ORD 2004-27 OPEN SPACE BOND ISSUANCE (2)CITY OF BAINBRIDGE ISLAND, WASHINGTON
ORDINANCE NO. 2004-27
AN ORDINANCE of the City of Bainbridge Island, Washington, relating
to contracting indebtedness; providing for the issuance of $[[7,625,000]] par value
of Limited Tax General Obligation Refunding Bonds, 2004, of the City to provide
funds with which to pay the cost of advance refunding the callable portions of the
City's outstanding Limited Tax General Obligation Bonds, 1996, the callable
portions of the City's outstanding Limited Tax General Obligation Bonds, 1997,
and the callable portions of the City's outstanding Limited Tax General Obligation
Bonds, 1999, and paying the administrative costs of such refunding and the costs
of issuance and sale of such bonds; fixing the date, form, maturities, interest rates,
terms and covenants of the bonds; providing for and authorizing the purchase of
certain obligations out of the proceeds of the sale of the bonds herein authorized
and for the use and application of the money derived from those investments;
authorizing the execution of an agreement with U.S. Bank, National Association
of Seattle, Washington, as refunding trustee; providing for the call, payment and
redemption of the outstanding bonds to be refunded; establishing a bond
redemption fund; providing for bond insurance, and approving the sale and
providing for the delivery of the bonds to Banc of America Securities LLC of
Seattle, Washington.
WHEREAS, pursuant to Ordinance No. 96-51, the City heretofore issued its $2,000,000
par value Limited Tax General Obligation Bonds, 1996 (the "1996 Bonds"), for the purpose of
providing funds with which to pay costs of acquiring land to be used for construction of a new
City Hall and maintenance facility, design and related charges for the maintenance facility, and
by that Ordinance reserved the right to redeem the 1996 Bonds maturing on or after December 1,
2007, prior to their maturity at any time on or after December 1, 2006, at a price of par plus
accrued interest to the date fixed for redemption; and
WHEREAS, there are presently outstanding $1,250,000 par value of 1996 Bonds
maturing on December 1 of each of the years 2007 through 2011, inclusive, and in 2016, and
bearing various interest rates from 5.125% to 5.600% (the "1996 Refunded Bonds"); and
WHEREAS, pursuant to Ordinance No. 97-12, the City heretofore issued its $4,000,000
par value Limited Tax General Obligation Bonds, 1997 (the "1997 Bonds"), for the purpose of
providing the funds with which to pay a part of the cost of the construction of a new Public
Works Facility, conversion of the existing Public Works shop area into a City park, and design
and begin construction of a new City Hall, and by that Ordinance reserved the right to redeem
the 1997 Bonds maturing on or after July 1, 2008, prior to their maturity on or after July 1, 2007,
at a price of par plus accrued interest to the date fixed for redemption; and
WHEREAS, there are presently outstanding $2,530,000 par value of 1997 Bonds
maturing on July 1 of each of the years 2008, 2010 through 2012, inclusive, and in 2017, and
bearing various interest rates from 5.200% to 5.625% (the "1997 Refunded Bonds"); and
WHEREAS, pursuant to Ordinance No. 99-51, the City heretofore issued its $4,900,000
par value Limited Tax General Obligation Bonds, 1999 (the "1999 Bonds"), for the purpose of
providing the funds with which to pay the costs of a water reservoir, certain road improvements
in the City's Winslow Master Plan of the Comprehensive Plan, and purchasing open space
property or development rights to maintain urban and agricultural land, and by that Ordinance
reserved the fight to redeem the 1999 Bonds maturing on or after October 1, 2010, prior to their
maturity on or after October 1, 2009, at a price of par plus accrued interest to the date fixed for
redemption; and
WHEREAS, there are presently outstanding $3,070,000 par value of 1999 Bonds
maturing on October 1 of each of the years 2010 through 2019, inclusive, and bearing various
interest rates from 5.100% to 5.500% (the "1999 Refunded Bonds"); and
WHEREAS, after due consideration, it appears to the City Council that the 1996
Refunded Bonds, the 1997 Refunded Bonds and the 1999 Refunded Bonds (collectively, the
"Refunded Bonds") may be refunded by the issuance and sale of the limited tax general
obligation refunding bonds authorized herein (the "Bonds") so that a substantial savings will be
effected by the difference between the principal and interest cost over the life of the Bonds and
the principal and interest cost over the life of the Refunded Bonds but for such refunding, which
refunding will be effected by carrying out the Refunding Plan, as defined herein; and
WHEREAS, to effect that refimding in the manner that will be most advantageous to the
City it is found necessary and advisable that certain Acquired Obligations (hereinafter defined)
beating interest and maturing at such time or times as necessary to accomplish the refunding as
aforesaid be purchased out of a portion of the proceeds of the Bonds; and
WHEREAS, the City Council deems it to be in the best interests of the City to issue and
sell the Bonds to pay part of the cost of advance refunding the Refunded Bonds and to pay the
administrative costs of such refunding and the costs of issuance and sale of the Bonds; and
WHEREAS, MBIA Insurance Corporation of Armonk, New York ("Bond Insurer"), has
made a commitment to issue an insurance policy (the "Financial Guaranty Insurance Policy")
insuring the payment when due of the principal of and interest on the Bonds as provided therein,
and the City Council of the City deems that the purchase of the Financial Guaranty Insurance
Policy is in the best interest of the City; and
WHEREAS, Banc of America Securities LLC, Seattle, Washington, has offered to
purchase the bonds authorized herein under the terms and conditions hereinafter set forth in the
form of a Bond Purchase Agreement; NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON,
DO ORDAIN AS FOLLOWS:
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Section 1. Definitions. As used in this ordinance, the following words shall have the
following meanings:
"Acquired Obligations" means those direct, noncallable obligations of the United States
of America purchased to accomplish the refunding of the Refunded Bonds as authorized by this
ordinance and Chapter 39.53 RCW.
