RES 2009-08 APPROVING THE SALE OF SEWER REVENUE BONDExecution Version
CITY OF BAINBRIDGE ISLAND, WASHINGTON
RESOLUTION NO. 2009-08
A RESOLUTION of the City of Bainbridge Island, Washington,
approving the sale of not to exceed $6,000,000 aggregate principal amount Sewer
Revenue Bond Anticipation Note (Line of Credit), 2009, to Cashmere valley
Bank, fixing the interest rate, maturity date, and other terms of the Note; and
providing for other matters properly relating thereto.
ADOPTED: April 22, 2009
This document prepared by:
Foster Pepper PLL`
1111 ThirdAvenue, Suite 3400
Seattle, Washington 98101
(206)447-4400
50975899.3
Table of Contents
Section 1 .
Findings and Determinations.................................................................................. 1
Section2 .
Definitions............................................................................................................... 1
Section 3 .
Description of the Note........................................................................................... 3
Section4 .
Covenants................................................................................................................ 4
Section 5 .
Prepayment and Redemption Provisions................................................................ 5
Section 6 .
Note Registrar; Registration and Transfer of the Note ........................................... 3
Section 7 .
Note Debt Service Fund; Payment of Note............................................................. 4
Section 8 .
Draws; Deposit of Proceeds.................................................................................... 4
Section 9 .
Acceptance of Proposal Letter................................................................................ 5
Section 10 .
Designation of Note as "Qualified Tax -Exempt Obligation" ................................. 5
Section 11 .
Effective Date; Contract; Severability.................................................................... 6
50975899.3
CITY OF BAINBRIDGE ISLAND, WASHINGTON
RESOLUTION NO. 2009-08
A RESOLUTION of the City of Bainbridge Island, Washington,
approving the sale of not to exceed $6,000,000 aggregate principal amount Sewer
Revenue Bond Anticipation Note (Line of Credit), 2009, to Cashmere Valley
Bank, fixing the interest rate, maturity date, and other terms of the Note; and
providing for other matters properly relating thereto.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAINBRIDGE
ISLAND, WASHINGTON, as follows:
Section 1. Findinjzs and Determinations. The City Council hereby makes the
findings and determinations set forth in this Section 1. Capitalized terms are defined in
Ordinance No. 2009-02 of the City, passed on March 11, 2009, as amended by Ordinance No.
2009-07 of the City, passed on April 22, 2009 (the "Bond Ordinance") and in Section 2 of this
resolution.
(a) Pursuant to the Bond Ordinance, the City has authorized the issuance of the Note,
as a short-term obligation issued in anticipation of permanent financing, in an amount not to
exceed $6.,000,000 for the purpose of carrying out the Plan of Additions set forth therein.
(b) Cashmere Valley Bank has offered to provide interim financing through the
purchase of a short --term bond anticipation note, as authorized by chapter 39.50 RCW, under the
terms and conditions set forth in the form of a Proposal Letter, which is on file with the City
Finance Director.
(c) Based on the foregoing, the City finds that it is in the best interest of the City and
its ratepayers to accept the Proposal Letter and to issue and sell its Not to Exceed $6,000,000
Sewer Revenue Bond Anticipation Note (Line of Credit), 2009, pending permanent financing.
Section 2. Definitions. The definitions provided in the Bond Ordinance are
incorporated by this reference. In addition, as used in this resolution, the following words shall
have the following meanings:
"Bank" means Cashmere Valley Bank of Cashmere, Washington.
"Bond Legislation" means, with respect to the Note, this Bond Sale Resolution and the
Bond Ordinance.
54975899.3
"Bond Ordinance" means Ordinance No. 2009-02 of the City, passed on March 11, 2009,
as amended by Ordinance No. 2009-07, passed on April 22, 2009.
"Bond Sale Resolution" means this resolution of the City Council approving and fixing
the par amount, date, form, maturities, interest rates, terms and covenants of the Note and
approving its issuance and sale to the Purchaser.
"Bonds" means, for purposes of this resolution, the Project Bonds authorized to be issued
pursuant to, under the authority of and for the purposes provided in the Bond Ordinance.
