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CITY OF AUBURN, WASHINGTON
ORDINANCE NO. 5160
AN ORDINANCE of the City of Auburn, Washington, relating to
conlxacting indebtedness; providing for the issuance of $4,000,000 par value of
Limited Tax General Obligation Bonds, 1998, of the City for general City purposes
to provide funds with which to pay the cost of constructing a library to be owned and
operated by the King County Rural Library District and related improvements,
fixing the date, form, maturities, interest rates, terms and covenants of the bonds;
establishing a bond redemption fund and a constmction fund; providing for bond
insurance; and approving the sale and providing for the delivery of the bonds to
Seattle-Northwest Securities Corporation of Seattle, Washington.
WHEREAS, the City of Auburn, Washington (the "City") and King County Rural
Library District (the "District") entered into an Interlocal Agreement for Library Services, dated
November 26, 1996, recorded under King County Records No. 9809081678, providing for the
construction of a new library to be owned and operated by the District to be funded in pan by the
City at the estimated City cost of $4,000,000, and the City does not have available sufficient funds
to pay the costs; and
WHEREAS, the City Council deems it to be in the best interest of the City to cause the City
to issue $4,000,000 par value of limited tax general obligation bonds to pay substantially all of such
costs; and
WHEREAS, Seattle-Northwest Securities Corporation has offered to purch0se those bonds
under the terms and conditions as set forth herein; NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, DO ORDAIN
AS FOLLOWS:
1 Section 1.. Debt Capacity. The assessed valuation of the taxable property within the City
2 as ascertained by the last preceding assessment for City purposes for the calendar year 1998 is
3 $3,004,000,000. The City has no outstanding general indebtedness evidenced by limited tax
4 general obligation bonds issued without a vote of the qualified voters therein and no outstanding
5 unlimited tax general obligation bonds issued pursuant to a vote of the qualified voters of the
6 City, and the amount of indebtedness for which bonds are authorized herein to be issued is
7 $4,000,000.
8 Section 2. Authorization of Bonds. The City shall borrow money on the credit of the
9 City and issue negotiable limited tax general obligation bonds evidencing that indebtedness in
10 the amount of $4,000,000 for general City purposes to provide funds to pay the City's share of
11 the cost of constructing a library to be owned and operated by the King County Rural Library
12 District (the "District"), pursuant to an inteflocal agreement, and related improvements to roads,
13 sidewalks and other City property (the "Project") and to pay the costs of issuance and sale of the
14 bonds (the "costs of issuance"). The general indebtedness to be incurred shall be within the limit
15 of up to 1-1/2% of the value of the taxable property within the City permitted for general
16 municipal purposes without a vote of the qualified voters therein.
17 Section 3. Description of Bonds. The bonds shall be called Limited Tax General
18 Obligation Bonds, 1998, of the City (the "Bonds"); shall be in the aggregate principal amount of
19 $4,000,000; shall be dated October 1, 1998; shall be in the denomination of $5,000 or any
20 integral multiple thereof within a single maturity; shall be numbered separately in the manner
21 and with any additional designation as the Bond Registrar (collectively, the fiscal agencies of the
22 State of Washington) deems necessary for purposes of identification; shall bear interest
23 (computed on the basis of a 360-day year of twelve 30-day months) payable semiannually on
24 each June 1 and December 1, commencing June 1, 1999, to the maturity or earlier redemption of
1 the Bonds; and shall mature on December 1 in years and mounts and bear interest at the rates
2 per annum as follows:
1999
7 2000
8 2001
9 2002
10 2003
11 2004
12 2005
13 2006
14 2007
15 2008
16 2009
17 2010
18 2011
19 2012
20 2013
21 2014
22 2015
23 2016
24 2017
25 2018
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3 Maturity Interest
4 Years Amounts Rates
5
6 $110,000
135,000
140,000
145,000
150,000
160,000
165,000
175 000
185 000
195 000
205 000
210 000
220 000
230 000
235 000
245 000
255000
270,000
28£ 000
290.900
3.75%
4.00
4.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
4.00
4.00
4.10
4.10
4.20
4.20
4.30
4.30
4.30
4.35
The life of the capital facility to be acquired with the proceeds of the Bonds exceeds the term of
28 the Bonds.
29
Section 4. Registration and Transfer of Bond~. The Bonds shall be issued only in
30 registered form as to both principal and interest and shall be recorded on books or records
31 maintained by the Bond Registrar (the "Bond Register"). The Bond Register shall contain the
32 name and mailing address of the owner of each Bond and the principal amount and number of
33 each of the Bonds held by each owner.
34
Bonds surrendered to the Bond Registxar may be exchanged for Bonds in any authorized
35 denomination of an equal aggregate principal amount and of the same interest rate and maturity.
