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20040213 r-04-2RESOLUTION NO.R-04-02 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF A GENERAL OBLIGATION PUBLIC IMPROVEMENT REFUNDING BOND, SERIES 2004A, IN THE PRINCIPAL AMOUNT OF $3,250,000, AND A GENERAL OBLIGATION WATER REFUNDING BOND, SERIES 2004B, IN THE PRINCIPAL AMOUNT OF $990,000 OF THE CITY OF FAIRFAX, VIRGINIA, PROVIDING FOR THE FORM, DETAILS AND PAYMENT THEREOF, AND PROVIDING FOR THE REFUNDING OF THE CITY'S GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS, SERIES OF 1994, AND THE CITY'S GENERAL OBLIGATION WATER BONDS, SERIES OF 1994 WHEREAS, on May 11, 1994, the City of Fairfax, Virginia (the "City"), issued its $7,560,000 General Obligation Public Improvement Bonds, Series of 1994 (the "1994 Public Improvement Bonds"), and its $2,010,000 General Obligation Water Bonds, Series of 1994 (the "1994 Water Bonds"); WHEREAS, the City can effect considerable savings by issuing (a) its general obligation public improvement refunding bonds to refund the outstanding 1994 Public Improvement Bonds maturing on May 1 in the years 2005 through 2009 in the aggregate principal amount of $3,250,000 (the "Refunded Public Improvement Bonds") and (b) its general obligation water refunding bonds to refund the outstanding 1994 Water Bonds maturing on May 1 in the years 2004 through 2009 in the aggregate principal amount of $990,000 (the "Refunded Water Bonds" and, together with the Refunded Public Improvement Bonds, the "Refunded Bonds"); WHEREAS, the City's administration and a representative of Davenport & Company LLC, acting in the role as the City's financial advisor (the "Financial Advisor"), have recommended to the Council of the City (the "City Council") that the City issue and sell one or more series of general obligation refunding bonds through a private placement with SunTrust Bank (the "Bank"); WHEREAS, pursuant to Section 15.2-2601 of the Public Finance Act of 1991, Title 15.2, Chapter 26 of the Code of Virginia of 1950, as amended (the "Public Finance Act of 1991"), the governing body of a locality may elect to issue bonds under the provisions of the Public Finance Act without regard to the requirements, restrictions or other provisions contained in its charter, and the City Council has elected to issue its general obligation refunding bonds under the Public Finance Act; BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAIRFAX, VIRGINIA: 1. Issuance of Bonds. Pursuant to the Constitution and statutes of the Commonwealth of Virginia, including the Public Finance Act of 1991, there shall be issued and sold two series of refunding bonds of the City as follows: (a) one series of bonds in the principal amount of $3,250,000 (the "Series 2004A Bond") to provide funds, together with other funds contributed by the City, to refund the Refunded Public Improvement Bonds, including funds to pay principal of and premium and interest on the Refunded Public Improvement Bonds until their earliest redemption date and to pay costs incurred in connection with refunding the Refunded Public Improvement Bonds and the costs of issuing the Series 2004A Bond, and (b) one series of bonds in the principal amount of $990,000 (the "Series 2004B Bond" and, together with Series 2004A Bond, the "Bonds") to provide funds, together with other funds contributed by the City, to refund the Refunded Water Bonds, including funds to pay principal of and premium and interest on the Refunded Water Bonds until their earliest redemption date and to pay costs incurred in connection with refunding the Refunded Water Bonds and the costs of issuing the Series 2004B Bond. 2. Bond Details. (a) The Series 2004A Bond shall be in the form of a single, typewritten bond, designated "General Obligation Public Improvement Refunding Bond, Series 2004A," shall be in registered form, shall be dated the date of its delivery and shall be numbered R-1. The Series 2004A Bond shall bear interest at the rate of 1.83% per year payable semi-annually, calculated on the basis of a 360-day year of twelve 30-day months. The Series 2004A Bond shall be sold to the Bank upon terms that the City Manager, in collaboration with the Financial Advisor, determines to be in the best interest of the City; provided, however, that the Series 2004A Bond shall (a) be sold at a price not less than 100% of the original principal amount thereof and (b) shall mature no later than May 1, 2009. Principal of and interest on the Series 2004A Bond shall be payable on dates determined by the City Manager. (b) The Series 2004B Bond shall be in the form of a single, typewritten bond, designated "General Obligation Water Refunding Bond, Series 2004B," shall be in registered form, shall be dated the date of its delivery and shall be numbered R-1. The Series 2004B Bond shall bear interest at the rate of 1.83% per year payable semi-annually, calculated on the basis of a 360-day year of twelve 30-day months. The Series 2004B Bond shall be sold to the Bank upon terms that the City Manager, in collaboration with the Financial Advisor, determines to be in the best interest of the City; provided, however, that the Series 2004B Bond shall (a) be sold at a price not less than 100% of the original principal amount thereof and (b) shall mature no later than May 1, 2009. Principal of and interest on the Series 2004B Bond shall be payable on dates determined by the City Manager. If the date on which any payment is due with respect to the Bonds is not a Business Day (as hereinafter defined), the payment shall be made on the next succeeding Business Day. "Business Day" shall mean a day on which banking business is transacted, but not including a Saturday, Sunday or legal holiday, or any other day on which banking institutions are authorized by law to close in the Commonwealth of Virginia. Principal and interest shall be payable by the Registrar (as hereinafter defined) by check or draft mailed to the registered owners at their addresses as they appear on the registration books kept by the Registrar on the last Business Day of the month preceding each interest payment date. Principal and interest shall be payable in lawful money of the United States of America. 3. Prepayment Provisions. The Bonds are subject to prepayment prior to maturity at the option of the City in whole or in part at any time upon payment of 100% of the principal amount to be prepaid plus interest accrued and unpaid to the date fixed prepayment upon 30 days' prior written notice to the purchaser thereof. 