"Business Day" means any day which is not a Saturday or Sunday or a day on which
commercial banks located in Seattle, Washington, are closed for business.
"Draw" means each incremental draw upon the Note.
"Interest Payment Date" means each June 1 and December 1, commencing June 1, 2009.
"Maturity Date" means December 1, 2011.
"Note" means, for purposes of this resolution, the Sewer Revenue Bond Anticipation
Note (Line of Credit), 2009 of the City in a principal amount not to exceed $6,000,000, which is
authorized by the Bond Legislation.
"Note Debt Service Fund" means that special fund of the City within the Sewer Fund,
designated as the Sewer Revenue Bond Anticipation Note Debt Service Fund, 2009, established
for the purpose of paying principal of and interest on the Note.
"Note Register" means the boobs or records maintained by the Note Registrar containing
the name and mailing address of the owner of the Note.
"Note Registrar" means the Finance Director.
"Prime Rate" means the rate of interest publicly announced from time to time as the Wall
Street Journal Prime Rate.
"Project Fund" means the special fund of the City created and established by this
ordinance to pay costs of the Project.
"Proposal Letter" means the letter of the Bank dated April 10, 2009, describing certain
terms of the line of credit to be evidenced by the Note.
"Sewer Fund" means the fund of that name previously established within the City's
Waterworks Utility Fund.
"Sewer System Obligations" means Revenue Obligations payable solely from and
secured by a pledge of the Sewer System Revenues. Sewer System Obligations are not general
obligations of the City and do not include any portion of any obligation secured by a general
obligation pledge.
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"Sewer System Revenues" means waterworks Utility Revenue allocable solely to the
Sewer System and remaining after payment of the Maintenance and Operation Expense allocable
to the Sewer System within the waterworks Utility. Sewer System Revenues shall be available
to pay, in the following order: (a) Maintenance and operation Expenses of the Sewer System of
the waterworks Utility; (b) the principal of and interest on all outstanding Sewer System
Obligations, if any, for which payment has not otherwise been provided and all amounts that the
City is obligated to set aside into a debt service fund and any reserve fund securing such Sewer
System obligations, and all other payment obligations related thereto; (c) payment of the
principal of and interest on (in the following order): (i) that portion of any outstanding Revenue
Obligations allocated to the Sewer System, (ii) that portion of any Subordinate Obligations
allocated to the Sewer System, and (iii) all amounts that the City is obligated to set aside in the
Debt Service Fund or reserve fund for such bonds; and (d) for the payment of any and all other
amounts allocable to the Sewer System that the City is obligated to pay from Net Revenue of the
Waterworks Utility, including without limitation any Public works Trust Fund Loans.
Section 3. Description of the Note. For the purpose of providing the funds with
which to pay costs of the Project, the costs of issuing and delivering the Note, and interest on the
Note pending the issuance of the Bonds, the City may borrow money from time to time pursuant
to a line of credit extended by the Bank under the terms of its Proposal Letter, and consistent
with the provisions of this ordinance, and shall issue the Note in a maximum principal amount
not to exceed $6,000,000. The Note shall be prepared in a form consistent with this resolution
and the Bond Ordinance and shall be designated a Sewer System Obligation for purposes of the
Bond ordinance.
The Note shall be designated the Sewer Revenue Bond Anticipation Note, 2009 (Line of
Credit) and it shall be dated as of its date of delivery to the Bank. The Note shall be issued in
fully registered form and shall be numbered R-1. Each Draw on the Note shall bear interest at a
variable rate equal to 90% of the Prime Rate on the date of such Draw, calculated on an
actual/365 day basis. The City Council finds that this method of determining the interest rate is
in the best interest of the City and its taxpayers and ratepayers. Principal of and interest on the
Note shall be payable as described in Section S, below. Draws are not subject to approval by the
Bank, but shall be limited to the aggregate principal amount of $6,000,000. The line of credit
evidenced by the Note is a nonrevolving line of credit, and amounts repaid may not be
reborrowed.
If the Note is not redeemed when properly presented at its Maturity Date, the City shall
be obligated to pay interest on the Note, solely from the funds set aside and pledged for such
purpose, at the same rate provided from and after its maturity until the Note, both principal and
interest, is paid in full or until sufficient money for its payment in full is on deposit in the note
redemption fund and the Note has been called for payment by giving notice of that call to the
registered owner.
