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R-14-06 RESOLUTION NO. R-14-06 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FAIRFAX, VIRGINIA, APPROVING THE ISSUANCE OF ITS SEWER SYSTEM REVENUE REFUNDING BOND, SERIES 2014,AND SETTING FORTH THE FORM, DETAILS AND PROVISIONS FOR THE PAYMENT THEREOF AND APPROVING THE AWARD OF SUCH BOND TO THE VIRGINIA RESOURCES AUTHORITY IN EXCHANGE FOR THE CANCELLATION OF PRIOR LEASE OBLIGATIONS OF THE CITY WHEREAS, the City of Fairfax, Virginia, a municipal corporation of the Commonwealth of Virginia (the "City"), presently owns, operates and maintains sewer facilities to provide for the sewage disposal needs of the City's residents; WHEREAS, the City formerly provided water service to the residents of the City and certain portions of Fairfax County, but on January 3, 2014, completed the sale of substantially all of the City's water distribution facilities to the Fairfax County Water Authority ("Fairfax Water") and ceased supplying water to its residents and others; WHEREAS, on November 23, 2010, the City closed a financing lease transaction with the Virginia Resources Authority ("VRA") evidenced by a Deed and Agreement of Ground Lease dated as of November 23, 2010 (the "Prime Lease"), between the City, as lessor, and VRA, as lessee, and a Local Lease Acquisition Agreement and Financing Lease dated as of October 15, 2010 (the "Financing Lease"), between VRA, as lessor, and the City, as lessee; WHEREAS,VRA funded the acquisition of the Financing Lease with a portion of the proceeds of VRA's Infrastructure and State Moral Obligation Revenue Bonds (Virginia Pooled Financing Program), Series 2010C (the "2010C VRA Bonds"); WHEREAS, the City entered into the Financing Lease to finance certain improvements to its water and sewer systems, many of which were not completed due to the negotiations between the City and Fairfax Water for the purchase of the above-referenced water facilities; WHEREAS, the leased property under the Financing Lease is the City's Goose Creek Water Treatment Plant and ancillary facilities in Loudoun County (the "WTP"), the sale of which to Loudoun County Sanitation Authority the City is scheduled to close on or about January 31, 2014; WHEREAS, as stated in a letter dated December 18, 2013, from the Executive Director of VRA to the City's Director of Finance, VRA has approved the conversion of the Financing Lease into a sewer revenue bond financing, which will result in the release of the encumbrance of the Financing Lease on the WTP; WHEREAS, the City Council has determined it to be advisable, necessary and in the best interests of the public health, safety and welfare of the residents of the City to (i) issue its sewer system revenue refunding bond (as more particularly defined below, the "Bond") secured principally by a lien on the revenues of the City's sewer facilities (the "Sewer System"), (ii) award the Bond to VRA in exchange for the cancellation of the City's obligations under the Prime Lease and the Financing Lease and (iii) amend the list of the projects to be financed to cover only improvements to the City's Sewer System (collectively and as amended, the "Project"), all as more particularly set forth in a Financing Agreement to be dated as of January 15, 2014 (the "Financing Agreement"), between VRA and the City; and WHEREAS, on January 28, 2014, the City Council held a public hearing on the issuance of the Bond in accordance with the requirements of Section 15.2-2606 of the Code of Virginia of 1950, as amended (the "Virginia Code"). NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAIRFAX,VIRGINIA, AS FOLLOWS: Authorization of Bond and Use of Proceeds; Election to Proceed under the Public Finance Act. The City Council hereby determines that it is advisable to cause the City to contract a debt and to issue the City's Sewer System Revenue Refunding Bond, Series 2014 (the "Bond"), in a principal amount not to exceed $25,000,000. The issuance and award of the Bond under the terms of this Resolution are authorized. The unspent proceeds of the Bond shall be used, along with other available City funds, if any, to (i) finance the Project, and (ii) pay the costs of issuing the Bond. The City Council hereby elects pursuant to Section 15.2-2601 of the Virginia Code to issue the Bond under the Public Finance Act of 1991, Chapter 26, Title 15.2 of the Virginia Code without regard to the requirements, restrictions or other provisions contained in the Charter of the City. Award of Bond to the Virginia Resources Authority. The award and delivery of the Bond to VRA in exchange for the cancellation of the City's obligations under the Prime Lease and the Financing Lease and otherwise as provided in the Financing Agreement are authorized. Details of Bond. The Bond shall be issued as a single fully registered bond in substantially the form set forth in Exhibit A to the Financing Agreement, which will reflect an initial principal amount equal to the outstanding principal amount of the Financing Lease and interest rates and payment terms identical to those of the Financing Lease. As shall be 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 VRA Reserve (as defined in the Financing Agreement). Payment and Redemption of Bond. The principal of and premium, if any, and interest on the Bond shall be payable in lawful money of the United States of America as set forth in the Bond and the Financing Agreement. The City may, at its option, defease, redeem, prepay or refund the Bond upon the terms set forth in the Financing Agreement. Pledge of Revenues; Other Security Provisions. The principal of and premium, if any, and interest on the Bond shall be payable as provided in the Bond and in the Financing Agreement, but solely from the revenues of the Sewer System, except to the extent such payment shall be made from the proceeds of the Bond, certain escrow trust funds that may be established with respect to the Bond, or the income, if any, derived from the investment thereof. The Revenues of the Sewer System are hereby pledged upon the terms and conditions set forth in the Financing Agreement to secure the payment of the principal of and premium, if any, and interest on the Bond and the payment and performance of the City's obligations under the Financing Agreement. Nothing in the Bond, the Financing Agreement or this Resolution shall be deemed to constitute a pledge of the faith and credit of the Commonwealth of Virginia or any of its political subdivisions, including the City. The issuance of the Bond shall not directly, indirectly or contingently obligate the Commonwealth of Virginia or any of its political subdivisions, including the City, to pledge its faith and credit or levy any taxes for the payment of the principal of or premium, if any, and interest on the Bond or other costs incident