities of the Escrow Agent in connection with the payment,
redemption, and retirement of the Refunded Bonds as provided herein and stating that the
provisions for payment of the fees, compensation, and expenses of such Escrow Agent set forth
therein are satisfactory to it. Prior to executing the Escrow Agreement, the Mayor or Finance
Director of the City is authorized to make such changes therein that do not change the substance
and purpose thereof or that assure that the escrow provided therein and the Bonds are in
compliance with the requirements of federal law governing the exclusion of interest on the
Bonds from gross income for federal income tax purposes.
Section 19. Call for Redemption of the Refunded Bonds. The City calls for
redemption on October 1, 2011, all of the Refunded Bonds at par plus accrued interest. Such call
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for redemption shall be irrevocable after the delivery of the Bonds to the initial purchaser
thereof. The date on which the Refunded Bonds are herein called for redemption is the first date
on which those bonds may be called.
The proper City officials are authorized and directed to give or cause to be given such
notices as required, at the times and in the manner required, pursuant to Ordinance No. 1267 in
order to effect the redemption prior to their maturity of the Refunded Bonds.
Section 20. City Findings with Respect to Refunding,. The City Council finds and
determines that the issuance and sale of the Bonds at this time will effect a savings to the City
and is in the best interest of the City and its taxpayers and in the public interest. In making such
finding and determination, the City Council has given consideration to the fixed maturities of the
Bonds and the Refunded Bonds, the costs of issuance of the Bonds and the known earned income
from the investment of the proceeds of the issuance and sale of the Bonds pending payment and
redemption of the Refunded Bonds.
The City Council further finds and determines that the money to be deposited with the
Escrow Agent for the Refunded Bonds in accordance with Section 18 of this ordinance will
discharge and satisfy the obligations of the City under Ordinance No. 1267 with respect to the
Refunded Bonds, and the pledges, charges, trusts, covenants, and agreements of the City therein
made or provided for as to the Refunded Bonds, and that the Refunded Bonds shall no longer be
deemed to be outstanding under such ordinance immediately upon the deposit of such money
with the Escrow Agent.
Section 21. Bond Insurance. The City Council finds that a higher rating and,
therefore, a savings will result from purchasing, the insurance policy (the "Insurance Policy")
issued by Assured Guaranty Municipal Corp. (formerly known as Financial Security Assurance
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Inc.), a New York stock exchange insurance company, or any successor thereto or assignee
thereof (the "Bond Insurer") insuring the payment of the Bonds. The Finance Director is
authorized to execute the commitment of the Bond Insurer to issue the Insurance Policy and all
other documents on behalf of the City necessary in connection with the Insurance Policy. Any
actions heretofore taken by such officials not inconsistent with this Section are hereby ratified
and confirmed.
Section 22. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement (the "Preliminary Official Statement"),
prepared in connection with the sale of the Bonds. For the sole purpose of the Bond purchaser's
compliance with Securities and Exchange Commission Rule 15c2-12(b)(1), the City "deems
final" that Preliminary Official Statement as of its date, except for the omission of information as
to offering prices, interest rates, selling compensation, aggregate principal amount, principal
amount per maturity, maturity dates, options of redemption, delivery dates, ratings and other
terms of the Bonds dependent on such matters.
Section 23. tJndertaking to Provide Continuing Disclosure. To meet the requirements
of United States Securities and Exchange Commission ("SEC") Rule 15c2-12(b)(5) (the "Rule"),
as applicable to a participating underwriter for the Bonds, the City makes the following written
undertaking (the "Undertaking") for the benefit of holders of the Bonds:
(a) Undertaking to Provide Annual Financial Information and Notice
of Material Events. The City undertakes to provide or cause to be provided, either
directly or through a designated agent, to the Municipal Securities Rulemaking
Board (the `MSRB"), in an electronic format as prescribed by the MSRB,
accompanied by identifying information as prescribed by the MSRB:
(i) Annual financial information and operating data of the type
included in the final official statement for the Bonds and described in
subsection (b) of this section ("annual financial information");
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(ii) Timely notice of the occurrence of any of the following
events with respect to the Bonds, if material: (1) principal and interest
payment delinquencies; (2) non-payment related defaults; (3) unscheduled
draws on debt service reserves reflecting financial difficulties;
(4) unscheduled draws on credit enhancements reflecting financial
difficulties; (5) substitution of credit or liquidity providers, or their failure
to perform; (6) adverse tax opinions or events affecting the tax-exempt
status of the Bonds; (7) modifications to rights of holders of the Bonds;
(8) Bond calls (other than scheduled mandatory redemptions of Term
Bonds); (9) defeasances; (10) release, substitution, or sale of property
securing repayment of the Bonds; and (11) rating changes; and
(iii) Timely notice of a failure by the City to provide required
annual financial information on or before the date specified in subsection
(b) of this section.
(b) Type of Annual Financial Information Undertaken to be Provided.
