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HomeMy WebLinkAboutCOW 2021-05-10 Item 4B - Ordinance - Issue Debt for General Fund Portion of Public Works Shops ProjectCOUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared by Mayor's review Council review 5/10/21 Vicky 5/17/21 Vicky ITEM INFORMATION ITEM No. 4.B. STAFF SPONSOR: VICKY CARLSEN ORIGINAL AGENDA DATE: 5/10/21 AGENDA ITEM TITLE Approve ordinance to issue debt to fund PW Shops Phase I and refund 2 existing debt issues CATEGORY ® Discussion Mtg Date 5/10/21 Motion Mtg Date Resolution Mtg Date ® Ordinance Mtg Date 5/17/21 Bid Award Mtg Date ❑ Public Hearing Mtg Date ❑ Other Mtg Date SPONSOR ❑ Council ❑ Mayor ❑ Admin Svcs ❑ DCD ® Finance ❑ Fire ❑ P&R ❑ Police ❑ PIF SPONSOR'S SUMMARY Aprove ordinance to issue debt to fund the general fund portion of the PW Shops Phase I and refund outstanding 2011 LTGO and 2014 LTGO bonds. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ LTAC DATE: 4/26/21 Community Svcs/Safety ® Finance & Governance ❑ Planning & Community Dev. ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. COMMITTEE CHAIR: IDAN RECOMMENDATIONS: SPONSOR/ADMIN. Department of Community Development COMMII°IEE Unanimous Approval; Forward to Committee of the Whole COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: Comments: 5/10/21 5/17/21 MTG. DATE 5/10/21 5/17/21 RECORD OF COUNCIL ACTION ATTACHMENTS Informational Memorandum dated 4/20/21 Draft Ordinance Minutes from the Finance and Governance meeting of 4/26/21 27 28 City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Vicky Carlsen, Finance Director CC: Mayor Ekberg DATE: April 20, 2021 SUBJECT: Approve Ordinance to Issue Debt to Fund General Fund Portion of PW Shops Phase I Project, Refund Outstanding 2011 Limited Tax Obligation Bonds, Refund Outstanding 2014 Limited Tax Obligation Bonds ISSUE Delegate authority to the Finance Director, through the end of September, to issue limited tax obligation bonds (LTGO) to issue debt to fund the general fund portion of the PW Shops Phase I project, refund the City's outstanding 2011 LTGO bonds, and refund the City's outstanding 2014 LTGO bonds via a direct placement process. Refunding the 2011 and 2014 bonds would only occur if total debt service would be lower than currently structured. BACKGROUND During the 2021-2022 budget process it was determined that, due to the current interest rate environment, the general fund portion ($2,850,000) of funding the PW Shops Phase I project would be financed. The City also has an opportunity to refund two outstanding LTGO issues, if debt service savings can be achieved, net of issuance costs. 1). The City issued $4,620,000 LTGO bonds on December 28, 2011 to refund 2003 Series A bonds that were issued to fund street improvements. Bonds were issued with an interest rate ranging from 2.00% to 4.00%; interest rates are higher during the last few years of the repayment schedule. Interest rates for the remaining life of the bonds range from 3.00% to 4.00%. Final payment for these bonds is December 2023. These bonds have a call provision that allows the bonds to be called on December 1, 2021. Given that current interest rates are lower than the rate the City is paying on these bonds, it is the City's best interest to pursue a refunding of these bonds. 2). The City issued $3,850,000 LTGO bonds in December 2014 to fund land acquisition and capital costs of redevelopment activities withing the City's Urban Renewal area. Bonds were issued with an interest rate ranging from 0.85% to 4.86% through 2024. After 2024, the interest rate is adjusted to the 5 -year Advance Fixed Bullet Rate, as quoted by the Seattle Federal Loan Bank, divided by 0.65. Interest rates for the remaining life of the bonds range from 4.32% to 4.86% through 2024. Final payment for these bonds is December 2034. These bonds were a private placement with Zions Bank and there is no prepayment penalty for refunding them after 29 INFORMATIONAL MEMO Page 2 December 2020. Given the current interest rate environment and the uncertainty of future interest rates, it is the City's best interest to pursue a refunding of these bonds. Per the City's current debt policy, adopted by Resolution No. 1840, the City will refinance debt to achieve debt service savings as market opportunities arise. DISCUSSION As of May 2021, the outstanding balance of the 2011 LTGO bonds is $1,545,000 plus total interest of $98,700. The 2014 refunding LTGO bonds have an outstanding principal amount of $3,101,000 and total interest is estimated to be $748,907. Total interest is subject to change depending on the interest rate in effect from 2025 through 2034. An RFP will be circulated to banks at the end of April 2021 to determine what banks are interested in submitting a proposal. Review of the proposals is tentatively scheduled for May 20, 2021 with an expected closing date of June 8, 2021 for the component related to the PW Shops Phase I project and a closing date of September 2, 2021 for refunding the 2011 and/or 2014 outstanding bond issues. The draft ordinance delegates authority to the Finance Director to select the proposal that is in the best interest of the City (if any) and to approve the