36 Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to
1 the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee.
2 The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days
3 preceding any principal payment or redemption date.
4 The Bonds initially shall be registered in the name of CEDE & CO., as the nominee of
5 The Depository Trust Company, New York, New York ("DTC"). The Bonds so registered shall
6 be held in fully immobilized form by DTC as depository in accordance with the provisions of a
7 Blanket Issuer Letter of Representations dated February 18, 1997, between the City and DTC
8 (the "Letter of Representations"). Neither the City nor the Bond Registrar shall have any
9 responsibility or obligation to DTC participants or the persons for whom they act as nominees
10 with respect to the Bonds regarding accuracy of any records maintained by DTC or DTC
11 participants of any amount in respect of principal of or interest on the Bonds, or any notice which
12 is permitted or required to be given to registered owners hereunder (except such notice as is
13 required to be given by the Bond Registrar to DTC).
14 For so long as any Bonds are held in fully immobilized form, DTC or its successor
15 depository shall be deemed to be the registered owner for all purposes hereunder and all
16 references to registered owners, bondowners, bondholders or the like shall mean DTC or its
17 nominees and shall not mean the owners of any beneficial interests in the Bonds. Registered
18 ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to
19 any successor of DTC or its nominee, if that successor shall be qualified under any applicable
20 laws to provide the services proposed to be provided by it; (ii) to any substitute depository
21 appointed by the City or such substitute depository's successor; or (iii) to any person if the Bonds
22 are no longer held in immobilized form.
23 Upon the resignation of DTC or its successor (or any substitute depository or its
24 successor) from its functions as depository, or a determination by the City that it no longer
1 wishes to continue the system of book entry transfers through DTC or its successor (or any
2 substitute depository or its successor), the City may appoint a substitute depository. Any such
3 substitute depository shall be qualified under any applicable laws to provide the services
4 proposed to be provided by it.
5 If (i) DTC or its successor (or substitute depository or its successor) resigns from its
6 functions as depository, and no substitute depository can be obtained, or (ii) the City determines
7 that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any
8 person as provided herein and the Bonds no longer shall be held in fully immobilized form.
9 Section 5. Payment of Bonds. Both principal of and interest on the Bonds shall be
10 payable in lawful money of the United States of America. Interest on the Bonds shall be paid by
11 checks or drafts of the Bond Registrar mailed on the interest payment date to the registered
12 owners at the addresses appearing on the Bond Register on the 15th day of the month preceding
13 the interest payment date. Principal of the Bonds shall be payable upon presentation and
14 surrender of the Bonds by the registered owners at either of the principal offices of the Bond
15 Registrar at the option of the owners. Notwithstanding the foregoing, as long as the Bonds are
16 registered in the name of DTC or its nominee, payment of principal of and interest on the Bonds
17 shall be made in the manner set forth in the Letter of Representations.
18 Section 6. Optional Redemption and Open Market Purchase of Bonds. Bonds maturing
19 in the years 1999 through 2008, inclusive, shall be issued without the fight or option of the City
20 to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option
21 to redeem Bonds maturing on or after December 1, 2009, prior to their stated maturity dates at
22 any time on or after December 1, 2008, as a whole or in part (within one or more maturities
23 selected by the City and by lot within a maturity in such manner as the Bond Registrar shall
24 determine), at par plus accrued interest to the date fixed for redemption.
1
2 Portions of thc principal amount of any Bond, in installments of $5,000 or any integral
3 multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is
4 redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar,
5 there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at
6 the option of the registered owner) of the same maturity and interest rate in any of the
7 denominations authorized by this ordinance in the aggregate principal amount remaining
8 unredeemed.
9 The City further reserves the right and option to purchase any or all of the Bonds in the
10 open market at any time at any price acceptable to the City plus accrued interest to the date of
11 purchase.
12 All Bonds purchased or redeemed under this section shall be canceled.
13 Notwithstanding the foregoing, for so long as the Bonds are registered in the name of
14 Cede & Co., as nominee of DTC, selection of Bonds for redemption shall be in accordance with
15 the Letter of Representations (as it may be changed).
16 Section 7. Notice of Redemption_ The City shall cause notice of any intended
17 redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed
18 for redemption by first-class mail, postage prepaid, to the registered owner of any Bond to be
19 redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares
20 the notice, and the requirements of this sentence shall be deemed to have been fulfilled when
21 notice has been mailed as so provided, whether or not it is actually received by the owner of any
22 Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed for
23 redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the
24 call. In addition, the redemption notice shall be mailed within the same period, postage prepaid,
1 to Moody's Investors Service, Inc., and Standard & Poor's at their offices in New York, New
2 York, or their successors, to Seattle-Northwest Securities Corporation at its principal office in
3 Seattle, Washington, or its successor, to MBIA Insurance Corporation (the "Bond Insurer") at its
4 principal office in Armonk, New York, or its successor, and to such other persons and with such
5 additional information as the City Finance Director shall determine, but these additional mailings
6 shall not be a condition precedent to the redemption of Bonds. Notwithstanding the foregoing,
7 for so long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, notice of
8 redemption shall be given in accordance with the Letter of Representations (as it may be
9 changed).
