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HomeMy WebLinkAboutORD 39940 t CITY OF RENTON, WASHINGTON ORDINANCE NO. 3994 AN ORDINANCE of the City of Renton, Washington, relating to Local Improvement District No. 332; authorizing the issuance and sale of a local improve- ment district bond anticipation note in Local Improvement District No. 332 pending the receipt of the proceeds of the local improvement district bonds authorized to be issued by Ordinance No. 3982; and providing for the sale and delivery of such note to Rainier National Bank, Seattle, Washington. WHEREAS, by Ordinance No. 3982 passed by the City Council April 7, 1986, the City ordered the construction and installa- tion of certain improvements on portions on Oakesdale Avenue S.W. and the construction and installation of a new sanitary sewer from the existing Metro interceptor lying northerly at S.W. Grady extending north along the westerly margin of the P-1 Channel to Monster Road S.W. and the vicinity of the Container Corporation on-site waste disposal system pursuant to Resolution No. 2636, and, after a public hearing thereon, established Local Improvement District No. 332 and provided for the issuance and sale of local improvement district warrants or other short-term obligations; and WHEREAS, the City Council deems it to be in the best interest of the City that the City borrow money and issue its short-term obligation pursuant to Chapter 39.50 RCW in the form of a local improvement district bond anticipation note for the purpose of providing the funds with which to pay the ORDINANCE NO. 3994 costs of carrying out the improvements ordered in Local Improvement District No. 332; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION I. A local improvement district bond anticipa- tion note of the District (the "Note") shall be issued in the principal amount of $3,000,000 to pay the cost of constructing the improvements in Local Improvement District No. 332. The Note shall be fully registered; shall be numbered R-1; shall be dated as of the date of its issuance; shall mature on December 31, 1988; and shall bear interest at the rate of 6.14% per annum until two years from its date of issuance and thereafter shall bear interest at a rate equal to 68% of the published prime rate of Rainier National Bank adjusted immedi- ately for any changes in that prime rate, calculated on the basis of a 360 -day year for the actual number of days elapsed, payable quarterly, commencing September 1, 1986, with full obligation on the part of the City to pay interest at the same variable rate from and after the maturity date until the Note I with interest is paid in full or until sufficient money for such payment in full is on deposit in the Local Improvement Fund, District No. 332 (the "Note Fund"), created by Ordinance No. 3982, and the Note has been duly called for redemption in I the manner hereinafter provided. During the fixed interest rate period, the Note is not subject to redemption prior to its maturity date. After conversion to a variable interest - 2 - ORDINANCE NO. 3994 rate, the City reserves the right to prepay the Note prior to its maturity date upon giving five days' written notice to Rainier National Bank. Both principal of and interest on the Note shall be payable solely out of the Note Fund from the proceeds of local improvement district bonds authorized to be issued by Ordinance No. 3982, or other short-term obligations to be deposited in such fund and/or prepaid special benefit assessments.deposited in such fund, and from the Local Improvement Guaranty Fund of the City, and shall be payable in lawful money of the United States of America. Principal of the Note is payable at the office of the City Finance Director, who is appointed Note Registrar for the Note, in Renton, Washington, and interest is payable by check, draft or warrant mailed at least one business day prior to each inter- est payment date to Rainier National Bank at its address appearing in the Bond Registrar's registration books. The Note shall be surrendered upon final payment of principal and interest and destroyed in accordance with law, and the Note Registrar shall furnish a certificate of destruction to the City. The City Council declares and finds that the fixing of the above fixed interest rate and variable interest rate index is inthe best interests of the City. SECTION II. The interest rate on the Note shall be adjusted as follows as of the effective date of any of the - 3 - ORDINANCE NO. 3994 following changes in the Internal Revenue Code of 1954, as amended (the "Code"): (a) In the event that interest on the Note is subject to federal income taxation when held by Rainier National Bank, then (i) the interest rate payable on the Note shall be increased, from and after the effective date that the interest on the Note becomes subject to federal income taxation, to 110% of the announced prime rate of Rainier National Bank, and (ii) the City shall pay to Rainier National Bank, on demand (1) the difference between the inter- est paid and the tax-exempt rate and the interest rate which would be payable at the taxable rate as provided in (i) hereof, but which has not been so paid, and (2) any interest, penalties or other charges, if any, incurred by Rainier National Bank as a result of the interest payable on the Note being subject to federal income taxation: (b) In the event of any increase or decrease in the Preference Disallowance (as defined herein) which would be a applicable to the Note, the interest rate on the Note in effect shall be increased (in the event of any increase in such Preference Disallow- ance) or decreased (in the event of any decrease in such Preference Disallowance) by .028 basis points for each percentage point increase or decrease, as appropriate (during the fixed interest rate period) and by .3 percent of the prime rate of Rainier National Bank for each percentage point increase