"Bond Fund" means the Limited Tax General Obligation Refunding Bond Fund, 2004,
created by this ordinance for the payment of the Bonds.
"Bond Insurer" means MBIA Insurance Corporation of Amonk, New York.
"Bond Register" means the books or records maintained by the Bond Registrar
containing the name and mailing address of the owner of each Bond and the principal amount
and number of Bonds held by each owner.
"Bond Registrar" means the Fiscal Agent.
"Bonds" means the $[[7,625,000]] par value Limited Tax General Obligation Refunding
Bonds, 2004, of the City issued pursuant to and for the purposes provided in this ordinance.
"City" means the City of Bainbridge Island, Washington, a municipal corporation duly
organized and existing under and by virtue of the laws of the state of Washington.
"Code" means the United States Internal Revenue Code of 1986, as amended, and
applicable rules and regulations promulgated thereunder.
"DTC" means The Depository Trust Company, New York, New York.
"Finance Director" means the Finance Director of the City.
"Fiscal Agent" means the fiscal agent of the state of Washington, or any other paying
agent/registrar of the City, as the same may be designated from time to time.
"Letter of Representations" means the Blanket Issuer Letter of Representations dated
December 10, 1998, between the City and DTC, as it may be amended from time to time.
"Financial Guaranty Insurance Policy" means the policy issued by the Bond Insurer
insuring the payment of the principal of and interest on the Bonds.
"1996 Refunded Bonds" means the outstanding Limited Tax General Obligation Bonds,
1996, of the City maturing in the years 2007 through 2011, inclusive, and 2016, issued pursuant
to Ordinance No. 96-51, the refunding of which has been provided for by this ordinance.
"1997 Refunded Bonds" means the outstanding Limited Tax General Obligation Bonds,
1997, of the City maturing in the years 2008, 2010 through 2012, inclusive, and 2017, issued
pursuant to Ordinance No. 97-12, the refunding of which has been provided for by this
ordinance.
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"1999 Refunded Bonds" means the outstanding Limited Tax General Obligation Bonds,
1999, of the City maturing in the years 2010 through 2019, inclusive, issued pursuant to
Ordinance No. 99-51, the refunding of which has been provided for by this ordinance.
"Refunded Bonds" means, collectively, the 1996 Refunded Bonds, the 1997 Refunded
Bonds and the 1999 Refunded Bonds.
"Refunding Plan" means:
(a) The placement of sufficient proceeds of the Bonds which, with other
money of the City, if necessary, will acquire the Acquired Obligations to be
deposited, with cash, if necessary, with the Refunding Trustee;
(b) The payment of the interest on the 1996 Refunded Bonds when due up
to and including December 1, 2006, and the call, payment and redemption on
December 1, 2006, of all of the then-outstanding 1996 Refunded Bonds at a price
of par; and
(c) The payment of the interest on the 1997 Refunded Bonds when due up
to and including July 1, 2007, and the call, payment and redemption on July 1,
2007, of all of the then-outstanding 1997 Refunded Bonds at a price of par; and
(d) The payment of the interest on the 1999 Refunded Bonds when due up
to and including October 1, 2009, and the call, payment and redemption on
October 1, 2009, of all of the then-outstanding 1999 Refunded Bonds at a price of
par; and
(e) The payment of the costs of issuing the Bonds and the costs of
carrying out the foregoing elements of the Refunding Plan.
"Refunding Trust Agreement" means a Refunding Trust Agreement between the City
and the Refunding Trustee substantially in the form of that which is on file with the Finance
Director and by this reference incorporated herein.
"Refunding Trustee" means U.S. Bank, National Association, of Seattle, Washington,
serving as trustee or escrow agent or any successor trustee or escrow agent.
Section 2. Debt Capacity. The assessed valuation of the taxable property within the City
as ascertained by the last preceding assessment for City purposes for the calendar year 2004 is
$3,674,200,371, and the City has outstanding general indebtedness evidenced by:
(a) Limited tax general obligation bonds, notes, leases and conditional
sales contracts, but excluding the Refunded Bonds, in the principal amount of
$12,637,771 incurred within the limit of up to 1-1/2% of the value of the taxable
property within the City permitted for general municipal purposes without a vote
of the qualified voters therein; and
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(b) Unlimited tax general obligation bonds in the principal amount of
$8,000,000 incurred within the additional limit of up to 2-1/2% of the value of the
taxable property within the City for parks and open space purposes, issued
pursuant to a vote of the qualified voters of the City.
The City has no other unlimited tax general obligation indebtedness. The amount of
indebtedness for which bonds are authorized herein to be issued is $[[7,625,000]].
Section 3. Authorization of Bonds. The City shall borrow money on the credit of the
City and issue negotiable limited tax general obligation refunding bonds evidencing that
indebtedness in the amount of $[[7,625,000]] for general City purposes to carry out the
Refunding Plan. The general indebtedness to be incurred shall be within the limit of up to
1-1/2% of the value of the taxable property within the City permitted for general municipal
purposes without a vote of the qualified voters therein.