10 Section 8. Failure To Redeem Bonds. If any Bond is not redeemed when properly
11 presented at its maturity or call date, the City shall be obligated to pay interest on that Bond at
12 the same rate provided in the Bond from and after its maturity or call date until that Bond, both
13 principal and interest, is paid in full or until sufficient money for its payment in full is on deposit
14 in the bond redemption fund hereinafter created and the Bond has been called for payment by
15 giving notice of that call to the registered owner of each of those unpaid Bonds.
16 Section 9. Pledge of Taxes. For as long as any of the Bonds are outstanding, the City
17 irrevocably pledges to include in its budget and levy taxes annually within the constitutional and
18 statutory tax limitations provided by law without a vote of the electors of the City on all of the
19 taxable property within the City in an amount sufficient, together with other money legally
20 available and to be used therefor, to pay when due the principal of and interest on the Bonds, and
21 the full faith, credit and resources of the City are pledged irrevocably for the annual levy and
22 collection of those taxes and the prompt payment of that principal and interest.
23 Section 10. Form and Execution of Bonds. The Bonds shall be printed or lithographed
24 on good bond paper in a form consistent with the provisions of this ordinance and state law and
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1 shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual
2 or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or
3 printed thereon.
4 Only Bonds bearing a Certificate of Authentication in the following form, manually
5 signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
6 benefits of this ordinance:
7
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Auburn, Washington,
Limited Tax General Obligation Bonds, 1998, described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENCY
Bond Registrar
By
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that the
Bonds so authenticated have been duly executed, authenticated and delivered and are 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
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.
1 Section 11. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its
2 principal corporate trust office, sufficient books for the registration and transfer of the Bonds,
3 which shall be open to inspection by the City at all times. The Bond Registrar is authorized, on
4 behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with
5 the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds
6 and to carry out all of the Bond Registrar's powers and duties under this ordinance and City
7 Ordinance No. 3905 establishing a system of registration for the City's bonds and obligations.
8 The Bond Registrar shall be responsible for its representations contained in the Bond
9 Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the
10 owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the
11 extent permitted by law, may act as depository for and permit any of its officers or directors to
12 act as members of, or in any other capacity with respect to, any committee formed to protect the
13 rights of Bond owners.
14 Section 12. Preservation of Tax Exemption for Interest on Bond~ The City covenants
15 that it will take all actions necessary to prevent interest on the Bonds from being included in
16 gross income for federal income tax purposes, and it will neither take any action nor make or
17 permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the
18 Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be
19 included in gross income for federal income tax purposes. The City certifies that it has not been
20 notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a
21 bond issuer whose arbitrage certifications may not be relied upon.
22 Section 13. Small Governmental Issuer Arbitrage Rebate Exception and Designation of
23 Bonds as "Oualified Tax-Exempt Obligations." The City finds and declares that (a) it is a duly
24 organized and existing governmental unit of the State of Washington and has general taxing
1 power; (b) no Bond which is part of this issue of Bonds is a "private activity bond" within the
2 meaning of Section 141 of the United States Internal Revenue Code of 1986, as amended (the
3 "Code"); (c) at least 95% of the net proceeds of the Bonds will be used for local governmental
4 activities of the City (or of a governmental unit the jurisdiction of which is entirely within the
5 jurisdiction of the City); (d) the aggregate face mount of all tax-exempt obligations (other than
6 private activity bonds and other obligations not required to be included in such calculation)
7 issued by the City and all entities subordinate to the City (including any entity that the City
8 controls, that derives its authority to issue tax-exempt obligations from the City, or that issues
9 tax-exempt obligations on behalf of the City) during the calendar year in which the Bonds are
10 issued is not reasonably expected to exceed $5,000,000; and (e)the amount of tax-exempt
11 obligations, including the Bonds, designated by the City as "qualified tax-exempt obligations"
12 for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds
13 are issued does not exceed $10,000,000. The City therefore certifies that the Bonds are eligible
14 for the arbitrage rebate exception under Section 148(f)(4)(D) of the Code and designates the
15 Bonds as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code.
16 Section 14. Bonds Negotiable. The Bonds shall be negotiable instruments to the extent
17 provided by RCW 62A.8-102 and 62A.8-105.