Section 4. Note Re istrar• Registration and Transfer of the Note. The Finance
Director is appointed Note Registrar for the Note. The Note shall be issued to the Bank only in
registered form as to both principal and interest and recorded on the Note Register. The Note
Register shall contain the name and mailing address of the owner of the Note. The Note may be
assigned or transferred only in whole by the registered owner to a single investor that is a
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financial institution or a person who is reasonably believed to be a qualified institutional buyer or
accredited investor within the meaning of the applicable federal securities laws. Any transfer
shall be without cost to the owner or transferee, except for governmental charges imposed on any
such transfer or exchange. The Note Registrar shall not be obligated to exchange or transfer any
Note during the 15 days preceding any interest payment or prepayment date. when the Note has
been paid in full, both principal and interest, the Note shall be surrendered by the registered
owner to the Note Registrar, who shall cancel the Note.
Section 5. Note Debt Service Fund-, Payment of Note. The Note Debt Service Fund
10
is established in the office of the Finance Director as a special fund within the Sewer Fund for
the purpose of paying principal of and interest on the Note. All rates and charges collected for
and allocated to the payment of the principal of and interest on the Note shall be deposited in the
Note Debt Service Fund.
Both principal of and interest on the Note shall be payable in lawful money of the United
States of America solely out of the Note Debt Service Fund from the proceeds of Project Bonds
authorized by the Bond Ordinance to be deposited in such fund, other short-term obligations or
from other money legally available and to be used therefor, and the City irrevocably pledges to
redeem the Note on its Maturity Date from the proceeds of those bonds or other money available
for that purpose. This pledge shall constitute a lien and charge upon such Sewer System
Revenues prior and superior to any other liens and charges whatsoever, subject only to
Maintenance and Operation Expense allocable to the Sewer System. The Note shall be payable
only from the Note Debt Service Fund as provided herein and shall not be a general obligation of
the City, the State of Washington or any political subdivision thereof.
Section 6. Draws; Deposit of Proceeds. The City Council finds it to be in the best
interest of the City that the Finance Director, or such other person as that officer may designate,
be authorized to make Draws against the Note in the amounts and at the times as he may
determine are required to finance the costs of the Project, those Draws to be made in accordance
with the terms and provisions set forth in this resolution and the Bond Ordinance.
The City may make Draws upon the Note in any amount on any Business Day during the
term of the Note to carry out the purposes of the Note. No Draw may exceed the total amount of
the costs to be paid from such Draw, and the proceeds of each Draw shall be used immediately to
pay those costs. Draws shall be made by written request to the Bank, which request may be
made by facsimile. Draws shall be recorded on the Loan Draw Record attached to the Note, or
in such other form as the City and the Bank may agree.
Proceeds of any Draws shall be paid into the Project Fund hereby created and established
in the office of the Finance Director. The City shall pay all costs and expenses, including the
Bank's attorney fees (if any), and any other costs of the Bank in the form of a Draw or as the
Bank and the City may mutually agree.
Section 7. Pied e• Covenants. The City irrevocably pledges to redeem the Note from
the proceeds of a sufficient amount of Bonds or additional short-term obligations, and the Sewer
System Revenues are pledged for the payment of the Note in accordance with the flow of funds
set forth in Section 11 of Ordinance No. 2009-02 (as amended by Section 4(d) of Ordinance No.
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2009-07). This pledge shall constitute a lien and charge upon such Sewer System Revenues
prior and superior to any other liens and charges whatsoever, subject only to Maintenance and
Operation Expense of the Sewer System. The Bonds shall be obligations only of the Note Debt
Service Fund and shall be payable and secured as provided herein. The Note is not a general
obligation of the City.
For as long as the Note remains outstanding, the City covenants with the Bank as follows:
(a) The City will provide to the Bank annual financial statements reviewed by the
Washington State Auditor's Office within 10 business days after their issue date.