The annual financial information that the City undertakes to provide in
subsection (a) of this section:
(i) Shall consist of (1) annual financial statements prepared
(except as noted in the financial statements) in accordance with applicable
generally accepted accounting principles promulgated by the Government
Accounting Standards Board ("GASB"), as such principles may be
changed from time to time, which statements shall not be audited, except,
however, that if and when audited financial statements are otherwise
prepared and available to the City they will be provided; (2) authorized,
issued and outstanding balance of general obligation bonds; (3) assessed
valuation for the fiscal year; and (4) regular property tax levy rate and
regular property tax levy rate limit for the fiscal year;
(ii) Shall be provided not later than the last day of the ninth
month after the end of each fiscal year of the City (currently, a fiscal year
ending December 31), as such fiscal year may be changed as required or
permitted by State law, commencing with the City's fiscal year ending
December 31, 2010; and
(iii) May be provided in a single or multiple documents, and
may be incorporated by specific reference to documents available to the
public on the Internet website of the MSRB or filed with the SEC.
(c) Amendment of Undertaking. The Undertaking is subject to
amendment after the primary offering of the Bonds without the consent of any
holder of any Bond, or of any broker, dealer, municipal securities dealer,
participating underwriter, rating agency or the MSRB, under the circumstances
and in the manner permitted by the Rule.
510702846 -23 -
The City will give notice to the MSRB of the substance (or provide a
copy) of any amendment to the Undertaking and a brief statement of the reasons
for the amendment. If the amendment changes the type of annual financial
information to be provided, the annual financial information containing the
amended financial information will include a narrative explanation of the effect of
that change on the type of information to be provided.
(d) Beneficiaries. The Undertaking evidenced by this section shall
inure to the benefit of the City and any holder of Bonds, and shall not inure to the
benefit of or create any rights in any other person.
(e) Termination of Undertaking. The City's obligations under this
Undertaking shall terminate upon the legal defeasance of all of the Bonds. In
addition, the City's obligations under this Undertaking shall terminate if those
provisions of the Rule which require the City to comply with this Undertaking
become legally inapplicable in respect of the Bonds for any reason, as confirmed
by an opinion of nationally recognized bond counsel or other counsel familiar
with federal securities laws delivered to the City, and the City provides timely
notice of such termination to the MSRB.
(f) Remedy for Failure to Comply with Undertaking. As soon as
practicable after the City learns of any failure to comply with the Undertaking, the
City will proceed with due diligence to cause such noncompliance to be corrected.
No failure by the City or other obligated person to comply with the Undertaking
shall constitute a default in respect of the Bonds. The sole remedy of any holder
of a Bond shall be to take such actions as that holder deems necessary, including
seeking an order of specific performance from an appropriate court, to compel the
City or other obligated person to comply with the Undertaking.
(g) Designation of Official Responsible to Administer Undertaking.
The Finance Director of the City (or such other officer of the City who may in the
future perform the duties of that office) or his or her designee is authorized and
directed in his or her discretion to take such further actions as may be necessary,
appropriate or convenient to carry out the Undertaking of the City in respect of
the Bonds set forth in this section and in accordance with the Rule, including,
without limitation, the following actions:
(i) Preparing and filing the annual financial information
undertaken to be provided;
(ii) Determining whether any event specified in subsection (a)
has occurred, assessing its materiality with respect to the Bonds, and, if
material, preparing and disseminating notice of its occurrence;
(iii) Determining whether any person other than the City is an
"obligated person" within the meaning of the Rule with respect to the
Bonds, and obtaining from such person an undertaking to provide any
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annual financial information and notice of material events for that person
in accordance with the Rule;
(iv) Selecting, engaging and compensating designated agents
and consultants, including but not limited to financial advisors and legal
counsel, to assist and advise the City in carrying out the Undertaking; and
(v) Effecting any necessary amendment of the Undertaking.
Section 24. Effective Date of Ordinance. This ordinance shall take effect and be in
force from and after its passage and five days following its publication as required by law.
PASSED by the City Council of the City of Arlington, Washington, at an open public
meeting thereof, this 2"a day of August, 2010.
? 2 1!- �-- ' _
Mayor
ATTEST:
��k r 01 1 ap,
City Cl -k
APPROVED AS TO FORM:
i
Cit Attor
51070284,6 -25 -
CERTIFICATION
I, the undersigned, City Clerk of the City of Arlington, Washington (the "City"), hereby
certify as follows:
1. The attached copy of Ordinance No. Ull(the "Ordinance") is a full, true and
correct copy of an ordinance duly passed at a regular meeting of the City Council of the City
held at the regular meeting place thereof on August 2, 2010, as that ordinance appears on the
minute book of the City; and the Ordinance will be in full force and effect five days after
publication in the City's official newspaper; and
2. A quorum of the members of the City Council was present throughout the
meeting and a majority of those members present voted in the proper manner for the passage of
the Ordinance.
IN WITNESS WHEREOF, I have hereunto set my hand this as day of August, 2010.
CITY OF ARLINGTON, WASHINGTON
City Cl k
510702846