interest rate and terms of the bond within the parameters set forth in the ordinance. If a proposal is accepted, the Finance Director will report back to the full Council on the details of the agreement. RECOMMENDATION The Council is being asked to approve the ordinance and consider this item at the May 10, 2021 Committee of the Whole meeting and subsequent May 17, 2021 Regular Meeting. ATTACHMENTS Draft Ordinance 30 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING THE ISSUANCE AND SALE OF ONE OR MORE SERIES OF LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS OF THE CITY IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $7,200,000 TO FINANCE AND/OR REIMBURSE COSTS RELATED TO CAPITAL IMPROVEMENTS TO THE CITY'S PUBLIC WORKS FACILITIES, TO REFUND CERTAIN OUTSTANDING LIMITED TAX GENERAL OBLIGATION BONDS OF THE CITY, AND TO PAY THE COST OF ISSUING THE BONDS; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; DELEGATING THE AUTHORITY TO APPROVE THE SALE OF THE BONDS; PROVIDING FOR OTHER MATTERS RELATING THERETO; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City Council (the "Council") of the City of Tukwila, Washington (the "City") has deemed it in the best interest of the City to acquire, improve, develop and equip certain capital improvements to the City's public works facilities (the "Project"); and WHEREAS, the City issued its Limited Tax General Obligation Refunding Bonds, 2011 on December 28, 2011, pursuant to Ordinance No. 2361 passed by the Council on December 5, 2011 (the "2011 Ordinance"), in the original principal amount of $4,620,000 (the "2011 Bonds"); and WHEREAS, the 2011 Ordinance provides that the City may redeem the 2011 Bonds maturing on or after December 1, 2022, on any date on or after December 1, 2021, in whole or in part, at the price of par plus accrued interest, if any, to the date of redemption (the "2011 Refunding Candidates"); and WHEREAS, the City issued its Limited Tax General Obligation Bond, 2014 (Taxable), on December 16, 2014 pursuant to Ordinance No. 2465 passed by the Council on December 1, 2014, as amended by Ordinance No. 2472 passed by the Council on March 16, 2015 (as amended, the "2014 Ordinance," and together with the CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 1 of 13 31 2011 Ordinance, the "Outstanding Bond Ordinances"), in the original principal amount of $3,850,000 (the "2014 Bond"); and WHEREAS, the 2014 Ordinance provides that the City may redeem the 2014 Bond on any date on or after December 1, 2019 (the "2014 Refunding Candidate," and together with the 2011 Refunding Candidates, the "Refunding Candidates"); and WHEREAS, after due consideration, the Council has determined it is in the best interest of the City to authorize the issuance of one or more series of limited tax general obligation and refunding bonds in the aggregate principal amount of not to exceed $7,200,000, to pay and/or reimburse the City for all or a portion of the costs of the Project, to refund and defease all or a portion of the Refunding Candidates for debt service savings, and to pay costs of issuance for the bonds; and WHEREAS, the City has issued a request for proposals from various financial institutions to purchase the bonds authorized herein; and WHEREAS, the Council wishes to delegate authority to the Finance Director (the "Designated Representative"), for a limited time, to select one or more proposals that are in the best interest of the City (if any); to approve the issuance from time to time, on a single date or on multiple dates, of one or more series of bonds; to designate each series of bonds as tax-exempt or taxable; to select the Refunding Candidates for redemption; and to approve the interest rates and the terms of the bonds within the parameters set by this ordinance; and WHEREAS, the Council now wishes to authorize the issuance of the bonds and sale of the bonds to the successful respondent(s) subject to the terms and conditions set forth in this ordinance; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: Acquired Obligations mean the Government Obligations, if any, acquired by the City under the terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of the Refunded Bonds, but only to the extent that the same are acquired at Fair Market Value. Bond Counsel means Pacifica Law Group LLP, Seattle, Washington, or an attorney at law or a firm of attorneys, which is admitted to practice law before the highest court of any state in the United States of America or the District of Columbia and nationally recognized and experienced in legal work relating to the issuance of tax- exempt bonds who is or are selected by the City. CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 2 of 13 32 Bond Purchase Contract means one or more commitments, bond purchase contracts, loan agreements, forward delivery agreements, or other contracts between the City and one or more Purchasers approved by the Designated Representative pursuant to this ordinance. Bond Register means the registration records for the Bonds maintained by the Bond Registrar. Bond Registrar means the City Finance Director or, at the option of the City, the fiscal agent for municipal bonds issued in the