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20041130 r-04-76RESOLUTION NO. 1/-04-76 RESOLUTION PROVIDING FOIl THE ISSUANCE AND SALE OF GENERAL OBLIGATION SCHOOL BONDS OF THE CITY OF FAIRFAX, VIRGINIA, IN THE MAXIMUM PRINCIPAL AMOUNT OF $42,000,000, HERETOFORE AUTHORIZED, AND PROVIDING FOIl THE FORM, DETAILS AND PAYMENT THEREOF WHEREAS, the issuance of general obligation school bonds of the City of Fairfax, Virginia (the "City"), in the maximum principal amount of $86,800,000 was approved by the qualified voters of the City at an election held on November 2, 2004, to finance a program of capital improvement projects for the public school system of the City (the "Project"), none of which bonds has been issued and sold; and WHEREAS, it has been recommended to the Council of the City (the "City Council"), by a representative of Davenport & Company LLC, the City's financial advisor (the "Financial Advisor"), that the City issue and sell a portion of such bonds as a single issue of general obligation school bonds in the maximum principal amount of $42,000,000; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAIRFAX, VIRGINIA: 1. Authorization for Issuance and Sale. The City hereby provides for the issuance sale, pursuant to the Constitution and statutes of the Commonwealth of Virginia, including the Public Finance Act of 1991, of general obligation school bonds of the City to finance the costs of the first phase of the Project and to pay costs incurred in connection with issuing such bonds. 2. Bond Details. The bonds shall be designated "General Obligation School Bonds, Series 2004" (the "Bonds"), or such other designation as may be determined by the City Manager, shall be dated such date as determined by the City Manager, shall be in registered form, in denominations of $5,000 and integral multiples thereof, and shall be numbered R-1 upward. Subject to Section 8, the issuance and sale of the Bonds are authorized on terms as shall be satisfactory to the City Manager; provided, however, that the Bonds (a) shall be issued in an aggregate principal amount not to exceed $42,000,000, (b) shall bear interest at a "true" or "Canadian" interest cost not to exceed 6.0% per year (taking into account any original issue discount or premium), (c) shall be sold at a price not less than 98% of the original aggregate principal amount thereof (excluding any original issue discount), and (d) shall mature, or be subject to mandatory sinking fund redemption, in annual installments beginning no later than December 31, 2007, and ending no later than December 31, 2037. Principal of the Bonds shall be payable annually on dates determined by the City Manager. Each Bond shall bear interest at such rate as shall be determined at the time of sale, payable semiannually on dates determined by the City Manager, calculated on the basis of a 360-day year of twelve 30-day months. Principal and premium, if any, shall be payable to the registered owners upon surrender of Bonds as they become due at the office of the Registrar (as hereinafter defined). Interest shall be payable by check or draft mailed to the registered owners at their addresses as they appear on the registration books kept by the Registrar on a date prior to each interest payment date (the "Record Date") that shall be determined by the City Manager. Principal, premium, if any, and interest shall be payable in lawful money of the United States of America. Initially, one Bond certificate for each maturity of the Bonds shall be issued to and registered in the name of The Depository Trust Company, New York, New York ("DTC"), or its nominee. The City has heretofore entered into a Letter of Representations relating to a book-entry system to be maintained by DTC with respect to the Bonds. "Securities Depository" shall mean DTC or any other securities depository for the Bonds appointed pursuant to this Section. In the event that (a) the Securities Depository determines not to continue to act as the securities depository for the Bonds by giving notice to the Registrar, and the City discharges its responsibilities hereunder, or (b) the City in its sole discretion determines (i) that beneficial owners of Bonds shall be able to obtain certificated Bonds or (ii) to select a new Securities Depository, then its chief financial officer shall, at the direction of the City, attempt to locate another qualified securities depository to serve as Securities Depository and authenticate and deliver certificated Bonds to the new Securities Depository or its nominee, or authenticate and deliver certificated Bonds to the beneficial owners or to the Securities Depository participants on behalf of beneficial owners substantially in the form provided for in Section 5; provided, however, that such form shall provide for interest on the Bonds to be payable (A) from the date of the Bonds if they are authenticated prior to the first interest payment date, or (B) otherwise from the interest payment date that is or immediately precedes the date on which the Bonds are authenticated (unless payment of interest thereon is in default, in which case interest on such Bonds shall be payable from the date to which interest has been paid). In delivering certificated Bonds, the Director shall be entitled to rely on the records of the Securities Depository as to the beneficial owners or the records of the Securities Depository participants acting on behalf of beneficial owners. Such certificated Bonds will then be registrable, transferable and exchangeable as set forth in Section 7. So long as there is a Securities Depository for the Bonds (a) it or its nominee shall be the registered owner of the Bonds, (b) notwithstanding anything to the contrary in this Resolution, determinations