Section 4. Description of Bonds. The bonds shall be called Limited Tax General
Obligation Bonds, 2004, of the City (the "Bonds"); shall be in the aggregate principal amount of
$[[7,625,000]]; shall be dated their date of issuance; shall be in the denomination of $5,000 or
any integral multiple thereof within a single maturity; shall be numbered separately in the
manner and with any additional designation as the fiscal agent of the State of Washington (as the
same may be designated by the State of Washington from time to time) (the "Bond Registrar")
deems necessary for purposes of identification; shall bear interest (computed on the basis of a
360-day year of twelve 30-day months) payable semiannually on each April 1 and October 1,
commencing April 1, 2005, to the maturity or earlier redemption of the Bonds; and shall mature
on October 1 in years and amounts and bear interest at the rates per annum as follows:
Maturity Interest Maturity Interest
Years Amounts Rates Years Amounts Rates
2005 2013
2006 2014
2007 2015
2008 2016
2009 2017
2010 2018
2011 2019
2012
Section 5. Registration and Transfer of Bonds. The Bonds shall be issued only in
registered form as to both principal and interest and shall be recorded on books or records
maintained by the Bond Registrar (the "Bond Register"). The Bond Register shall contain the
name and mailing address of the owner of each Bond and the principal amount and number of
each of the Bonds held by each owner.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized
denomination of an equal aggregate principal amount and of the same interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to
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the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee.
The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days
preceding any principal payment or redemption date.
The Bonds initially shall be registered in the name of Cede & Co., as the nominee of The
Depository Trust Company, New York, New York ("DTC"). The Bonds so registered shall be
held in fully immobilized form by DTC as depository in accordance with the provisions of the
Letter of Representations. Neither the City nor the Bond Registrar shall have any responsibility
or obligation to DTC participants or the persons for whom they act as nominees with respect to
the Bonds regarding accuracy of any records maintained by DTC or DTC participants of any
amount in respect of principal of or interest on the Bonds, or any notice which is permitted or
required to be given to registered owners hereunder (except such notice as is required to be given
by the Bond Registrar to DTC).
For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its
successor depository shall be deemed to be the registered owner for all purposes hereunder and
all references to registered owners, bondowners, bondholders or the like shall mean DTC or its
nominee and shall not mean the owners of any beneficial interests in the Bonds. Registered
ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to
any successor of DTC or its nominee, if that successor shall be qualified under any applicable
laws to provide the services proposed to be provided by it; (ii) to any substitute depository
appointed by the City or such substitute depository's successor; or (iii) to any person if the Bonds
are no longer held in immobilized form.
Upon the resignation of DTC or its successor (or any substitute depository or its
successor) from its functions as depository, or a determination by the City that it no longer
wishes to continue the system of book entry transfers through DTC or its successor (or any
substitute depository or its successor), the City may appoint a substitute depository. Any such
substitute depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it.
If (i) DTC or its successor (or substitute depository or its successor) resigns from its
functions as depository, and no substitute depository can be obtained, or (ii) the City determines
that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any
person as provided herein and the Bonds no longer shall be held in fully immobilized form.
Section 6. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Interest on the Bonds shall be paid by
checks or drafts of the Bond Registrar mailed on the interest payment date to the registered
owners at the addresses appearing on the Bond Register on the 15th day of the month preceding
the interest payment date or, if requested in writing by a registered owner of $1,000,000 or more
in principal amount of Bonds prior to the applicable record date, by wire transfer on the interest
payment date. Principal of the Bonds shall be payable upon presentation and surrender of the
Bonds by the registered owners to the Bond Registrar. Notwithstanding the foregoing, for as
long as the Bonds are registered in the name of DTC or its nominee, payment of principal of and
interest on the Bonds shall be made in the manner set forth in the Letter of Representations.
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Section 7. Redemption Provisions and Open Market Purchase of Bonds. The Bonds shall
be issued without the right or option of the City to redeem those Bonds prior to their stated
maturity dates.
Bonds maturing in are Term Bonds and, if not redeemed
under the optional redemption provisions set forth above or purchased in the open market under
the provisions set forth below, shall be called for redemption randomly (in such manner as the
Bond Registrar shall determine) at par plus accrued interest on October 1 in years and amounts
as follows:
Mandatory
Redemption Years
Mandatory Redemption
Amounts
Mandatory
Redemption Years
2O 20
20 20
20__ (maturity) 20__ (maturity)
Mandatory Redemption
Amounts
If the City purchases in the open market or defeases Term Bonds, the par amount of the
Term Bonds so purchased or defeased (irrespective of their actual purchase prices) shall be
credited against one or more scheduled mandatory redemption amounts for those Term Bonds.
The City shall determine the manner in which the credit is to be allocated and shall notify the
Bond Registrar in writing of its allocation at least 60 days prior to the earliest mandatory
redemption date for that maturity of Term Bonds for which notice of redemption has not already
been given.
Portions of the principal amount of any Bond, in installments of $5,000 or any integral
multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is
redeemed, upon surrender of that Bond to the Bond Registrar, there shall be issued to the
registered owner, without charge therefor, a new Bond (or Bonds, at the option of the registered
owner) of the same maturity and interest rate in any of the denominations authorized by this
ordinance in the aggregate principal amount remaining unredeemed.
The City further reserves the right and option to purchase any or all of the Bonds in the
open market at any time at any price acceptable to the City plus accrued interest to the date of
purchase.
All Bonds purchased or redeemed under this section shall be canceled.
Notwithstanding the foregoing, for as long as the Bonds are registered in the name of
DTC or its nominee, selection of Bonds for redemption shall be in accordance with the Letter of
Representations.
Section 8. Notice of Redemption. The City shall cause notice of any intended
redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed
for redemption by first-class mail, postage prepaid, to the registered owner of any Bond to be
redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares
the notice, and the requirements of this sentence shall be deemed to have been fulfilled when
notice has been mailed as so provided, whether or not it is actually received by the owner of any
Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed for
redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the
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call. In addition, the redemption notice shall be mailed within the same period, postage prepaid,
to Moody's Investors Service, Inc., and Standard & Poor's at their offices in New York, New
York, or their successors, to Banc of America Securities LLC, at its principal office in Seattle,
Washington, or its successor, to the Bond Insurer, at its principal office in Amonk, New York, or
their successors, to each NRMSIR or the MSRB and to such other persons, including registered
securities depositories, and with such additional information as the Finance Director shall
determine, but these additional mailings shall not be a condition precedent to the redemption of
Bonds. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of
DTC or its nominee, notice of redemption shall be given in accordance with the Letter of
Representations.