State, currently U.S. Bank National Association. Bonds means the Project Bond together with the Refunding Bonds, authorized to be issued from time to time under this ordinance. Call Date means the date of redemption of the Refunded Bonds as set forth in the Escrow Agreement. City means the City of Tukwila, Washington, a municipal corporation duly organized and existing under the laws of the State of Washington. City Administrator means the duly appointed and acting City Administrator, including anyone acting in such capacity for the position, or the successor to the duties of that office. City Attorney means the duly appointed and acting City Attorney, including anyone acting in such capacity for the position, or the successor to the duties of that office. City Clerk means the duly appointed and acting City Clerk of the City or the successor to the duties of that office. Code means the Internal Revenue Code of 1986 as in effect on the date of issuance of any Tax -Exempt Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of any Tax - Exempt Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code. Commission means the United States Securities and Exchange Commission. Council or City Council means the Tukwila City Council, as the general legislative body of the City as the same is duly and regularly constituted from time to time. Debt Service Fund means the funds or accounts created pursuant to this ordinance for the purpose of paying debt service on each series of Bonds. Designated Representative means the Finance Director, or his or her designee. CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 3 of 13 33 Escrow Agent means U.S. Bank National Association, and its successors and assigns. Escrow Agreement means the Escrow Deposit Agreement between the City and the Escrow Agent. Fair Market Value means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction, except for specified investments as described in Treasury Regulation § 1.148-5(d)6), including United States Treasury obligations, certificates of deposit, guaranteed investment contracts, and investments for yield restricted defeasance escrows. Fair Market Value is generally determined on the date on which a contract to purchase or sell an investment becomes binding, and, to the extent required by the applicable regulations under the Code, the term "investment" shall include a hedge. Federal Tax Certificate means the certificate executed by the City setting forth the requirements of the Code for maintaining the tax exemption of interest on the Tax - Exempt Bonds, and attachments thereto. Finance Director means the duly appointed and acting Finance Director of the City or the successor to such officer. Government Obligations mean those obligations now or hereafter defined as such in Chapter 39.53 RCW. Interest Rate means the fixed rate of interest for each series of Bonds as approved by the Designated Representative and set forth in the applicable Bond and in the Bond Purchase Contract. Maturity Date means the date of final maturity for a series of Bonds, as set forth therein. Mayor or City Mayor means the elected Mayor of the City, or the successor to the duties of that office. Outstanding Bond Ordinances mean the 2011 Ordinance and the 2014 Ordinance. Project means the capital project described in Section 2 of this ordinance. Project Bond means the Limited Tax General Obligation Bond authorized to be issued pursuant to this ordinance to pay all or a portion of the costs of the Project and to pay costs of issuance for such Bond. Project Fund means the account created pursuant to Section 7 of this ordinance. CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 4 of 13 34 Purchaser means any bank or other financial institution selected to purchase one or more series of Bonds (or to accept delivery of one or more Bonds to evidence the City's obligations under a Bond Purchase Contract), as selected by the Designated Representative. Refunded Bonds mean all or a portion of the Refunding Candidates as designated by a Designated Representative for refunding pursuant to this ordinance. Refunding Account means the account by that name established pursuant to Section 7 of this ordinance. Refunding Bond or Bonds means one or more series of Limited Tax General Obligation Refunding Bonds authorized to be issued pursuant to this ordinance to refund and defease one or more series of the Refunded Bonds and to pay costs of issuance for such Bonds. Refunding Candidates mean the 2011 Refunding Candidates and the 2014 Refunding Candidate. Registered Owner means the person whose name the Bonds are registered to on the Bond Register. Rule means the Securities and Exchange Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. State means the State of Washington. Taxable Bonds mean any Bonds of a series determined to be issued on a taxable basis pursuant to this ordinance. Tax -Exempt Bonds mean any Bonds of a series determined to be issued on a tax- exempt basis under the Code pursuant to this ordinance. 2011 Bonds mean the City's Limited Tax General Obligation Refunding Bonds, 2011, issued pursuant to the 2011 Ordinance in the original aggregate principal amount of $4,620,000 on December 28, 2011. 