of persons entitled to payment of principal, premium, if any, and interest, transfers of ownership and exchanges and receipt of notices shall be the responsibility of the Securities Depository and shall be effected pursuant to roles and procedures established by such Securities Depository, (c) the Registrar and the City shall not be responsible or liable for maintaining, supervising or reviewing the records maintained by the Securities Depository, its participants or persons acting through such participants, (d) references in this Resolution to registered owners of the Bonds shall mean such Securities Depository or its nominee and shall not mean the beneficial owners of the Bonds, and (e) in the event of any inconsistency between the provisions of this Resolution and the provisions of the above-referenced Letter of Representations such provisions of the Letter of Representations, except to the extent set forth in this paragraph and the next preceding paragraph, shall control. 3. Redemption Provisions. The Bonds may be subject to redemption prior to maturity at the option of the City on or after dates, if any, determined by the City Manager, in whole or in part at any time at a redemption price equal to the principal amount of the Bonds to be redeemed, together with any accrued interest to the date fixed for redemption plus a redemption premium not to exceed 2% of the principal amount of the Bonds to be redeemed, such redemption dates and premium to be determined by the City Manager. Any term bonds may be subject to mandatory sinking fund redemption as determined by the City Manager. If less than all of the Bonds are called for redemption, the maturities of the Bonds to be redeemed shall be selected by the chief financial officer of the City in such manner as he may determine to be in the best interest of the City. If less than all the Bonds of a particular maturity are called for redemption, the Bonds to be redeemed shall be selected by DTC or any successor securities depository pursuant to its rules and procedures or, if the book-entry system is discontinued, shall be selected by the Registrar by lot in such manner as the Registrar in its discretion may determine. In either case, (a) the portion of any Bond to be redeemed shall be in the principal amount of $5,000 or some integral multiple thereof and (b) in selecting Bonds for redemption, each Bond shall be considered as representing that number of Bonds that is obtained by dividing the principal amount of such Bond by $5,000. The City shall cause notice of the call for redemption identifying the Bonds or portions thereof to be redeemed to be sent by facsimile transmission, registered or certified mail or overnight express delivery, not less than 30 nor more than 60 days prior to the redemption date, to the registered owner of the Bonds. The City shall not be responsible for mailing notice of redemption to anyone other than DTC or another qualified securities depository then serving or its nominee unless no qualified securities depository is the registered owner of the Bonds. If no qualified securities depository is the registered owner of the Bonds, notice of redemption shall be mailed to the registered owners of the Bonds. If a portion of a Bond is called for redemption, a new Bond in principal amount equal to the unredeemed portion thereof shall be issued to the registered owner upon the surrender thereof. 2 4. Execution and Authentication. The Bonds shall be signed by the manual or facsimile signature of the Mayor of the City, and the City's seal shall be affixed thereto or a facsimile thereof printed thereon and attested by the manual or facsimile signature of the City Clerk or Deputy City Clerk; provided, however, that if both of such signatures are facsimiles, no Bond shall be valid until it has been authenticated by the manual signature of an authorized officer or employee of the Registrar and the date of authentication noted thereon. 5. Bond Form. The Bonds shall be in substantially the following form, with such completions, omissions, insertions and changes not inconsistent with this Resolution as may be approved by the officers signing the Bonds, whose approval shall be evidenced conclusively by the execution and delivery of the Bonds: Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the issuer or its agent for registration of transfer, exchange, or payment, and any certificate is registered in the name of Cede & Co., or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED REGISTERED No. R- $ UNITED STATES OF AMERICA COMMONWEALTH OF VIRGINIA CITY OF FAIRFAX General Obligation School Bond~ Series of 2004 INTEREST RATE MATURITY DATE DATED DATE CUSIP % January 15,__ .,_ REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS The City of Fairfax, Virginia (the "City"), for value received, promises to pay, upon surrender hereof, to the registered owner hereof, or registered assigns or legal representative, the principal sum stated above on the maturity date stated above, subject to prior redemption as hereinafter provided, and to pay interest hereon semiannually on each January 15 and July 15, beginning July 15, 2005, at the annual rate stated above, calculated on the basis of a 360- day year of twelve 30-day months. Principal, premium, if any, and interest are payable in lawful money of the United States of America by the City Treasurer, who has been appointed paying agent and registrar for the bonds, or at such bank or trust company as may be appointed as successor paying agent and registrar by the City (the "Registrar").' Notwithstanding any other provision hereof, this bond is subject to a book-entry system maintained by The Depository Trust Company ("DTC"), and the payment of