18 Section 15. Refunding or Defeasance of the Bonds. The City may issue refunding bonds
19 pursuant to the laws of the State of Washington or use money available from any other lawful
20 source to pay when due the principal of and interest on the Bonds, or any portion thereof
21 included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such
22 then-outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay the
23 costs of the refunding or defeasance. If money and/or direct obligations of the United States
24 maturing at a time or times and bearing interest in amounts (together with money, if necessary)
1 sufficient to redeem and retire, refund or defease the defeased Bonds in accordance with their
2 terms are set aside in a special trust fund or escrow account irrevocably pledged to that
3 redemption, retirement or defeasance of defeased Bonds (hereinafter called the "trust account"),
4 then all right and interest of the owners of the defeased Bonds in the covenants of this ordinance
5 and in the funds and accounts obligated to the payment of the defeased Bonds shall cease and
6 become void. The owners of defeased Bonds shall have the right to receive payment of the
7 principal of and interest on the defeased Bonds from the trust account. The City shall include in
8 the refunding or defeasance plan such provisions as the City deems necessary for the random
9 selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds,
10 for notice of the defeasance to be given to the owners of the defeased Bonds and to such other
11 persons as the City shall determine, and for any required replacement of Bond certificates for
12 defeased Bonds. The defeased Bonds shall be deemed no longer outstanding, and the City may
13 apply any money in any other fund or account established for the payment or redemption of the
14 defeased Bonds to any lawful purposes as it shall determine.
15 Notwithstanding anything in this section to the contrary, if the principal of and/or interest
16 due on the Bonds is paid by the Bond Insurer pursuant to an insurance policy (the "Municipal
17 Bond Insurance Policy") insuring the payment when due of the principal of and interest on the
18 Bonds as provided in such policy, the Bonds shall be treated as remaining outstanding for all
19 purposes and shall not be considered paid by the City, and the covenants, agreements and other
20 obligations of the City to the registered owners of the Bonds shall continue to exist, and the Bond
21 Insurer shall be subrogated to the rights of the registered owners.
22 If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance
23 of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for
24 notices of redemption of Bonds.
1
2 Section 16. Bond Fund and Deposit of Bond Proceeds. There is created and established
3 in the office of the Finance Director a special fund designated as the Limited Tax General
4 Obligation Bond Fund, 1998 (the "Bond Fund"), for the purpose of paying principal of and
5 interest on the Bonds. Accrued interest on the Bonds, if any, received from the sale and delivery
6 of the Bonds shall be paid into the Bond Fund. All taxes collected for and allocated to the
7 payment of the principal of and interest on the Bonds shall be deposited in the Bond Fund.
8 There also is created and established in the office of the Finance Director a special fund
9 designated as the 1998 Library Construction Fund, (the "Construction Fund"). The principal
10 proceeds received from the sale and delivery of the Bonds shall be paid into the Construction
11 Fund and used for the purposes specified in Section 2 of this ordinance. Until needed to pay the
12 costs of the Project and costs of issuance of thc Bonds, the City may invest principal proceeds
13 temporarily in any legal investment, and the investment earnings may be retained in the
14 Construction Fund and be spent for the purposes of that fund.
15 Section l7. Approval of Bond Purchase Contract. Seattle-Northwest Securities
16 Corporation, of Seattle, Washington, has presented a purchase contract (the "Bond Purchase
17 Contract") to the City offering to purchase the Bonds under the terms and conditions provided in
18 the Bond Purchase Contract, which written Bond Purchase Contract is on file with the City Clerk
19 and is incorporated herein by this reference. The City Council finds that entering into the Bond
20 Purchase Contract is in the City's best interest and therefore accepts the offer contained therein
21 and authorizes its execution by City officials.
22 The Bonds will be printed at City expense and will be delivered to the pumhaser in
23 accordance with the Bond Purchase Contract, with the approving legal opinion of Foster
24 Pepper & Shefelman PLLC, municipal bond counsel of Seattle, Washington, regarding the
25 Bonds printed on each Bond. Bond counsel shall not be required to review and shall express no
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opinion concerning the completeness or accuracy of any official statement, offering circular or
other sales or disclosure material issued or used in connection with the Bonds, and bond
counsel's opinion shall so state.
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. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated September 29, 1998 (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 19. Undertaking 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 fbr 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:
(i) To each nationally recognized municipal securities
information repository designated by the SEC in accordance with the Rule
('~NRMSIR") and to a state information depository, if any, established in the
State of Washington (the "SID") annual fmancial 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) To each NRMSIR or the Municipal Securities Rulemaking
Board ("MSRB"), and to the SID, 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 fights 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) To each NRMSIR or to the MSRB, and to the SID, 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 accounting
procedures prescribed by the State Auditor and any other applicable rules
and regulations prescribed by the State of Washington, which may 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) a
statement of authorized, issued and outstanding general obligation debt of
the City; (3) the assessed value of the property within the City subject toa__d
valorem taxation; and (4) ad valorem tax levy rates and amounts and
percentage of taxes collected; and
(ii) Shall be provided to each NRMSIR and the SID, 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, 1998; and
(iii) May be provided in a single or multiple documents, and may
be incorporated by reference to other documents that have been filed with
each NRMSIR and the SID, or, if the document incorporated by reference is
a "final official statement" with respect to other obligations of the City, that
has been filed with the MSRB.
