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R-22-38RESOLUTION NO. R-22-38 RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF A TAXABLE SEWER SYSTEM REVENUE BOND, SERIES 2022, OF THE CITY OF FAIRFAX, VIRGINIA, IN A PRINCIPAL AMOUNT NOT TO EXCEED $14,800,000, AND PROVIDING FOR THE FORM, DETAILS AND PAYMENT THEREOF WHEREAS, on September 13, 2022, the City of Fairfax, Virginia (the "City"), adopted an ordinance (the "Ordinance") authorizing the issuance of revenue bonds in the maximum principal amount of $14,800,000 to finance capital improvements related to the City's sewer system (the "Project"); WHEREAS, the City has determined to issue a single sewer system revenue bond (as further described herein, the "Bond") to finance the Project; WHEREAS, the City has applied to the Virginia Resources Authority ("VRA") for the purchase of the Bond, and VRA has indicated its willingness to purchase the Bond from the proceeds of one or more series of its Infrastructure and State Moral Obligation Revenue Bonds (Virginia Pooled Financing Program) (collectively, the "VRA Bonds"), in accordance with the terms of a Local Bond Sale and Financing Agreement (the "Financing Agreement"), between VRA and the City, the form of which has been made available for this meeting of the Council; WHEREAS, the Financing Agreement shall indicate that the sum of $14,250,000 is the amount of proceeds requested for the Project from VRA or such other amount as requested by the City in writing and approved by VRA prior to VRA's bond pricing (the "Proceeds Requested"); WHEREAS, VRA has advised the City that VRA's objective is to pay the City a purchase price for the Bond (the "Purchase Price Objective") that, in VRA's judgment, reflects its market value taking into consideration the Proceeds Requested and such factors as the purchase price received by VRA for the VRA Bonds, the issuance costs of the VRA Bonds (consisting of the underwriters' discount and other costs incurred by VRA) (collectively, the "VRA Costs") and other market conditions relating to the sale of the VRA Bonds; WHEREAS, such factors are expected to result in the City's receiving a purchase price other than the par amount of the Bond and consequently (a) the aggregate principal amount of the Bond may be greater than or less than the Proceeds Requested in order to receive an amount of proceeds that is substantially equal to the Proceeds Requested, or (b) if the maximum authorized principal amount of the Bond set forth in Section 3 of this Resolution does not exceed the Proceeds Requested by at least the amount of the VRA Costs and any original issue discount, the amount to be paid to the City, given the Purchase Price Objective and market conditions, will be less than the Proceeds Requested; and WHEREAS, the Financing Agreement will provide that the terms of the Bond may not exceed the parameters set forth below in Section 3; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAIRFAX, VIRGINIA: 1. Issuance of Bond and Use of Proceeds. Pursuant to the Constitution and statutes of the Commonwealth of Virginia (the "Commonwealth"), including the Public Finance Act of 1991, the Bond shall be issued and sold to VRA as a taxable sewer system revenue bond of the City to provide funds to finance the Project and to pay issuance and financing costs (including capitalized interests and reserves, if required) incurred in connection with the issuance of the Bond. The Bond shall be delivered to or upon the order of VRA upon VRA's payment of the purchase price set forth in the Financing Agreement. Subject to the determination by the City Manager (which term for purposes of this Resolution shall include the Chief Financial Officer of the City) of what will be in the City's best interest, the Bond is authorized to be sold to VRA in connection with any sale of VRA Bonds occurring prior to June 30, 2023. 2. Authorization of Financing Agreement. The form of the Financing Agreement made available for this meeting is hereby approved. The City Manager is authorized to execute and deliver the Financing Agreement in substantially such form, with such completions, omissions, insertions and changes not inconsistent with this Resolution as may be approved by the City Manager, whose approval shall be evidenced conclusively by the execution and delivery thereof. The issuance and sale of the Bond to VRA shall be upon the terms and conditions set forth in the Financing Agreement. The proceeds of the Bond shall be applied in the manner set forth in the Financing Agreement. All capitalized terms used but not otherwise defined herein shall have the same meanings as set forth in the Financing Agreement. 3. Bond Details. The Bond shall be issued as a single, registered bond, shall be designated "Taxable Sewer System Revenue Bond," shall have a series designation added to reflect the year in which issued, shall be numbered R-1 and shall be dated the date that is 30 days prior to the closing date of the VRA Bonds. The City Council authorizes the issuance and sale of the Bond to VRA on such terms as shall be determined by VRA subject to VRA's Purchase Price Objective and market conditions described in the Recitals hereof, provided, however, that the Bond (a) shall be issued in an aggregate principal amount not to exceed $14,800,000, (b) shall have a "true" interest cost not to exceed 5.00% (exclusive of "Supplemental Interest" as provided in the Financing Agreement), (c) shall be payable in principal installments ending not later than December 31, 2052, (d) shall be sold to VRA at a price that is substantially equal to the Proceeds Requested, and (e) shall be subject to prepayment upon the terms set forth in the Financing Agreement. Subject to the preceding terms, the City Council further authorizes the City Manager to accept the final terms presented by VRA, including (x) the final principal amount of the Bond, (y) the