principal, ipremium, if any, and interest, the providing of notices and other matters shall be made as described in the City's Letter of Representations to DTC. This bond is one of an issue of $ General Obligation School Bonds, Series of 2004, of like date and tenor, except as to number, denomination, rate of interest, privilege of redemption and maturity, and is issued pursuant to the Constitution and statutes of the Commonwealth of Virginia, including the Public Finance Act of 1991. The Bonds were approved by the qualified voters of the City at referendum held on November 2, 2004, and are authorized by a resolution adopted by the Council of the City (the "City Council") on November 30, 2004, to finance the cost of the first phase of capital improvement projects for the City's public school system and to pay costs of issuing the bonds. Bonds maturing on or before January 15, 2015, are not subject to redemption prior to maturity. Bonds maturing on or after January 15, 2016, are subject to redemption prior to maturity at the option of the City on or after January 15, 2015, in whole or in part (in any multiple of $5,000) at any time, upon payment of 100% of the principal amount of bonds to be redeemed plus interest accrued and unpaid to the date fixed for redemption. Bonds maturing on January 15, , are required to be redeemed in part before naturity by the City on January 15 in the years and amounts set forth below, at a redemption price equal to the principal amount of the bonds to be redeemed, plus accrued interest to the redemption date: Year Amount Year Amount If less than all of the bonds are called for redemption, the maturities of the bonds to be redeemed shall be selected by the chief financial officer of the City in such manner as he may determine to be in the best interest of the City. If less than all the bonds of a particular maturity are called for redemption, the bonds within such to be redeemed shall be selected by DTC or any successor securities depository pursuant to its rules and procedures or, if the book entry system is discontinued, shall be selected by the Registrar by lot in such manner as the Registrar in its discretion may determine. In either case, (a) the portion of any bond to be redeemed shall be in the principal amount of $5,000 or some integral multiple thereof and (b) in selecting bonds for redemption, each bond shall be considered as representing that number of bonds that is obtained by dividing the principal amount of such bond by $5,000. The City shall cause notice of the call for redemption identifying the bonds or portions thereof to be redeemed to be sent by facsimile transmission, registered or certified mail or overnight express delivery, not less than 30 nor more than 60 days prior to the redemption date, to DTC ~ior its nominee as the registered owner hereof. If a portion of this bond is called for redemption, a new bond in the principal amount of the unredeemed portion hereof will be issued to the referenced owner upon surrender hereof. The full faith and credit of the City are irrevocably pledged for the payment of principal of and premium, if any, and interest on this bond. Unless other funds are lawfully available and appropriated for timely payment of this bond, the City Council shall levy and collect an annual ad valorem tax, over and above all other taxes authorized or limited by law and without limitation as to rate or amount, on all locally taxable property in the City ;ufficient to pay when due the principal of and premium, if any, and interest on this bond. The Registrar shall treat the registered owner of this bond as the person exclusively ~ntitled to payment of principal of and premium, if any, and interest on this bond and the exercise of all other rights and powers of the owner, except that interest payments shall be made to the person shown as the owner on the registration books on the first day of the month of each interest payment date. All acts, conditions and things required by the Constitution and statutes of the Commonwealth of Virginia to happen, exist or be performed precedent to and in the issuance of this bond have happened, exist and have been performed, and the issue of bonds of which this bond is one, together with all other indebtedness of the City, is within every debt and other limit prescribed by the Constitution and statutes of the Commonwealth of Virginia. IN WITNESS WHEREOF, the City Council of the City of Fairfax, Virginia, has caused this Bond to be issued in the name of the City of Fairfax, Virginia, to be signed by its Mayor, its seal to be affixed hereto and attested by the signature of the City Clerk, and this bond to be dated ,2004. ATTESTED: 4 City Clerk, City of Fairfax, Virginia (SEAL) Mayor, City of Fairfax, Virginia ASSIGNMENT FOR VALUE RECEIVED the undersigned sell(s), assign(s) and transfer(s) unto __ (Please print or type name and address, including postal zip code, of Transferee) PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF TRANSFEREE: the within bond and all rights thereunder, hereby irrevocably constituting and appointing ' l Attorney, to transfer said bond on the books kept for the registration thereof, with full power substitution in the premises. Dated: Signature Guaranteed NOTICE: Signature(s) must be guaranteed by an Eligible Guarantor Institution such as a Commercial Bank, Trust Company, Securities Broker/Dealer, Credit Union, or Savings Association who is a member of a medallion program approved by The Securities Transfer Association, Inc. (Signature of Registered Owner NOTICE: The signature above must correspond with the name of the registered owner as it appears on the front of this bond in every particular without alteration or enlargement or any change whatsoever. 