(b) The City will establish, maintain and collect such rates and charges for sanitary
sewage disposal service which, together with other miscellaneous revenue of the Sewer System
(excluding ULID assessments), will provide sufficient amounts annually to provide for
Maintenance and Operation Expense of the Sewer System, and for debt service on all
outstanding obligations having a lien and charge on the Sewer System Revenues, including but
not limited to debt service on the Note.
Section S. Pre a ment and Redemption Provisions. The City reserves the right and
option to prepay and redeem at any time all or a portion of the principal amount of the Note then
outstanding at par plus accrued interest to the date of prepayment and redemption. Interest on
the Note or the portion thereof so prepaid shall cease to accrue on the date of such prepayment.
There shall be no fee for prepayment and no advance notice shall be required.
Section 9. Acceptance ,of Pro^posal.. Letter. The Bank has submitted a proposal to
accept delivery of the Note under the terms and conditions of its Proposal Letter on file with the
Finance Director and incorporated herein by this reference. The City Council finds that accepting
the offer contained in the Proposal Letter is in the City's best interest and therefore accepts such
offer and authorizes and directs the Mayor to execute the Proposal Letter and such other
documents as may be necessary for the issuance, sale and delivery of the Note to the Bank. The
Note will be prepared at City expense and will be delivered to the Bank in accordance with the
Proposal Letter, with the approving legal opinion of Foster Pepper PLLC, municipal bond
counsel of Seattle, Washington, regarding the Note. The Bank shall be paid the loan fees set
forth in the Proposal Letter. The proper City officials are authorized and directed to do
everything necessary for the prompt delivery of the Note to the Bank and for the proper
application and use of the Draws thereon.
Section 10. Desi nation of Note as "Qualified Tax-Exem-pt Obligation". The City has
determined and certifies that (a) the Note is not a "private activity bond" within the meaning of
Section 141 of the Code; (b) the reasonably anticipated amount of tax-exempt obligations (other
than private activity bonds and other obligations not required to be included in such calculation)
which the City and any entity subordinate to the City (including any entity that the City controls,
that derives its authority to issue tax --exempt obligations from the City, or that issues tax-exempt
obligations on behalf of the City) will issue during the calendar year in which the Note is issued
will not exceed $30,000,000; and (c) the amount of tax-exempt obligations, including the Note,
designated by the City as "qualified tax-exempt obligations" for the purposes of Section
265(b)(3) of the Code during the calendar year in which the Note is issued does not exceed
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$30,000,000. The City designates the Note as a "qualified tax-exempt obligation" for the
purposes of Section 265(b)(3) of the Code.
Section 11. Effective Date; Contract; _ Severability. This resolution shall take effect
immediately upon the effective date of Ordinance No. 2009-07. The covenants contained in this
resolution and the ordinance shall constitute a contract between the City and the Registered
Owner of the Note. If any one or more of the covenants or agreements to be performed on the
part of the City shall be declared by any court of competent jurisdiction and final appeal (if any
appeal be taken) to be contrary to law, then such covenant or covenants, agreement or
agreements, shall be null and void and shall be deemed separable from the remaining covenants
and agreements in this resolution and shall in no way affect the validity of the other provisions of
this resolution or of the Note.
ADOPTED by the City Council of the City of Bainbridge Island, Washington, and signed
by me in open session in authentication of its adoption at a regular meeting thereof held this
22nd day of April, 2009. (A
Mayor
ATTEST:
. . � %% wir\fj� --k- \,�-) cw=
City Clerk Ts
APPROVED AS TO
Foster Pepper PLLC, Bond Counsel
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CERTIFICATION
I, the undersigned, City Clerk of the City of Bainbridge Island, Washington (the "City"%
hereby certify as follows:
1. The attached copy of Resolution No. 2009-08 (the "Resolution") is a full, true and
correct copy of a Resolution duly adopted at a regular meeting of the City Council of the City
held at the regular meeting place thereof on April 22, 2009, as that Resolution appears on the
minute book of the City; and the Resolution is in full force and effect from and after its date of
adoption; and
2. A quorum of the members of the City Council was present throughout the meeting
and a majority of those members present voted in the proper manner for the adoption of the
Resolution.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of April, 2009.
CITY OF BAINBRIDGE ISLAND,
WASHINGTON
City Clerk
50975899.3