Section 9. Failure To Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity date, the City shall be obligated to pay interest on that Bond at the same
rate provided in the Bond from and after its maturity or call date until that Bond, both principal
and interest, is paid in full or until sufficient money for its payment in full is on deposit in the
bond redemption fund hereinafter created and the Bond has been called for payment by giving
notice of that call to the registered owner of each of those unpaid Bonds.
Section 10. Pledge of Taxes. For as long as any of the Bonds are outstanding, the City
irrevocably pledges to include in its budget and levy taxes annually within the constitutional and
statutory tax limitations provided by law without a vote of the electors of the City on all of the
taxable property within the City in an amount sufficient, together with other money legally
available and to be used therefor, to pay when due the principal of and interest on the Bonds, and
the full faith, credit and resources of the City are pledged irrevocably for the annual levy and
collection of those taxes and the prompt payment of that principal and interest.
Section 11. Form and Execution of Bonds. The Bonds shall be printed or lithographed
on good bond paper in a form consistent with the provisions of this ordinance and state law and
shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual
or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or
printed thereon.
Only Bonds bearing a Certificate of Authentication in the following form, manually
signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
benefits of this ordinance:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Bainbridge
Island, Washington, Limited Tax General Obligation
Refunding Bonds, 2004, described in the Bond Ordinance.
By¸
WASHINGTON STATE FISCAL AGENT
Bond Registrar
Authorized Signer
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The authorized signing of a Certificate of Authentication shall be conclusive evidence that the
Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the
benefits of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to be an officer of
the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are
authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless
may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall
be as binding on the City as though that person had continued to be an officer of the City
authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person
who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds,
although he or she did not hold the required office on the date of issuance of the Bonds.
Section 12. Bond Registrar. The Bond Registrar shall keep, or cause to be kept,
sufficient books for the registration and transfer of the Bonds, which shall be open to inspection
by the City at all times. The Bond Registrar is authorized, on behalf of the City, to authenticate
and deliver Bonds transferred or exchanged in accordance with the provisions of the Bonds and
this ordinance, to serve as the City's paying agent for the Bonds and to carry out all of the Bond
Registrar's powers and duties under this ordinance and City Ordinance No. 83-10 establishing a
system of registration for the City's bonds and obligations.
The Bond Registrar shall be responsible for its representations contained in the Bond
Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the
owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the
extent permitted by law, may act as depository for and permit any of its officers or directors to
act as members of, or in any other capacity with respect to, any committee formed to protect the
rights of Bond owners.
Section 13. Bond Fund and Deposit of Bond Proceeds. There is created and established
in the office of the Finance Director a special fund designated as the Limited Tax General
Obligation Refunding Bond Fund, 2004 (the "Bond Fund"), for the purpose of paying principal
of and interest on the Bonds. Accrued interest on the Bonds, if any, received from the sale and
delivery of the Bonds, together with any net premium and/or contingency amounts that are not
necessary to pay the administrative costs of the refunding and the costs of issuance and sale of
the Bonds, shall be deposited into the Bond Fund. The remaining principal proceeds of the sale
of the Bonds shall be deposited with the Refunding Trustee in accordance with the provisions of
Section 14 herein. All taxes and other funds collected for and allocated to the payment of the
principal of and interest on the Bonds shall be deposited in the Bond Fund.
Section 14. Refunding of the Refunded Bonds.
(a) Appointment of Refunding Trustee. U.S. Bank, National Association, of Seattle,
Washington, is appointed Refunding Trustee.
(b) Use of Bond Proceeds; Acquisition of Acquired Obligations. All of the proceeds of
the sale of the Bonds, exclusive of contingency amounts, if any, which shall be paid into the
Bond Fund, shall be deposited immediately upon the receipt thereof with the Refunding Trustee
and used to discharge the obligations of the City relating to the Refunded Bonds under
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Ordinances Nos. 96-51, 97-12 and 99-51 by providing for the payment of the amounts required
to be paid by the Refunding Plan. To the extent practicable, such obligations shall be discharged
fully by the Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing
such interest and maturing as to principal and interest in such amounts and at such times so as to
provide, together with a beginning cash balance, if necessary, for the payment of the amount
required to be paid by the Refunding Plan. The Acquired Obligations are listed and more
particularly described in Exhibit A attached to the Refunding Trust Agreement between the City
and the Refunding Trustee, but are subject to substitution as set forth below. Any Bond proceeds
or other money deposited with the Refunding Trustee not needed to purchase the Acquired
Obligations and provide a beginning cash balance, if any, and pay the costs of issuance of the
Bonds shall be returned to the City at the time of delivery of the Bonds to the initial purchaser
thereof and deposited in the Bond Fund to pay interest on the Bonds on the first interest payment
date.
(c) Substitution of Acquired Obligations. Prior to the purchase of any Acquired
Obligations by the Refunding Trustee, the City reserves the right to substitute other direct,
noncallable obligations of the United States of America ("Substitute Obligations") for any of the
Acquired Obligations and to use any savings created thereby for any lawful City purpose if, (a)
in the opinion of Foster Pepper & Shefelman PLLC, the City's bond counsel, the interest on the
Bonds and the Refunded Bonds will remain excluded from gross income for federal income tax
purposes under Sections 103, 148, and 149(d) of the Code, and (b) such substitution shall not
impair the timely payment of the amounts required to be paid by the Refunding Plan, as verified
by a nationally recognized independent certified public accounting firm.