6. Pledge of Full Faith and Credit. The full faith and credit of the City are irrevocably pledged for the payment of principal of and premium, if any, and interest on the Bonds. Unless other funds are lawfully available and appropriated for timely payment of the Bonds, the City Council shall levy and collect an annual ad valorem tax, over and above all other taxes authorized or limited by law and without limitation as to rate or amount, on all locally taxable property in the City sufficient to pay when due the principal of and premium, if any, and interest on the Bonds. 7. Registration, Transfer and Owners of Bonds. The City Treasurer is appointed paying agent and registrar for the Bonds (the "Registrar"). The City may appoint at any time a qualified bank or trust company as successor Registrar. The Registrar shall maintain registration books for the registration and registration of transfers of Bonds. Upon presentation and surrender of any Bonds at the office of the Registrar, or its corporate trust office if the Registrar is a bank or trust company, together with an assignment duly executed by the registered owner or his duly authorized attorney or legal representative in such form as shall be satisfactory to the Registrar, the City shall execute and the Registrar shall authenticate, if required by Section 4, and deliver in exchange, a new Bond or Bonds having an equal aggregate principal amount, in authorized denominations, of the same form and maturity, bearing interest at the same rate, and registered in names as requested by the then registered owner or his duly authorized attorney or legal representative. Any such exchange shall be at the expense of the City, except that the Registrar may charge the person requesting such exchange the amount of any tax or other governmental charge required to be paid with respect thereto. The Registrar shall treat the registered owner as the person exclusively entitled to payment of principal, premium, if any, and interest and the exercise of all other rights and >owers of the owner, except that interest payments shall be made to the person shown as owner on the registration books as of the Record Date. 8. Sale of Bonds. The City approves the following terms of the sale of the Bonds. The Bonds may be sold by competitive bid, and the City Manager, in collaboration with the Financial Advisor, shall receive bids for the Bonds and award the Bonds to the bidder providing the lowest "true" or "Canadian" interest cost, all subject to the limitations set forth in Section 2. The City Council further authorizes the City Manager, in collaboration with the Financial Advisor, to (a) reduce the aggregate principal amount of the Bonds, (b) determine the maturity schedule of the Bonds, subject to the limitations set forth in Section 2, (c) establish the redemption provisions, if any, for the Bonds, subject to the limitations set forth in Section 3, and (d) determine the dated date, maturity dates, interest payment dates and Record Date for the Bonds. Following the sale of the Bonds, the City Manager shall file a certificate with the City Clerk setting forth the final terms and purchase price of the Bonds. The actions of the City Manager in selling the Bonds shall be conclusive, and no further action shall be necessary on the part of the City Council. 9. Notice of Sale. The City Manager, in collaboration with the Financial Advisor, is authorized and directed to take all proper steps to advertise the Bonds for sale substantially in accordance with the form of Notice of Sale attached as Appendix D to the Preliminary Official Statement (referred to in Section 10 below), which is approved; provided that the City Manager, in collaboration with the Financial Advisor, may make such changes in the Notice of Sale not inconsistent with the provisions of this Resolution as he may consider to be in the best interest of the City. The distribution of the Notice of Sale shall constitute conclusive evidence of the approval of the City Manager of any such changes. 10. Official Statement. A draft of a Preliminary Official Statement describing the Bonds, copies of which have been provided to the members of the City Council, is approved as the form of the Preliminary Official Statement by which the Bonds will be offered for sale, with such completions, omissions, insertions and changes not inconsistent with this Resolution as the City Manager and Director of Finance may consider appropriate. After the Bonds have been sold, the City Manager and the Director of Finance, in collaboration with the Financial Advisor, shall make such completions, omissions, insertions and changes in the Preliminary Official Statement not inconsistent with this Resolution as are necessary or desirable to complete it as a final Official Statement, execution thereof by the City Manager to constitute conclusive evidence of his approval of any such completions, omissions, insertions and changes. The City shall arrange for the delivery to the purchaser of the Bonds of a reasonable number of copies of the final Official Statement, within seven business days after the Bonds have been awarded, for delivery to each potential investor requesting a copy of the Official Statement and to each person to whom such purchaser and members of its group initially sell Bonds. 