(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,
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participating underwriter, rating agency, NRMSIR, the SID or the MSRB, under the
circumstances and in the manner permitted by the Rule.
The City will give notice to each NRMSIR or the MSRB, and the SID, 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 Undertakine. 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 each NRMSIR or the MSRB and the SID.
(f) Remedy for Failure to Comply with Undertaldn~. 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 Undertakim,. The
Finance Director of the City (or such other officer of the City who may in the future
perform the duties of the Finance Director) 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;
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(iii) Deterraining 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 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 20.. Bond Insurance. The City Council finds that it is in the City's best interest to
15 purchase, and that a savings will result from purchasing, the Municipal Bond Insurance Policy
16 for the Bonds. The City is authorized to purchase from the Bond Insurer the Municipal Bond
17 Insurance Policy insuring the prompt payment of the principal of and interest on the Bonds and
18 agrees to the conditions for obtaining that policy, including the payment of the premium therefor
19 and the following provisions entitled "Payments under the Policy" required by the Bond insurer to
20 be included in this ordinance:
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"A. In the event that, on the second Business Day, and again on the
Business Day, prior to the payment date on the Obligations, the Paying Agent [the
Bond Registrar] has not received sufficient moneys to pay all principal of and
interest on the Obligations due on the second following or following, as the case
may be, Business Day, the Paying Agent shall immediately notify the Insurer or its
designee on the same Business Day by telephone or telegraph, confirmed in writing
by registered or certified mail, of the amount of the deficiency.
"B. If the deficiency is made up in whole or in part prior to or on the
payment date, the Paying Agent shall so notify the Insurer or its designee.
"C. In addition, if the Paying Agent has notice that any Bondholder has
been required to disgorge payments of principal or interest on the Obligation to a
trustee in Bankruptcy or creditors or others pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes a voidable preference to such
Bondholder within the meaning of any applicable bankruptcy laws, then the Paying
Agent shall notify the Insurer or its designee of such fact by telephone or telegraphic
notice, confirmed in writing by registered or certified mail.
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"D. The Paying Agent is hereby irrevocably designated, appointed,
directed and authorized to act as attomey-in-fact for Holders of the Obligations as
follows:
"1. If and to the extent there is a deficiency in amounts required
to pay interest on the Obligations, the Paying Agent shall (a) execute and
deliver to State Street Bank and Trust Company, N.A., or its successors
under the Policy (the "Insurance Paying Agent'), in form satisfactory to the
Insurance Paying Agent, an instrument appointing the Insurer as agent for
such Holders in any legal proceeding related to the payment of such interest
and an assignment to the Insurer of the claims for interest to which such
deficiency relates and which are paid by the Insurer, (b) receive as designee
of the respective Holders (and not as Paying Agent) in accordance with the
tenor of the Policy payment from the Insurance Paying Agent with respect to
the claims for interest so assigned, and (c) disburse the same to such
respective Holders; and
"2. If and to the extent of a deficiency in amounts required to pay
principal of the Obligations, the Paying Agent shall (a) execute and deliver
to the Insurance Paying Agent in form satisfactory to the Insurance Paying
Agent an instrument appointing the Insurer as agent for such Holder in any
legal proceeding relating to the payment of such principal and an assignment
to the Insurer of any of the Obligation surrendered to the Insurance Paying
agent of so much of the principal amount thereof as has not previously been
paid or for which moneys are not held by the Paying Agent and available for
such payment (but such assignment shall be delivered only if payment from
the Insurance Paying Agent is received), (b) receive as designee of the
respective Holders (and not as Paying Agent) in accordance with the tenor of
the Policy payment therefor from the Insurance Paying Agent, and (c)
disburse the same to such Holders.
"E. Payments with respect to claims for interest on and principal of
Obligations disbursed by the Paying Agent from proceeds of the Policy shall not be
considered to discharge the obligation of the Issuer with respect to such Obligations,
and the Insurer shall become the owner of such unpaid Obligations and claims for
the interest in accordance with the tenor of the assignment made to it under the
provisions of this subsection or otherwise.