After the purchase of the Acquired Obligations by the Refunding Trustee, the City
reserves the right to substitute therefor cash or Substitute Obligations subject to the conditions
that such money or securities held by the Refunding Trustee shall be sufficient to carry out the
Refunding Plan, that such substitution will not cause the Bonds or the Refunded Bonds to be
arbitrage bonds within the meaning of Section 148 of the Code and regulations thereunder in
effect on the date of such substitution and applicable to obligations issued on the issue dates of
the Bonds and the Refunded Bonds, as applicable, and that the City obtain, at its expense: (1) a
verification by a nationally recognized independent certified public accounting firm acceptable
to the Refunding Trustee confirming that the payments of principal of and interest on the
substitute securities, if paid when due, and any other money held by the Refunding Trustee will
be sufficient to carry out the Refunding Plan; and (2) an opinion from Foster Pepper &
Shefelman PLLC, bond counsel to the City, its successor, or other nationally recognized bond
counsel to the City, to the effect that the disposition and substitution or purchase of such
securities, under the statutes, rules, and regulations then in force and applicable to the Bonds,
will not cause the interest on the Bonds or the Refunded Bonds to be included in gross income
for federal income tax purposes and that such disposition and substitution or purchase is in
compliance with the statutes and regulations applicable to the Bonds. Any surplus money
resulting from the sale, transfer, other disposition, or redemption of the Acquired Obligations and
the substitutions therefor shall be released from the trust estate and transferred to the City to be
used for any lawful City purpose.
(d) Administration of Refunding Plan. The Refunding Trustee is authorized and directed
to purchase the Acquired Obligations (or substitute obligations) and to make the payments
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required to be made by the Refunding Plan from the Acquired Obligations (or substitute
obligations) and money deposited with the Refunding Trustee pursuant to this Ordinance. All
Acquired Obligations (or substitute obligations) and the money deposited with the Refunding
Trustee and any income therefrom shall be held irrevocably, invested and applied in accordance
with the provisions of Ordinances Nos. 96-51, 97-12 and 99-51, this Ordinance, chapter 39.53
RCW and other applicable statutes of the State of Washington and the Refunding Trust
Agreement. All necessary and proper fees, compensation, and expenses of the Refunding
Trustee for the Bonds and all other costs incidental to the setting up of the escrow to accomplish
the refunding of the Refunded Bonds and costs related to the issuance and delivery of the Bonds,
including bond printing, verification fees, bond insurance premium, bond counsel's fees, and
other related expenses, shall be paid out of the proceeds of the Bonds.
(e) Authorization for Refunding Trust Agreement. To carry out the Refunding Plan
provided for by this Ordinance, the Mayor or Finance Director of the City is authorized and
directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement
substantially in the form on file with the City Clerk and by this reference made a part hereof
setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection
with the payment, redemption, and retirement of the Refunded Bonds as provided herein and
stating that the provisions for payment of the fees, compensation, and expenses of such
Refunding Trustee set forth therein are satisfactory to it. Prior to executing the Refunding Trust
Agreement, the Mayor or Finance Director of the City is authorized to make such changes
therein that do not change the substance and purpose thereof or that assure that the escrow
provided therein and the Bonds are in compliance with the requirements of federal law governing
the exclusion of interest on the Bonds from gross income for federal income tax purposes.
Section 15. Call for Redemption of the Refunded Bonds. The City calls the 1996
Refunded Bonds for redemption on December 1, 2006, the 1997 Refunded Bonds for redemption
on July 1, 2007, and the 1999 Refunded Bonds for redemption on October 1, 2009, at par plus
accrued interest. Such calls for redemption shall be irrevocable after the delivery of the Bonds to
the initial purchaser thereof. The dates on which the Refunded Bonds are herein called for
redemption are the first dates on which those bonds may be called.
The proper City officials are authorized and directed to give or cause to be given such
notices as required, at the times and in the manner required, pursuant to Ordinances Nos. 96-51,
97-12 and 99-51 in order to effect the redemption prior to their respective maturities of the
Refunded Bonds.
Section 16. City Findings with Respect to Refunding. The City Council of the City finds
and de.termines that the issuance and sale of the Bonds at this time will effect a savings to the
City and is in the best interest of the City and its taxpayers and in the public interest. In making
such finding and determination, the City Council has given consideration to the fixed maturities
of the Bonds and the Refunded Bonds, the costs of issuance of the Bonds and the known earned
income from the investment of the proceeds of the issuance and sale of the Bonds pending
payment and redemption of the Refunded Bonds.
The City Council further finds and determines that the money to be deposited with the
Refunding Trustee for the Refunded Bonds in accordance with Section 14 of this Ordinance will
discharge and satisfy the obligations of the City under Ordinances Nos. 96-51, 97-12 and 99-51
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with respect to the Refunded Bonds, and the pledges, charges, trusts, covenants, and agreements
of the City therein made or provided for as to the Refunded Bonds, and that the Refunded Bonds
shall no longer be deemed to be outstanding under such ordinances immediately upon the deposit
of such money with the Refunding Trustee.
Section 17. Preservation of Tax Exemption for Interest on Bonds. The City covenants
that it will take all actions necessary to prevent interest on the Bonds from being included in
gross income for federal income tax purposes, and it will neither take any action nor make or
permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the
Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be
included in gross income for federal income tax purposes. The City also covenants that it will, to
the extent the arbitrage rebate requirement of Section 148 of the Internal Revenue Code of 1986,
as amended (the "Code"), is applicable to the Bonds, take all actions necessary to comply (or to
be treated as having complied) with that requirement in connection with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative to
calculating rebatable arbitrage, and the payment of any other penalties if required under Section
148 of the Code to prevent interest on the Bonds from being included in gross income for federal
income tax purposes. The City certifies that it has not been notified of any listing or proposed
listing by the Intemal Revenue Service to the effect that it is a bond issuer whose arbitrage
certifications may not be relied upon.