or decrease, as appropriate (during the variable inter- est rate period). However, in no event shall the applicable rate exceed 110% of the prime rate of Rainier National Bank. For purposes of this section, "Preference Disallowance" means the percentage disallowance, set forth in Section 291(a)(3) of the Code, of the deduction for that interest, described in Section 291(a)(1)(B) of the Code, on indebtedness incurred or continued to purchase or carry tax-exempt obligations. (c) In the event there is a change in the maximum corporate tax rate under the Code, the interest rate on the Note shall be. increased (or decreased) by 10 basis points at such time as each one percent decrease (or increase) (during the fixed interest rate period) and by one percentage point of the prime rate of Rainier National Bank at such time as each one percent decrease (or increase) (during - 4 - ORDINANCE NO. 3994 the variable interest rate period) in the highest marginal statutory rate of federal income tax applicable to corporations becomes effective with respect to Rainier National Bank. However, in no event shall the applicable rate exceed 110% of the prime rate of Rainier National Bank. SECTION III. The Note shall be printed, lithographed, typed or multicopied on good bond paper in a form consistent with the provisions of this ordinance, shall be manually signed by the Mayor and City Clerk, and shall have the seal of the City impressed thereon. Only such Note as shall bear thereon a Certification of Authentication in the following form, manually executed by the Note Registrar, shall be valid or.obligatory for any purpose or entitled to the benefits of this resolution: CERTIFICATE OF AUTHENTICATION This note is the fully registered City of Renton, Washington, Local Improvement District No. 332 Bond Anticipation Note, described in the Note Ordinance. By Finance Director of the City of Renton, Washington, Note Registrar Such Certificate of Authentication shall be conclusive evidence that the Note so authenticated has been duly executed, authenti- cated and delivered hereunder and is entitled to the benefits of this ordinance. SECTION IV. The Note Registrar shall keep, or cause to be kept, at his principal office, sufficient books for the regis- tration of the Note, which shall at all times be open to - 5 - Ll ORDINANCE NO. 3994 inspection by the City. The Note Registrar is authorized, on behalf of the City, to serve as paying agent for the Note and to carry out all of the Note Registrar's powers and duties under this ordinance. The Note Registrar shall be responsible for its representa- tions contained in the Registrar's Certificate of Authentication on the Notes. SECTION V. The City covenants that it will not take or permit to be taken on its behalf any action which would adversely affect the exemption from federal income taxation of the interest on the Note and will take or require to be taken such acts as may reasonably be within its ability and as may from time to time be required under applicable law to continue the exemption from federal income taxation of the interest on the Note. Without limiting.the generality of the foregoing, and except to the extent that the investment of any Note proceeds is limited to a yield required to comply with federal arbitrage regulations, the City will spend the proceeds of the Note with due diligence to completion of the purpose specified herein, and will not invest or make other use of the proceeds of the Note or of its other money at any time during the term of the Note, which if such use had been reasonably expected at the date that the Note is issued, would have caused such Note to be an arbi- trage obligation within the meaning of Section 103(c) of the United States Internal Revenue Code of 1954, as amended, and applicable regulations thereunder. - 6 - ORDINANCE NO. 3994 In addition, if future federal laws or regulations require the payment by the City of any federal tax or rebate or the observing by the City of any other requirement to maintain the exemption from federal income taxation of the interest on the Note, the City, to the extent permitted'by law, shall make any such payment and observe any such requirement. The City further covenants that itlhas not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a note issuer whose arbitrage certifi- cations may not be relied upon. SECTION VI. The Note shall be a negotiable instrument to the extent provided by RCW 62A.8-102 and 62A.8-105. SECTION VII. The City Council designates the Note as a "qualified tax-exempt obligation" which may be acquired by a financial institution under Section 608 of H.R. 3838 or under any similar provision of any future federal law. SECTION VIII. Rainier National Bank of Seattle, Washington, has submitted an offer to purchase the Note at a price of par, the City to furnish the Note and the approving legal opinion of Roberts & Shefelman, municipal bond counsel of Seattle, Washington,.at the City's expense. Bond counsel shall not be required to. review or express any, opinion concerning the completeness or accuracy of any official statement, offering circular or other sales material issued or used in connection with the Note, and bond counsel's opinion shall so state.. The City Council finds that it is in the best interest of the City - 7 - ORDINANCE NO. 3994 that such offer be accepted, and accepts the same. The Note, therefore, immediately upon its authentication, shall be delivered to the purchaser in Seattle, Washington, upon payment therefor in accordance with such offer. SECTION IX. This ordinance shall be effective upon its passage, approval and five days after publication. PASSED BY THE CITY COUNCIL this 19th day of May, 1986. Maxine E. Motor, City Clerk APPROVED BY THE MAYOR this 19th day of May, 1986. Cwt 5fw Udo C`�• Barbara Y. hinpoch, Mayor Approved as to form: ROBERTS & SHEFELMAN - George M. Mack Date of Publication: May 23, 1986 =:=