11. Official Statement Deemed Final. The City Manager is authorized, on behalf of the City, to deem the Preliminary Official Statement and the Official Statement in final form, each to be "final" as of its date within the meaning of Rule 15c2-12 (the "Rule") of the Securities and Exchange Commission (the':''SEC'''), except for the omission in the Preliminary Official Statement of certain pricing and other information permitted to be omitted pursuant to !such the Rule. The distribution of the Preliminary Official Statement and the Official Statement in final form shall be conclusive evidence that each has been deemed final as of its date by the City, except for the omission in the Preliminary Official Statement of such pricing and other information permitted to be omitted pursuant to the Rule. 12. Preparation and Delivery of Bonds. After bids have been received and the Bonds have been awarded, the Mayor of the City and the City Clerk are authorized and directed to take all. proper steps to have the Bonds prepared and executed in accordance with their terms and to deliver the Bonds to the purchaser thereof upon payment therefor. 13. Arbitrage Covenants. The City covenants that it shall not take or omit to take any action the taking or omission of which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and regulations issued pursuant thereto (the "Code"), or otherwise cause interest on the Bonds to be includable in the gross income for Federal income tax purposes of the registered owners thereof under existing laws. Without limiting the generality of the foregoing, the City shall comply with any provision of law that may require the City at any time to rebate to the United States any part of the earnings derived from the investment of the gross proceeds of the Bonds, unless the City receives an opinion of nationally recognized bond counsel that such compliance is not required to prevent interest on the Bonds from being includable in the gross income of the registered owners thereof under existing law. The City shall pay any such required rebate from its legally available funds. 14. Non-Arbitrage Certificate and Elections. Such officers of the City as may be requested are authorized and directed to execute an appropriate certificate setting forth the expected use and investment of the proceeds of the Bonds and any elections such officers deem desirable regarding rebate of earnings to the United States, for purposes of complying with Section 148 of the Code. Such certificate and elections shall be in such form as may be requested by bond counsel for the City. 15. SNAP Investment Authorization. The City Council has received and reviewed the Information Statement (the "Information Statement"), describing the State Non- Arbitrage Program of the Commonwealth of Virginia ("SNAP") and the Contract Creating the State Non-Arbitrage Program Pool I (the "Contract"), and the City Council has determined to authorize the Treasurer to have the option to utilize SNAP in connection with the investment of the proceeds of the Bonds. The City Council acknowledges that the Treasury Board of the Commonwealth of Virginia is not, and shall not be, in any way liable to the City in connection with SNAP, except as otherwise provided in the Contract. 16. Private Activity Bond Covenant. The City covenants that it shall not permit the proceeds of the Bonds or the facilities financed with the proceeds of the Bonds to be used in any manner that would result in (a) 5% or more of such proceeds or the facilities financed with such proceeds being used in a trade or business carried on by any person other than a governmental unit, as provided in Section 141(b) of the Code, (b) 5% or more of such proceeds or the facilities financed with such proceeds being used with respect to any output facility (other than a facility for the furnishing of water), within the meaning of Section 141(b)(4) of the Code, or (c) 5% or more of such proceeds being used directly or indirectly to make or finance loans to any persons other than a governmental unit, as provided in Section 141(c) of the Code; provided, however, that if the City receives an opinion of nationally recognized bond counsel that any such covenants need not be complied with to prevent the interest on the Bonds from being includable in the gross income for federal income tax purposes of the registered owners thereof under existing law, the City need not comply with such covenant. 17. Continuing Disclosure. The Mayor, the City Manager and such officer or officers of the City as either may designate are hereby authorized and directed to execute a continuing disclosure agreement (the "Continuing Disclosure Agreement") setting forth the reports and notices to be filed by the City and containing such covenants as may be necessary to assist the purchaser of the Bonds in complying with the provisions of the Rule. The Continuing Disclosure Agreement shall be substantially in the form presented to this meeting with such completions, omissions, insertions and changes that are not inconsistent with this Resolution as the Mayor and City Manager may consider appropriate. The execution thereof by such officers shall constitute conclusive evidence of their approval of any such completions, omissions, insertions and changes. 18. Other Actions. All other actions of officers of the City in conformity with the purposes and intent of this Resolution and in furtherance of the issuance and sale of the Bonds are approved and confirmed. The officers of the City are authorized and directed to execute and deliver all certificates and instruments and to take all such further action as may be considered necessary or desirable in connection with the issuance, sale and delivery of the Bonds. 19. Repeal of Conflicting Resolutions. All resolutions or parts of resolutions in conflict herewith are hereby repealed. 20. Effective Date. This Resolution shall take effect immediately. ADOPTED THIS 30TH DAY OF NOVEMBER 2004. IIATTEST: I '( - ~ityClerk Mayor The vote on the motion to approve was recorded as follows: VOTE: J. Cross aye J. Greenfield absent G. Lyon aye G. Rasmussen absent S. Silverthome aye P. Winter aye 8