Section 18. Refunding or Defeasance of the Bonds. The City may issue refunding bonds
pursuant to the laws of the State of Washington or use money available from any other lawful
source to pay when due the principal of and interest on the Bonds, or any portion thereof
included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such
then-outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay the
costs of the refunding or defeasance. If money and/or direct obligations of the United States of
America maturing at a time or times and bearing interest in amounts (together with money, if
necessary) sufficient to redeem and retire, refund or defease the defeased Bonds in accordance
with their terms are set aside in a special trust fund or escrow account irrevocably pledged to that
redemption, retirement or defeasance of defeased Bonds (hereinafter called the "trust account"),
then all right and interest of the owners of the defeased Bonds in the covenants of this ordinance
and in the funds and accounts obligated to the payment of the defeased Bonds shall cease and
become void. The owners of defeased Bonds shall have the fight to receive payment of the
principal of and interest on the defeased Bonds from the trust account. The City shall include in
the refunding or defeasance plan such provisions as the City deems necessary for the random
selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds,
for notice of the defeasance to be given to the owners of the defeased Bonds and to such other
persons as the City shall determine, and for any required replacement of Bond certificates for
defeased Bonds. The defeased Bonds shall be deemed no longer outstanding, and the City may
apply any money in any other fund or account established for the payment or redemption of the
defeased Bonds to any lawful purposes as it shall determine.
If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance
of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for
notices of redemption of Bonds.
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Notwithstanding anything in this section to the contrary, if the principal of and/or interest
due on the Bonds is paid by the Bond Insurer pursuant to the Financial Guaranty Insurance
Policy, the Bonds shall be treated as remaining outstanding for all purposes, not defeased or
otherwise satisfied and shall not be considered paid by the City, and the assignment and pledge
of the taxes and all other covenants, agreements and other obligations of the City to the
registered owners of the Bonds shall continue to exist and shall run to the benefit of the Bond
Insurer, and the Bond Insurer shall be subrogated to the rights of those registered owners.
Section 19. Approval of Bond Purchase Agreement. Banc of America Securities LLC of
Seattle, Washington, has presented a purchase contract (the "Bond Purchase Agreement") to the
City offering to purchase the Bonds under the terms and conditions provided in the Bond
Purchase Agreement, which written Bond Purchase Agreement is on file with the City Clerk and
is incorporated herein by this reference. The City Council finds that entering into the Bond
Purchase Agreement is in the City's best interest and therefore accepts the offer contained therein
and authorizes its execution by City officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Agreement, with the approving legal opinion of Foster
Pepper & Shefelman PLLC, municipal bond counsel of Seattle, Washington, regarding the
Bonds.
The proper City officials are authorized and directed to do everything necessary for the
prompt delivery of the Bonds to the purchaser and for the proper application and use of the
proceeds of the sale thereof.
Section 20. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated November 3, 2004 (the
"Preliminary Official Statement"), prepared in connection with the sale of the Bonds. For the
sole purpose of the Bond purchaser's compliance with Securities and Exchange Commission
Rule 15c2-12(b)(1), the City "deems final" that Preliminary Official Statement as of its date,
except for the omission of information as to offering prices, interest rates, selling compensation,
aggregate principal amount, principal amount per maturity, maturity dates, options of
redemption, delivery dates, ratings and other terms of the Bonds dependent on such matters.
Section 21. Undertaking to Provide Continuing Disclosure. To meet the requirements of
United States Securities and Exchange Commission ("SEC") Rule 15c2-12(b)(5) (the "Rule"), as
applicable to a participating underwriter for the Bonds, the City makes the following written
undertaking (the "Undertaking") for the benefit of holders of the Bonds:
(a) UndertaMng to Provide Annual Financial Information and Notice of Material Events.
The City undertakes to provide or cause to be provided, either directly or through a designated
agent:
(i) To each nationally recognized municipal securities
information repository designated by the SEC in accordance with the Rule
("NRMSIR") and to a state information depository, if any, established in
the State of Washington (the "SID") annual financial information and
operating data of the type included in the final official statement for the
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Bonds and described in subsection (b) of this section ("annual financial
information");
(ii) To each NRMSIR or the Municipal Securities Rulemaking
Board ("MSRB"), and to the SID, timely notice of the occurrence of any
of the following events with respect to the Bonds, if material: (1) principal
and interest payment delinquencies; (2) non-payment related defaults; (3)
unscheduled draws on debt service reserves reflecting financial
difficulties; (4) unscheduled draws on credit enhancements reflecting
financial difficulties; (5) substitution of credit or liquidity providers, or
their failure to perform; (6) adverse tax opinions or events affecting the
tax-exempt status of the Bonds; (7) modifications to rights of holders of
the Bonds; (8) Bond calls (other than scheduled mandatory redemptions of
Term Bonds); (9) defeasances; (10) release, substitution, or sale of
property securing repayment of the Bonds; and (11) rating changes; and
(iii) To each NRMSIR or to the MSRB, and to the SID, timely
notice of a failure by the City to provide required annual financial
information on or before the date specified in subsection (b) of this
section.
(b) Type of Annual Financial Information Undertaken to be Provided. The annual
financial information that the City undertakes to provide in subsection (a) of this section:
(i) Shall consist of (1) annual financial statements prepared
(except as noted in the financial statements) in accordance with applicable
generally accepted accounting principles applicable to governmental units,
as such principles may be changed from time to time and as permitted by
State law, which statements shall not be audited, except, however, that if
and when audited financial statements are otherwise prepared and
available to the City they will be provided; (2) authorized, issued and
outstanding balance of general obligation bonds; (3) assessed valuation for
the fiscal year; and (4) ad valorem property tax rate and amount collected
in the fiscal year;
(ii) Shall be provided to each NRMSIR and the SID, not later
than the last day of the ninth month after the end of each fiscal year of the
City (currently, a fiscal year ending December 31), as such fiscal year
may be changed as required or permitted by State law, commencing with
the City's fiscal year ending December 31, 2004; and
(iii) May be provided in a single or multiple documents, and may
be incorporated by reference to other documents that have been filed with
each NRMSIR and the SID, or, if the document incorporated by reference
is a "final official statement" with respect to other obligations of the City,
that has been filed with the MSRB.