amortization schedule (including the principal installment dates and amounts) for the Bond, and (z) the optional and extraordinary redemption provisions, if any, of the Bond, all in such manner as the City Manager shall determine to be in the best interests of the City. If the limitation on the maximum principal amount of the Bond set forth in this Section 3 restricts VRA's ability to generate the Proceeds Requested, taking into account the VRA Costs, the Purchase Price Objective and market conditions, the City Manager is authorized to accept a purchase price for the Bond at an amount less than the Proceeds Requested. As set forth in the Financing Agreement, the City agrees to pay such "Supplemental Interest" and other charges as provided therein, including such amounts as may be necessary to maintain or replenish the Capital Reserve Fund. The principal of and premium, if any, and interest on the Bond shall be payable in lawful money of the United States of America. The actions of the City Manager in accepting the final terms of the Bond shall be conclusive, and no further action shall be necessary on the part of the City Council. 4. Payment and Redemption Provisions of Bond. The principal of and premium, if any, and interest on the Bond shall be payable as set forth in the Bond and the Financing Agreement. The City may, at its option, redeem, prepay or refund the Bond upon the terms set forth in the Financing Agreement. 5. Execution and Form of Bond; Preparation of Printed Bond. The Bond shall be signed by the Mayor of the City, and the City's seal shall be affixed thereon and attested by the City Clerk or any Assistant City Clerk. The Bond shall be issued initially as a typewritten bond in substantially the form of Exhibit A attached hereto, with such completions, omissions, insertions and changes not inconsistent with this Resolution as may be approved by the officers signing the Bond, whose approval shall be evidenced conclusively by the execution and delivery of the Bond. Upon request of the registered owner and upon presentation of the Bond at the office of the Registrar (as hereinafter defined), the City shall arrange to have prepared, executed and delivered in exchange as soon as practicable the Bond in printed form in an aggregate principal amount equal to the unpaid principal of the Bond in typewritten form, in denominations of $5,000 and multiples thereof, of the same form and maturity and registered in such names as requested by the registered owners or their duly authorized attorneys or legal representatives. The printed Bond may be executed by manual or facsimile signature of the Mayor of the City, and the City's seal is to be affixed thereto and attested by the City Clerk or any Assistant Clerk; provided, however, that if both such signatures are facsimiles, no Bond shall be valid until it has been authenticated by the manual signature of the Registrar and the date of authentication noted thereon. The typewritten Bond surrendered in any such exchange shall be canceled. 6. Pledge of Revenues Securing the Bond; No Full Faith and Credit Pledge. Subject to the right of the City to apply Revenues (as defined in the Financing Agreement) to the payment of Operation and Maintenance Expenses (as defined in the Financing Agreement), the City irrevocably pledges the Revenues for the payment of principal of and premium, if any, and interest on the Bond. The City is required to fix and collect rates, fees and other charges for the use of and for services furnished or to be furnished by the System and will from time to time revise such rates, fees and other charges so that in each Fiscal Year the Net Revenues Available for Debt Service will equal at least 115% of the amount required during the Fiscal Year to pay principal of and premium, if any, and interest on the Bond and all other indebtedness of the City payable from Revenues, including, without limitation, indebtedness under leases that are treated as capital leases under generally accepted accounting principles. The Bond shall not be deemed to constitute a pledge of the faith and credit of the Commonwealth or any political subdivision thereof, including the City. Neither the Commonwealth nor any political subdivision thereof, including the City, shall be obligated to pay the principal of and premium, if any, and interest on the Bond or other costs incident thereto except from the revenues pledged therefor, and neither the faith and credit nor the taxing power of the Commonwealth or any political subdivision thereof, including the City, is pledged to the payment of the principal of and premium, if any, and interest on the Bond or other costs incident thereto. Additional bonds secured on a parity as to the pledge of the Revenues with the Bond may be issued on terms provided in the Financing Agreement. 7. Registration, Transfer and Owner of Bond. The City appoints the City Treasurer as paying agent and registrar (the "Registrar") for the Bond. If deemed to be in the best interest of the City, the City Manager may at any time appoint a qualified bank or trust company as successor Registrar. Upon surrender of the Bond at the office of the Registrar, together with an assignment duly executed by the registered owner or its duly authorized attorney or legal representative in such form as shall be satisfactory to the Registrar, the City officers shall execute, and the Registrar shall authenticate and deliver in exchange, a new Bond or Bonds having an equal aggregate principal amount, of the same form and maturity, bearing interest at the same rates and registered in such name as requested by the then registered owner or its 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 or entity exclusively entitled to payment of principal of and premium, if any, and interest on the Bond and the exercise of all other rights and powers of the owner, except that regular installments of principal and interest shall be paid to the person or entity shown as owner on the registration books on the 15'i' day of the month preceding each payment date. 8. Mutilated, Lost or Destroyed Bond. If the Bond has been mutilated, lost or destroyed, the City shall execute and deliver a new Bond of like date and tenor in exchange and substitution for, and upon cancellation of, such mutilated Bond or in lieu of and in substitution for such lost or destroyed Bond; provided, however, that the City shall so execute and deliver only if the registered owner has paid the reasonable expenses and charges of the City in connection therewith and, in the case of a lost or destroyed Bond, (a) has filed with the City evidence satisfactory to the City that such Bond was lost or destroyed and (b) has furnished to the City satisfactory indemnity. 