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HomeMy WebLinkAboutORD 3993CITY OF RENTON, WASHINGTON ORDINANCE NO. 3993 AN ORDINANCE of the City of Renton, Washington, relating to Local Improvement District No. 330; amending Ordinance No. 3890; authorizing the issuance and sale of local improvement district bond anticipa- tion notes in Local Improvement District No. 330 pending the receipt of the proceeds of the local improvement district bonds authorized to be issued by Ordinance No. 3890; and providing for the sale and delivery of such notes to Rainier National Bank, Seattle, Washington. WHEREAS, by Ordinance No. 3890 passed by the City Council February 11, 1985, the City ordered the construction and installation of certain improvements in the vicinity of S.W. Grady Way from Lind Avenue S.W. to the Grady Way bridge within the City pursuant to Resolution No. 2854, and, after a public hearing thereon, established Local Improvement District No. 330 and provided for the issuance and sale of local improve- ment district warrants; 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 or obligations pursuant to Chapter 39.50 RCW in the form of one or more local improvement district bond anticipation notes for the purpose of providing the funds with which to pay the costs of carrying out the improvements ordered in Local Improvement District.No. 330; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DO ORDAIN AS FOLLOWS: ORDINANCE NO. 3993 SECTION I. Section V of Ordinance No. 3890 is amended to read as follows: SECTION V. Local improvement district warrants shall be issued in payment of the cost and expense of the improvement herein ordered. Such warrants shall be payable out of Local Improvement Fund, District No. 330, to bear interest from the date thereof at a rate to be fixed hereafter and to be redeemed in cash and/or by local improvement district bonds herein authorized to be issued, said interest- bearing warrants to .be hereafter referred to as "revenue warrants." The exact form, amount, date, interest rate and denomination of said warrants shall be hereafter fixed by ordinance of the City Council. In the alternative, the City may provide by ordinance for the issuance of other short-term obligations.pursuant to Chapter 39.50 RCW. The City is authorized to issue local improvement dis- trict bonds for the District which shall bear interest at a rate and to be payable on or before a date to be hereafter fixed by ordinance. The bonds shall be issued in exchange for and/or in redemption of any and all revenue warrants or other short-term obligations issued hereunder and not redeemed in cash within twenty days after the expiration of the thirty -day period for the cash payment of assessments without interest on the assessment roll for the District. The bonds shall be redeemed by the collection of special assessments to be levied and assessed against the property within the District, payable - 2 - ORDINANCE NO. 3993 in annual installments, with interest at a rate to be here- after fixed by ordinance under the mode of "payment by bonds," as defined by law and the ordinances of the City. The exact form, amount, date, interest rate and denominations of such bonds shall be hereafter fixed by ordinance of the City Council. Such bonds shall be sold in such manner as the City Council shall hereafter determine. For those persons found by the City of Renton to be economically disadvantaged property owners, or other persons who, under the terms.of a recorded contract of purchase, recorded mortgage,.recorded deed of trust transaction, or recorded lease are responsible under penalty of forfeiture, foreclosure or default, the assessment levied for the District may be deferred until a time previous to the termination of the District under the terms acceptable to the City and upon assurance of proper.security for the payment of such assess-. ments. Such deferral shall not survive the termination of the ownership of interest of the economically disadvantaged prop- erty owner or person to whom the deferral was granted and it shall likewise not survive the sale, transfer or other action which either terminates the possessory interest of such prop- erty owner or person or which turns the property into invest- ment, rental or lease property. SECTION II. A local improvement district bond anticipa- tion note of the District (the "Note") shall be issued in the principal amount of $574,300 to pay the cost of constructing - 3 - ORDINANCE.NO.. 39.93 the improvements in Local Improvement District No. 330. 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 5.83% per annum until one year 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 immediately 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 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. 330 (the "Note Fund"), created by Ordinance No. 3890, as amended, and the Note has been duly called for redemption by the City Finance Director's giving five days' written notice to Rainier National Bank. During the fixed interest rate period the Note is not subject to redemption prior to its maturity date. After conversion to a variable interest rate, the City reserves the right to prepay the Note at any time 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 - 4 - ORDINANCE NO. 3993 issued by Ordinance No. 3890, as amended, 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 interest 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 in the best interests of the City. SECTION III. The interest rate on the Note shall be adjusted as follows as of the effective date of any of the 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 11.0% of the announced prime rate of Rainier National - 5 - ORDINANCE NO. 3993 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 interest rate period), in the Preference Disallowance. 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 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 IV. The Note shall be printed, lithographed, typed or multicopied on good bond paper in a form consistent with the - 6 - ORDINANCE NO. 3993 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. 330 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, authen- ticated and delivered hereunder.and is entitled to the benefits of this ordinance. SECTION V. 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 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. - 7 - ORDINANCE NO. 3993 The Note Registrar shall be responsible for its representa- tions contained in the Registrar's Certificate of Authentication on the Notes. SECTION VI. 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. 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 ORDINANCE NO. 3993 Note, the City, to the extent permitted by law, shall make any such payment and observe any such requirement. The City further covenants that it has 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 VII. The Note shall be a negotiable instrument to the extent provided by RCW 62A.8-102 and 62A.8-105. SECTION VIII. 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 IX. 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 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., - 9 - ORDINANCE NO. 3993 SECTION X. 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. E. Motor, City Clerk APPROVED BY THE MAYOR this 19th day of May, 1986. Barbara Y.463hinpoch, Mayor Approved as to form: ROBERTS & SHEFELMAN - George M. Mack Date of Publication: May 23, 1986