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(c) Amendment of Undertaking. The Undertaking is subject to amendment after the
primary offering of the Bonds without the consent of any holder of any Bond, or of any broker,
dealer, municipal securities dealer, participating underwriter, rating agency, NRMSIR, the SID
or the MSRB, under the circumstances and in the manner permitted by the Rule.
The City will give notice to each NRMSIR or the MSRB, and the SID, of the substance
(or provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for
the amendment. If the amendment changes the type of annual financial information to be
provided, the annual financial information containing the amended financial information will
include a narrative explanation of the effect of that change on the type of information to be
provided.
(d) Beneficiaries. The Undertaking evidenced by this section shall inure to the benefit of
the City and any holder of Bonds, and shall not inure to the benefit of or create any rights in any
other person.
(e) Termination of Undertaking. The City's obligations under this Undertaking shall
terminate upon the legal defeasance of all of the Bonds. In addition, the City's obligations under
this Undertaking shall terminate if those provisions of the Rule which require the City to comply
with this Undertaking become legally inapplicable in respect of the Bonds for any reason, as
confirmed by an opinion of nationally recognized bond counsel or other counsel familiar with
federal securities laws delivered to the City, and the City provides timely notice of such
termination to each NRMSIR or the MSRB and the SID.
(f) Remedy for Failure to Comply with Undertaking. As soon as practicable after the
City learns of any failure to comply with the Undertaking, the City will proceed with due
diligence to cause such noncompliance to be corrected. No failure by the City or other obligated
person to comply with the Undertaking shall constitute a default in respect of the Bonds. The
sole remedy of any holder of a Bond shall be to take such actions as that holder deems necessary,
including seeking an order of specific performance from an appropriate court, to compel the City
or other obligated person to comply with the Undertaking.
(g) Designation of Official Responsible to Administer Undertaking. The Director of
Finance of the City (or such other officer of the City who may in the future perform the duties of
that office) or his or her designee is authorized and directed in his or her discretion to take such
further actions as may be necessary, appropriate or convenient to carry out the Undertaking of
the City in respect of the Bonds set forth in this section and in accordance with the Rule,
including, without limitation, the following actions:
(i) Preparing and filing the annual financial information
undertaken to be provided;
(ii) Determining whether any event specified in subsection (a)
has occurred, assessing its materiality with respect to the Bonds, and, if
material, preparing and disseminating notice of its occurrence;
(iii) Determining whether any person other than the City is an
"obligated person" within the meaning of the Rule with respect to the
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Bonds, and obtaining from such person an undertaking to provide any
annual financial information and notice of material events for that person
in accordance with the Rule;
(iv) Selecting, engaging and compensating designated agents and
consultants, including but not limited to financial advisors and legal
counsel, to assist and advise the City in carrying out the Undertaking; and
(v) Effecting any necessary amendment of the Undertaking.
Section 22. Bond Insurance. The City Council finds that it is in the City's best interest to
purchase, and that a savings will result from purchasing, the Financial Guaranty Insurance Policy
for the Bonds. The City shall purchase from the Bond Insurer the Financial Guaranty Insurance
Policy insuring the prompt payment of the principal of and interest on the Bonds and agrees to
the conditions for obtaining that policy, including the payment of the premium therefor and the
following provisions entitled "Payments under the Policy" required by the Bond Insurer to be
included in this ordinance:
"A. In the event that, on the second Business Day, and again on the Business Day,
prior to the payment date on the Obligations, the Paying Agent [the Bond Registrar] has
not received sufficient moneys to pay all principal of and interest on the Obligations due
on the second following or following, as the case may be, Business Day, the Paying
Agent shall immediately notify the Insurer or its designee on the same Business Day by
telephone or telegraph, confirmed in writing by registered or certified mail, of the amount
of the deficiency.
"B. If the deficiency is made up in whOle or in part prior to or on the payment
date, the Paying Agent shall so notify the Insurer or its designee.
"C. In addition, if the Paying Agent has notice that any Bondholder has been
required to disgorge payments of principal or interest on the Obligation to a trustee in
Bankruptcy or creditors or others pursuant to a final judgment by a court of competent
jurisdiction that such payment constitutes a avoidable preference to such Bondholder
within the meaning of any applicable bankruptcy laws, then the Paying Agent shall notify
the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in
writing by registered or certified mail.
"D. The Paying Agent is hereby irrevocably designated, appointed, directed and
authorized to act as attorney-in-fact for Holders of the Obligations as follows:
"1. If and to the extent there is a deficiency in amounts required to pay
interest on the Obligations, the Paying Agent shall (a) execute and deliver to U.S.