"F. Irrespective of whether any such assignment is executed and
delivered, the Issuer and the Paying Agent hereby agree for the benefit of the Insurer
that:
"1. They recognize that to the extent the Insurer makes
payments, directly or indirectly (as by paying through the Paying Agent), on
account of principal of or interest on the Obligations, the Insurer will be
subrogated to the fights of such Holders to receive the amount of such
principal and interest from the Issuer, with interest thereon as provided and
solely fi.om the sources stated in this Indenture and the Obligations; and
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"2. They will accordingly pay to the Insurer the mount of such
principal and interest (including principal and interest recovered under
subparagraph (ii) of the first paragraph of the Policy, which principal and
interest shall be deemed past due and not to have been paid), with interest
thereon as provided in this Indenture and the Obligations, but only from the
sources and in the manner provided herein for the payment of principal of
and interest on the Obligations to Holders, and will otherwise treat the
Insurer as the owner of such rights to the amount of such principal and
interest.
"G. In connection with the issuance of additional Obligations, the Issuer
shall deliver to the Insurer a copy of the disclosure document, if any, circulated with
respect to such additional Obligations.
"H. Copies of any amendmems made to the documents executed in
connection with the issuance of the Obligations which are consented to by the
Insurer shall be sent to S ' '
tandard & Poor s Corporation.
"I. The Insurer shall receive notice of the resignation or removal of the
Paying Agent and the appointment of a successor thereto.
"J. The Insurer shall receive copies of all notices required to be
delivered to Bondholders and, on an annual basis, copies of the Issuer's audited
financial statements and Annual Budget.
"Notices: Any notice that is required to be given to a holder of the
Obligation or to the Paying Agent pursuant to the Indenture shall also be provided to
the Insurer. All notices required to be given to the Insurer under the Indenture shall
be in writing and shall be sent by registered or certified mail addressed to MBIA
Insurance Corporation, 113 King Street, Amaonk, New York 10504 Attention:
Surveillance."
Section 21. Ratification. All actions previously taken in accordance with this ordinance
35 are hereby ratified and confirmed.
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Section 22. 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.
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18 ATTEST:
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23 Danie]le Daskam, City Clerk
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31 Michael J. Reynolds, City Attorney
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INTRODUCED: October 5, 1998
PASSED: October 5, 1998
APPROVED: October 5. 1998
CHARLES A. BOOTH, Mayor
SEATTLE NORTHWEST
October 5, 1998
1420 Fifth Avenue
Suite 4300
Seattle, Washington 98101
1206)628-2882
Honorable Mayor and City Council
City of Auburn
25 W. Main Street
Auburn, Washington 980014998
Re: City of Auburn, Washington
$4,000,000 Limited Tax General Obligation Bonds, 1998
Dated: October 1, 1998
Honorable Mayor and City Council:
Seattle-Northwest Securities Corporation ("Purchaser") offers to purchase from the City of
Auburn, Washington ("Seller"), all the above-described bonds (the "Bonds"), on the terms and
based upon the covenants, representafiom and warranties set forth below. Appendix A, which is
incorporated into this Bond Purchase Agreement (the "Agreement') by reference, contains a brief
description of the Bonds, including principal amounts, maturities, interest rates, purchase price,
and the proposed date and place of delivery and payment (the "Closing"). Other provisions of
this Agreement are as follows:
Prior to the Closing, Seller will approve a Pre 'luninary Official Statement, and will pass an
ordinance authorizing the Bonds (the "Bond Ordinance") with such changes as are requested
by the Seller and its counsel. The Purchaser is authorized by Seller to use these documents
and the information contained in them in connection with the public offering of the Bonds
and the Final Official Statement in connection with the sale and delivery of the Bonds.
Seller, to the best of its knowledge, represents and covenants to the Purchaser that:
(a) it has and will have at the Closing the power and authority to enter into and perform
this Agreement, to pass the Bond Ordinance and to deliver and sell the Bonds to the
Purchaser;
(b) this Agreement and the Bonds do not and will not conflict with, or constitute or create
a breach or default under, any existing law, regulation, order or agreement to which
Seller is subject;
(c) no governmental approval or authorization other than the Bond Ordinance which has
not been obtained, or will not be obtained prior to closing, is required in connection
with the sale of the Bonds to the Purchaser;
(d) the Prelimina~ Official Statement with corrections, if any, noted by the Seller and its
counsel, as of its date and (except as to matters corrected or added in the Final Official
Statement) as of the Closing, is accurate and complete in all material respects as of its
date to the knowledge and belief of the officers and employees of the Seller, after due
review;
Honorable Mayor and City Council
City of Auburn
October 5, 1998
Page 2
(e) the Seller has previously provided the Purchaser with a copy of its Preliminary Official
Statement dated September 29, 1998. As of its date, the Preliminary Official
Statement has been ~deemed f-mai' by the Seller for purposes of Securities and
Exchange Commission ("S.E.C.') Rule 15c2-12(b)(1);
(f) the Seller agrees to cooperate with the lha. rchaser to permit the Purchaser to deliver or
cause to be delivered, within seven business days after any final agreement to purchase,
offer, or sell the securities and in sufficient time to accompany any confirmation that
requests payment from any customer of the Purchaser, copies of a final Official
Statement in sufficient quantity to comply with paragraph (b)(4) of the S.E.C.