to the Bond or make any appropriation for its payment except from the revenues and other funds pledged for such purpose under the provisions of the Bond, the Financing Agreement and this Resolution. Hereby acknowledged that, in the event of any failure by the City to make a payment under the Bond, VRA may take action to the extent permitted by law pursuant to Section 62.1-216.1 of the Virginia Code, commonly referred to as the "state-aid intercept." Approval of Financing Agreement. The City Manager is authorized to approve the form of the Financing Agreement, whose approval shall be evidenced conclusively by the execution and delivery of the Financing Agreement on the City's behalf. The City Manager is authorized to execute and deliver the Financing Agreement and such other documents and certificates as such officer may consider necessary in connection therewith. Execution and Delivery of the Bond. The Mayor is authorized and directed to execute the Bond and the City Clerk is authorized and directed to affix the seal of the City thereon and to attest such seal. Such officers are further authorized and directed to deliver the Bond to or at the direction of VRA as provided in the Financing Agreement. Registration, Transfer and Exchange. The City Clerk is hereby appointed as the City's registrar and transfer agent to keep books for the registration and transfer of the Bond and to make such registrations and transfers under such reasonable regulations as the City Council may prescribe. Upon surrender for transfer or exchange of the Bond at the office of the City Clerk,the City shall execute and deliver in the name of the transferee or transferees a new Bond in a principal amount equal to the Bond surrendered and of the same form and maturity and bearing interest at the same rate or rates as the Bond surrendered, subject in each case to such reasonable regulations as the City Council may prescribe. If presented for transfer, exchange, redemption or payment, the Bond shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and substance reasonably satisfactory to the City Clerk, duly executed by the registered owner or by his or her duly authorized attorney-in-fact or legal representative. No Bond may be registered to bearer. A new Bond delivered upon any transfer or exchange shall be a valid limited obligation of the City, evidencing the same debt as the Bond surrendered and shall be secured by and entitled to all of the security and benefits of this Resolution and the Financing Agreement to the same extent as the Bond surrendered. Charges for Exchange or Transfer. No charge shall be made for any exchange or transfer of a Bond, but the City Clerk may require payment by the registered owner of the Bond of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. Mutilated, Lost, Stolen or Destroyed Bond. If a Bond has been mutilated, lost, stolen or destroyed, the City shall execute and deliver a new Bond of like date and tenor in exchange and substitution for, and upon delivery to the City Clerk and cancellation of, such mutilated Bond, or in lieu of and in substitution for such lost, stolen or destroyed Bond; provided, however, that the City shall execute, authenticate and deliver a new Bond only if the registered owner thereof has paid the reasonable expenses and charges of the City in connection therewith and, in the case of a lost, stolen or destroyed Bond (i) has filed with the City Clerk evidence satisfactory to him or her that such Bond was lost, stolen or destroyed and that the holder of the Bond was the registered owner thereof and (ii) has furnished to the City indemnity satisfactory to the City Clerk. If the Bond has matured, instead of issuing a new Bond, the City may pay the same without surrender thereof upon receipt of the aforesaid evidence and indemnity. Tax Documents. The City Manager and the Director of Finance, either of whom may act, are authorized to execute a Nonarbitrage Certificate and Tax Compliance Agreement or any related document (the "Tax Documents") setting forth the expected use and investment of the proceeds of the Bond and the property financed or refinanced therewith and containing such covenants as may be necessary in order for the City to be in compliance with the provisions of the Internal Revenue Code of 1986, as amended (the "Tax Code") so as not to affect adversely the tax status of the 2010C VRA Bonds, including the provisions of Section 148 of the Tax Code and applicable regulations relating to "arbitrage bonds." The City covenants that the proceeds from the issuance and sale of the Bond will be invested and expended, and the financed property will be used, as set forth in the Tax Documents, and that the City shall comply with the other covenants and representations contained therein. SNAP Investment Authorization. The City has heretofore 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 has determined to authorize the Director of Finance to utilize SNAP in connection with the investment of the proceeds of the Bond, if the Director of Finance determines that the utilization of SNAP is in the best interest of the City. The City acknowledges 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. Further Actions; Authorized Representations. All officers and agents of the City Council and the City are authorized and directed to take such further actions in conformity with the purpose and intent of this Resolution as may be necessary or appropriate in connection with the issuance and award of the Bond, the execution, delivery and performance of the Financing Agreement, and the cancellation of the City's obligations under the Prime Lease and the Financing Lease, including the execution and delivery on behalf of the City of such instruments, documents or certificates as necessary or appropriate to carry out the transactions contemplated by this Resolution. All actions previously taken by such officers and agents in connection with the issuance and sale of the Bond are ratified and confirmed. The City Manager and the Director of Finance are designated the City's Authorized Representatives for purposes of the Financing Agreement. Filing of Resolution. The City Attorney is authorized and directed to file a certified copy of this Resolution with the Circuit Court of Fairfax County pursuant to Sections 15.2- 2607 and 15.2-2627 of the Virginia Code. Repeal of Conflicting Resolutions. All resolutions are repealed to the extent they are inconsistent with this Resolution. Effective Date. This Resolution shall take effect immediately. ADOPTED this 28th day of January, 2014. g7lyz4e7.)- Mayor ATTEST: City Clerk The vote on the motion to approve was recorded as follows: VOTE: Councilman DeMarco Aye Councilman Drummond Aye Councilman Greenfield Aye Councilman Meyer Aye Councilmember Schmidt Aye Councilman Stombres Aye