Bank Trust National Association, or its successors under the Policy (the
"Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an
instrument appointing the Insurer as agent for such Holders in any legal
proceeding related to the payment of such interest and an assignment to the
Insurer of the claims for interest to which such deficiency relates and which are
paid by the Insurer, (b) receive as designee of the respective Holders (and not as
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Paying Agent) in accordance with the tenor of the Policy payment from the
Insurance Paying Agent with respect to the claims for interest so assigned, and (c)
disburse the same to such respective Holders; and
"2. If and to the extent of a deficiency in amounts required to pay principal
of the Obligations, the Paying Agent shall (a) execute and deliver to the Insurance
Paying Agent in form satisfactory to the Insurance Paying Agent an instrument
appointing the Insurer as agent for such Holder in any legal proceeding relating to
the payment of such principal and an assignment to the Insurer of any of the
Obligation surrendered to the Insurance Paying agent of so much of the principal
amount thereof as has not previously been paid or for which moneys are not held
by the Paying Agent and available for such payment (but such assignment shall be
delivered only if payment from the Insurance Paying Agent is received), (b)
receive as designee of the respective Holders (and not as Paying Agent) in
accordance with the tenor of the Policy payment therefor from the Insurance
Paying Agent, and (c) disburse the same to such Holders.
"E. Payments with respect to claims for interest on and principal of Obligations
disbursed by the Paying Agent from proceeds of the Policy shall not be considered to
discharge the obligation of the Issuer with respect to such Obligations, and the Insurer
shall become the owner of Such unpaid Obligations and claims for the interest in
accordance with the tenor of the assignment made to it under the provisions of this
subsection or otherwise.
"F. Irrespective of whether any such assignment is executed and delivered, the
Issuer and the Paying Agent hereby agree for the benefit of the Insurer that:
"1. They recognize that to the extent the Insurer makes payments, directly
or indirectly (as by paying through the Paying Agent), on account of principal of
or interest on the Obligations, the Insurer will be subrogated to the fights of such
Holders to receive the amount of such principal and interest from the Issuer, with
interest thereon as provided and solely from the sources stated in this Indenture
and the Obligations; and
"2. They will accordingly pay to the Insurer the amount of such principal
and interest (including principal and interest recovered under subparagraph (ii) of
the first paragraph of the Policy, which principal and interest shall be deemed past
due and not to have been paid), with interest thereon as provided in this Indenture
and the Obligations, but only from the sources and in the manner provided herein
for the payment of principal of and interest on the Obligations to Holders, and
will otherwise treat the Insurer as the owner of such fights to the amount of such
principal and interest.
"G. In connection with the issuance of additional Obligations, the Issuer shall
deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to
such additional Obligations.
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"H. Copies of any amendments made to the documents executed in connection
with the issuance of the Obligations which are consented to by the Insurer shall be sent to
Standard & Poor's Corporation.
"I. The Insurer shall receive notice of the resignation or removal of the Paying
Agent and the appointment of a successor thereto.
"J. The Insurer shall receive copies of all notices required to be delivered to
Bondholders and, on an annual basis, copies of the Issuer's audited financial statements
and Annual Budget.
"Notices: Any notice that is required to be given to a holder of the Obligation or
to the Paying Agent pursuant to the Indenture shall also be provided to the Insurer. All
notices required to be given to the Insurer under the Indenture shall be in writing and
shall be sent by registered or certified mail addressed to MBIA Insurance Corporation,
113 King Street, Armonk, New York 10504 Attention: Surveillance."
"K. The Issuer/Obligor agrees to reimburse the Insurer immediately and
unconditionally upon demand, to the extent permitted by law, for all reasonable expenses,
including attorneys' fees and expenses, incurred by the Insurer in connection with (i) the
enforcement by the Insurer of the Issuer's/Obligor's obligations, or the preservation or
defense of any fights of the Insurer, under this Resolution/Indenture and any other
document executed in connection with the issuance of the Obligations, and (ii) any
consent, amendment, waiver or other action with respect to the Resolution/Indenture or
any related document, whether or not granted or approved, together with interest on all
such expenses from and including the date incurred to the date of payment at Citibank's
Prime Rate plus 3% or the maximum interest rate permitted by law, whichever is less. In
addition, the Insurer reserves the right to charge a fee in connection with its review of any
such consent, amendment or waiver, whether or not granted or approved.
"L. The Issuer/Obligor agrees not to use MBIA's name in any public document
including, without limitation, a press release or presentation, announcement or forum
without MBIA's prior consent. In the event that the Issuer/Obligor is advised by counsel
that it has a legal obligation to disclose MBIA's name in any press release, public
announcement or other public document, the Issuer/Obligaor shall provide MBIA with at
least three (3) business days' prior written notice of its intent to use MBIA's name
together with a copy of the proposed use of MBIA's name and of any description of a
transaction with MBIA and shall obtain MBIA's prior consent as to the form and
substance of the proposed use of MBIA's name and any such description.
"M. The Issuer/Obligor shall not enter into any agreement nor shall it consent to
or participate in any arrangement pursuant to which Bonds are tendered or purchased for
any purpose other than the redemption and cancellation or legal defeasance of such
Bonds without the prior written consent of MBIA."
Any notices required to be given to the bondholders under the terms of this resolution shall also
be given to the Bond Insurer, Attn.: Insured Portfolio Management.
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Section 23. Effective Date of Ordinance. This ordinance shall take effect and be in force
from and after its passage and five days following its publication as required by law.
PASSED by the City Council and APPROVED by the Mayor of the City of Bainbridge
Island, Washington, at a regular open public meeting thereof, this 1 st day of December, 2004.
Mayor
ATTEST:
Citf Clerk
APPROVED AS TO FORM:
City Attorney
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CERTIFICATION
I, the undersigned, City Clerk of the City of Bainbridge Island, Washington (the "City"),
hereby certify as follows:
The attached copy of Ordinance No. 2004-27 (the "Ordinance") is a full, true and correct
copy of an ordinance duly passed at a regular meeting of the City Council of the City
held at the regular meeting place thereof on December 1, 2004, as that ordinance appears
on the minute book of the City; and the Ordinance will be in full force and effect five
days after the publication of its summary in the City's official newspaper; and
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 passage of the
Ordinance.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of December, 2004.
CITY OF BAINBRIDGE ISLAND, WASHINGTON
!
Susa6 Kasper, City Clerk
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