Rule 15c2-12 and the rules of the Municipal Securities Rulemaking Board ("MSRB').
The Purchaser agrees to deliver the required number of copies of the final Official
Statement to the MSRB and to all nationally recognized municipal securities
information repositories on the business day on which the final Official Statement is
available, and in any event no later than ten business days after the date hereof;
(g) the Seller agrees to enter into a written agreement or contract, constituting an
undertaking (the "Undertaking") to provide ongoing disclosure about the City of
Auburn, Washington, for the benefit of the owners of the Bonds on or before the
Closing as required by paragraph (d)(2) to meet the limited exemption from paragraph
(b)(5) of S.E.C. Rule 15c2-12 (the "Rule"), and in the form as summarized by the
Pre 'hminary Official Statement, with such changes as may be agreed to in writing by
the Purchaser;
(h) if, at any time prior to the Closing, any event occurs as a result of which the
Pre 'lmainary Official Statement might include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Seller shall promptly
notify the Purchaser thereof.
The Purchaser shall have the right to cancel this Agreement to purchase the Bonds by
notifying the Seller of its election to do so if, after the execution of this Agreement and prior
to the Closing:
(a) a decision by a court of thc United States or the United States Tax Court shall be
rendered, or a..mling or a regulation (final, temporary, or proposed) by or on behalf of
the Treasury Department of the United States, the Internal Revenue Service or other
governmental agency shall be issued and in the case of any such regulation, published in
the Federal Register, or legislation shall have been introduced in, enacted by or
favorably reported to either the House of Representatives or the Semte of the United
States, with respect to Federal taxation upon interest received on bonds of the type and
character of any of the Bonds which, in the reasonable judgment of the Purchaser,
materially adversely affects the marketability of the Bonds or their sale by the Purchaser,
at the contemplated public offering prices; or
(b) the United States shall have become engaged in hostilities which have resulted in
declaration of war or national emergency, or other national or international calamity or
other event shall have occurred or accderated to such an extent as, in the reasonable
opinion of the Purchaser, to have a materially adverse effect on the marketability of the
Bonds; or
(c) there shall have occurred a general suspension of trading on the New York Stock
Exchange; or
Honorable Mayor and City Councll
City of Auburn
October 5, 1998
Page 3
(d) a general banking moratorium shall have been declared by United States, New York
State or Washington State authorities; or
(e) legislation shall hereafter be enacted, or actively considered for enactment, with an
effective date prior to the date of the delivery of the Bonds, or a decision by a court of
the United States shall hereafter be rendered, or a ruling or regulation by the S.E.C. or
other governmental agency having jurisdiction of the subject matter shall hereafter be
made, the effect of which is that
(1) the Bonds are not exempt from the registration, qualification or other
requirements of the Securities Act of 1933, as amended and as then in effect, or
the Securities Exchange Act of 1934, as amended and then in effect, or
(2) the Bond Ordinance is not exempt from the registration, qualification or other
requirements of the Trust Indenture Act of 1939, as amended and as then in
effect, or
(f) a stop order, ruling or regulation by the S.E.C. shall hereafter be issued or made, the
effect of which is that the issuance, offering or sale of the Bonds, as contemplated
herein or in the Final Official Statement, is in violation of any provision of the
Securities Act of 195~, as amended and as then in effect, the Securities Exchange Act of
1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as
amended and as then in effect, and which, in its reasonable judgment, adversely affects
the marketability of the Bonds or the market price thereof.
The Purchaser's obligations hereunder are also subject to the condition that at or prior to the
Closing Seller will deliver to the Purchaser all of the following:
(a) the Bonds, fully registered in book-entry form only in the name of Cede & Co., as
bond owner and noininee for The Depos~mry Trust Company; .
(b) the approving opinion of Bond Counsd dated the Closing date;
(c) iss.uance of a municipal bond insurance policy by MBIA Insurance Corporation and
assignment to the Bonds of a rating of Aaa by Moody's Investors Service;
(d) a certificate setting forth the facts, estimates and circumstances in existence on the date
of Closing which establish that it is not expected that the proceeds of the Bonds will be
nsed in a manner that could canse the Bonds to be "arbitrage bonds" winkln the
meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and any
applicable regulations thereunder;
(c) a ccxtified copy of the Bond Ordinance; and
(f) such additional certificates, instalments or opinions or other evidence as the Purchaser
may deem reasonably necessary or desirable to evidence the due authorization,
execution, authentication and delivery of the Bonds, the truth and accuracy as of the
time of the Closing of the Seller's representations and warranties, and thc conformity of
the Bonds and Bond Ordinance with the terms thereof as summarized in the Official
Statement, and to cover such other matters as it reasonably requests.