4. Execution and Form of Bonds. The Bonds shall be signed by the manual signature of the Mayor or Vice Mayor and the City's seal shall be affixed thereon and attested by the City Clerk or any Deputy City Clerk. The Series 2004A Bond and the Series 2004B Bond shall be issued as typewritten bonds in substantially the forms of Exhibit A and Exhibit B attached hereto, respectively, with such completions, omissions, insertions and changes not inconsistent with this Resolution as may be approved by the Mayor or Vice Mayor, whose approval shall be evidenced conclusively by the execution and delivery of the Bonds. 5. Pledge of Full Faith and Credit and Revenues. The full faith and credit of the City are irrevocably pledged for the payment of principal of 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. In addition, it is hereby covenanted and agreed with the holder of the Series 2004B Bond that so long as the Series 2004B Bond is outstanding and unpaid, the City shall: (a) charge rates or fees to users of its water system and fix and maintain such rates or fees at such level as will produce sufficient revenues to pay the cost of operation and administration, the cost of insurance against loss by injury to persons or property and the 2 principal of and premium, if any, and interest on the Series 2004B Bond authorized hereby and any other bonds heretofore or hereafter issued on account of such system and secured by a pledge of water revenues, as the same become due; (b) apply the revenues derived from the operation of such system in each fiscal year first to the payment of such costs of operation, administration and insurance during such year and then to the payment of principal of and premium, if any, and interest on the Series 2004A Bond and any other bonds heretofore or hereafter issued on account of such system and secured by a pledge of water revenues becoming due in such year; and (c) segregate and keep segregated from all other City funds all revenues derived fi:om the operation of such system and keep proper records and accounts therefor, separate and apart from all other records and accounts. 6. Registration, Transfer and Owners of Bonds. The Bonds shall be issued in registered form without coupons, payable to the registered holders or registered assigns. The City Treasurer is hereby appointed paying agent and registrar for the Bonds (the "Registrar"). The City may in its discretion 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, at 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 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 and interest and the exercise of all other rights and powers of the owner, except that interest payments shall be made to the person shown as owner on the registration books on the last Business Day of the month preceding each interest payment date. 7. Preparation and Delivery of Bonds. Subject to the provisions of paragraphs 1 and 2, the officers of the City 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 or purchasers upon payment therefor. 8. Redemption of Refunded Bonds. The Refunded Bonds are hereby irrevocably called for redemption on May 1, 2004 (the "Redemption Date"). The City shall cause notice of redemption to be given in accordance with the resolutions providing for the issuance of the Refunded Bonds to the registered owners of the Refunded Bonds. 9. Escrow Deposit Agreement. The City Manager is hereby authorized to execute an escrow deposit agreement (the "Escrow Agreement") between the City and SunTrust Bank, Richmond, Virginia, as escrow agent (the "Escrow Agent"). The Escrow Agreement shall be in substantially the form of the draft which has been presented to this meeting, which is hereby approved. The Escrow Agreement shall be in such final form as approved by the City Manager, in collaboration with the City Attorney and the City's bond counsel, the execution thereof by the City Manager to constitute conclusive evidence of approval of the Escrow Agreement. The Escrow Agreement shall provide for the irrevocable deposit of a portion of the Bond proceeds (the "Refunding Portion"), together with other legally available funds, in an escrow fund which shall be sufficient to provide for payment of principal of and premium, if any, and interest on the Refunded Bonds; provided, however, that such Bond proceeds shall be invested in such manner that the Bonds will not be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations issued pursuant thereto. 10. Deposit of Bond Proceeds. The Director of Finance is authorized and directed to provide for the delivery of the Refunding Portion for deposit in an escrow fund, in an amount that, together with other funds of the City, will be sufficient, together with the interest thereon (a) to pay when due the interest on the Refunded Bonds to the first date on which they may be redeemed at the option of the City and (b) to pay upon the earlier of maturity or redemption the principal of the Refunded Bonds, plus the applicable redemption premium. The Director of Finance is further authorized and directed to take all such further action as may be necessary or desirable in connection with the payment and refunding of the Refunded Bonds. 11. Arbitrage Covenants. (a) The City represents that there have not been issued, and covenants that there will not be issued, any obligations that will be treated as part of the same issue of obligations as the Bonds within the meaning of Treasury Regulations Section 1.150-1(c). (b) The City covenants that it shall not take or omit to take any action the taking or omission of which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, or otherwise cause interest on the Bonds to be includable in the gross income of the registered owners thereof under existing law. Without limiting the generality of the foregoing, the City shall comply with any provision of law which 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. 12. 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 in order to show that such expected use and investment will not violate the provisions of Section 148 of the Code, 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. 13. Limitation on Private Use. The City covenants that it shall not permit the proceeds of the Bonds or the facilities refinanced 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 refinanced 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 refinanced 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 covenants. 14. Qualified Tax-Exempt Obligations. By operation of Section 265(b)(3)(D)(ii), the City intends for the Bonds to be designated "qualified tax-exempt obligations." 15. 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. 16. Repeal of Conflicting Resolutions. All resolutions or parts of resolutions in conflict herewith are repealed. 17. Effective Date. This Resolution shall take effect immediately. 4 ATTEST: Adopted this 10th day of February, 2004. City Clerk (SEAL) VO'IE: Councilwoman Cross Councilman Greenfield Councilwoman Lyon Councilman Rasmussen Councilman Silverthome Councilwoman Winter Aye Aye Aye Aye Aye Aye