9. Preparation and Delivery of Bond. The officers of the City are authorized and directed to take all proper steps to have the Bond prepared and executed in accordance with its terms and to deliver it to VRA as the purchaser thereof upon receipt of the Purchase Price from VRA as set forth in the Financing Agreement. 10. State Aid Intercept. The City acknowledges that VRA is treating the Bond as a "local obligation" within the meaning of Section 62.1-199 of the Act, which in the event of a nonpayment thereunder authorizes VRA or the VRA trustee to file an affidavit with the Governor of the Commonwealth of Virginia that such nonpayment has occurred pursuant to Section 62.1-216.1 of the Act. In purchasing the Bond, VRA is further relying on Section 62.1-216.1 of the Act providing that if the Governor is satisfied that such nonpayment has occurred, the Governor will immediately make an order directing the Comptroller to withhold all further payment to the City of all funds, or of any part of them, appropriated and payable by the Commonwealth of Virginia to the City for any and all purposes, and the Governor will, while the nonpayment continues, direct in writing the payment of all sums withheld by the Comptroller, or as much of them as is necessary, to VRA, so as to cure, or cure insofar as possible, such nonpayment. 11. Tax Compliance Agreement. Such officers of the City as may be requested are authorized and directed to execute and deliver a nonarbitrage certificate and tax compliance agreement (the "Tax Compliance Agreement") in a form not inconsistent with this Resolution as may be approved by the officers of the City executing such document, whose approval shall be evidenced conclusively by the execution and delivery thereof. 12. Arbitrage Covenants. The City covenants that it shall not take or omit to take any action the taking or omission of which will cause the VRA 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 VRA 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 the Tax Compliance Agreement 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 Bond, unless the City receives an opinion of nationally recognized bond counsel that compliance with any such covenant is not required to prevent interest on the VRA Bonds from being included in the gross income for federal income tax purposes of the registered owners thereof under existing law. The City shall pay any such required rebate from legally available funds. 13. Private Activity Bond Covenant. The City covenants that it shall not permit the proceeds of the Bond or the facilities financed therewith to be used in any manner that would result in (a) 5% or more of such proceeds or facilities being used in any 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 facilities 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 person 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 compliance with any such covenant is not required to prevent the Bond from being deemed a "private activity bond" under applicable law, the City need not comply with such covenant to the extent provided in such opinion. 14. Official Statement. The City authorizes and consents to the inclusion of information with respect to the City contained in VRA's Preliminary Official Statement and VRA's Official Statement in final form, both prepared in connection with the sale of the VRA Bonds. The City Manager is authorized and directed to take whatever actions are necessary or appropriate to aid VRA in ensuring compliance with Securities and Exchange Commission Rule 15c2-12. 15. SNAP Investment Authorization. The City Council has heretofore received and reviewed the Information Statement describing the State Non -Arbitrage Program of the Commonwealth ("SNAP") and the Contract Creating the State Non -Arbitrage Program Pool (the "Contract"), and the City Council has determined to authorize the City Treasurer to utilize SNAP in connection with the investment of the proceeds of the Bond, if the City Manager, in consultation with the City Treasurer, determines that the utilization of SNAP is in the best interests of the City. The City Council acknowledges the Treasury Board of the Commonwealth 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. Filing of Resolution. The appropriate officers or agents of the City are hereby authorized and directed to cause a certified copy of this Resolution to be filed with the Circuit Court of Fairfax County, Virginia. 17. 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 Bond are hereby ratified, 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 Bond. 18. Repeal of Conflicting Resolutions. All resolutions or parts of resolutions in conflict herewith are repealed. 19. Effective Date. This Resolution shall take effect immediately upon adoption. Introduced: September 13, 2022 Adopted: September 13, 2022 &qf, -�► Mayor Attest: City Clerk The vote on the motion to approve was recorded as follows: VOTE: Councilmember Harmon Aye Councilmember Lim Aye Councilmember Miller Aye Councilmember Ross Aye Councilmember Stehle Aye Councilmember Yi Aye