Honorable Mayor and City. Council
City of Auburn
October 5, 1998
Page 4
Seller will pay the cost of preparing, printing and executing the Bonds, the fees and
disbursements of Bond Counsel, bond registration and rating fees and expenses, bond
insurance, the cost of printing and distributing the Prelhninary and Final Official
Statements, travel and lodging expenses of Seller's employees and representatives, and other
expenses of Seller.
Purchaser will pay fees and disbursements of Purchaser's counsel, if any, the cost of
preparation and filing of blue sky and legal investment surveys where necessary, Purchaser's
travel expenses, and other expemes of Purchaser. As a convenience to Seller, Purchaser may
from time to time, as Seller's agent, make arrangements for certain items for which Seller is
respomible hereunder, such as printing of the Official Statement and travel or lodging
arrangements for Seller's representatives.
Purchaser also may advance for Seller's account when appropriate the cost of the items for
which Seller is responsible by making payments to third-party vendors. In such cases, Seller
shall pay such costs or expenses directly, upon submission of appropriate invoices by
Purchaser, or promptly reimburse Purchaser in the event Purchaser has advanced such costs
or expemes for Seller's account. It is understood that Seller shall be primarily responsible for
payment of all such items and that Purchaser may agree to advance the cost ot such items
from time to time solely as an accommodation to Seller and on the condition that it shall be
reimbursed in full by Seller.
This Agreement is intended to benefit only the parties hereto, and Seller's representatiom
and warranties shall survive any investigation made by or for the purchase, delivery and
payment for the Bonds, and the termination of this A~reement. Should the Seller fail to
satisfy any of the foregoing conditiom or covenants, or if the Purchaser's obligations are
terminated for any reasons permitted under this Agreement then neither the Purchaser nor
the Seller shall have any further obllgatiom under this Agreement, except that any expenses
incurred shall be borne in accordance with Section 5.
7. This Agreement may be modified or amended by an instrument in writing executed by the
parties hereto.
8. This offer expires on the date, and at the time, set forth on Appendix A.
Respectfully submitted,
Seattle-Northwest Securities Corporation
Alan K. Granberg, Vice President
Accepted October 5, 1998
City of Auburn, Washington
Charles A. Booth, Mayor
APPENDIX A
City of Auburn, Washington
$4,000,000 Limited Tax General Obligation Bonds, 1998
Description of Bonds
(a) Purchase Price: $4,029,638.85 ($100.740846 per $100), plus accrued interest from the
dated date of October 1, 1998 to date of Closing.
(b) Denominations: $5,000, or integral multiples thereof.
(c) Form: Fully registered in book-entxy form only in the name of Cede & Co., as bond
owner and nominee for Thc Depository Trust Company.
(d) Interest Payment Dates: June 1 and December 1, commencing June 1, 1999.
(e) Maturity Schedule: Bonds shall mature serially on December 1 of each year and bear
interest as follows:
Duc Interest Duc
Dec. 1 Amounts Rates Dec. 1
1999 $ 110,000 3.75% 2009
2000 135,000 4.00 2010
2001 140,000 4.00 2011
2002 145,000 5.00 2012
2003 150,000 5.00 2013
2004 160,000 5.00 2014
2005 165,000 5.00 2015
2006 175,000 5.00 2016
2007 185,000 5.00 2017
2008 195,000 5.00 2018
Interest
Amounts Rates
$ 205 000 4.00%
210 000 4.00
220 000 4.10
230 000 4.10
235 000 4.20
245 000 4.20
255 000 4.30
27£ 000 4.30
28C 000 4.30
290. DO0 4.35
Option.al Redemption: The Bonds maturing in years 1999 through 2008, inclusive, are
not subject to redemption prior to maturity. The Bonds maturing on and after December 1,
2009, are subject to redemption at the option of the City on and after December 1, 2008, in
whole or in part at any time (maturities to be selected by the City and by lot within a
maturity in such manner as the Bond Registrar and DTC will deternfine) at a price of par
plus accrued interest, if an),, to the date of redemption.
(g) Closing Date:
(h) Offer Expires:
(i) Bond Counsel:
With definitive Bonds or a temporary Bond on or about October 22, 1998.
11:00 p.m., October 5, 1998.
Foster Pepper & Shefelman PLLC.
For Information Purposes Only:
Net Interest Cost: 4.292996%