2011 Ordinance means Ordinance No. 2361 passed by the Council on December 5, 2011, authorizing the issuance of the 2011 Bonds. 2011 Refunding Candidates mean the outstanding 2011 Bonds. 2014 Bond means the City's Limited Tax General Obligation Bond, 2014 (Taxable), issued pursuant to the 2014 Ordinance in the original aggregate principal amount of $3,850,000 on December 16, 2014. CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 5 of 13 35 2014 Ordinance means Ordinance No. 2465 passed by the Council on December 1, 2014, as amended by Ordinance No. 2472 passed by the Council on March 16, 2015, authorizing the issuance of the 2014 Bond. 2014 Refunding Candidate means the outstanding 2014 Bond. Section 2. Authorization of the Project; Findings; Authorization of the Bonds. (a) Authorization of the Project. The Project Bond is being issued to finance and/or reimburse the City for costs of acquiring, improving, developing and equipping certain capital improvements to the City's public works facilities (the "Project") and paying costs of issuance for the Project Bond. The cost of all necessary and other costs incurred in connection with the Project shall be paid from other City funds legally available for such purposes. (b) Refunding Findings. The City has established financial policies which provide, as a general rule, that the City may issue refunding bonds to refund outstanding debt when, among other reasons, such refunding results in net present value savings. The Council hereby finds it is in the best interest of the City and its taxpayers that it issue one or more series of limited tax general obligation refunding bonds to refund the Refunded Bonds for aggregate net present value debt service savings. (c) Authorization of Bonds. For the purpose of paying and/or reimbursing the City for costs of the Project, defeasing and refunding the Refunded Bonds, and paying costs of issuance, the City is hereby authorized to issue and sell one or more series of limited tax general obligation and refunding bonds in the aggregate principal amount not to exceed $7,200,000 (the "Bonds"). The Bonds authorized herein may be issued from time to time, on a single date or on multiple dates, in one or more series, as Tax - Exempt or Taxable Bonds, pursuant to the authorization set forth in this ordinance, subject to the conditions set forth in Section 10 hereof. The Bonds shall be general obligations of the City and shall be designated "City of Tukwila, Washington, Limited Tax General Obligation and Refunding Bonds, 2021" or other such designation as set forth in the Bonds and approved by the Designated Representative. Each Bond shall be dated as of its date of delivery to the applicable Purchaser, shall be fully registered as to both principal and interest, shall be in one denomination, and shall mature on the applicable Maturity Date. Each Bond shall bear interest from its dated date or the most recent date to which interest has been paid at the applicable Interest Rate. Interest on the principal amount of the Bonds shall be calculated per annum on a 30/360 basis, or as otherwise provided in the Bonds and in the Bond Purchase Contract. Principal of and interest on each Bond shall be payable at the times and in the amounts as set forth in the applicable Bond Purchase Contract and in the payment schedule attached to such Bond. CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 6 of 13 36 Section 3. Registration, Exchange and Payments. (a) Registrar/Bond Registrar. The Finance Director or the fiscal agent of the State shall act as Bond Registrar for the Bonds. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the Bonds if transferred or exchanged in accordance with the provisions of the Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance. (b) Registered Ownership. The City and the Bond Registrar may deem and treat the Registered Owner of the Bonds as the absolute owner for all purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of the Bonds shall be made only as described in subsection (d) below. All such payments made as described in subsection (d) below shall be valid and shall satisfy the liability of the City upon the Bonds to the extent of the amount so paid. (c) Transfer or Exchange of Registered Ownership. The Bonds shall not be transferrable without the consent of the City except as provided in the Bonds and/or the Bond Purchase Contract. (d) Place and Medium of Payment. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Principal and interest on the Bonds shall be payable by check, warrant, ACH transfer or by other means mutually acceptable to the Purchaser and the City. Upon final payment of principal and interest of the Bonds, the Registered Owner shall surrender the Bonds for cancellation at the office of the Bond Registrar in accordance with this ordinance. (e) Additional Provisions. The Bonds will not be registered with The Depository Trust Company, New York, New York, or any other securities depository. No official statement, prospectus, offering circular or other offering statement containing material information with respect to the City or the Bonds will be provided in connection with the issuance of the Bonds, the Bonds will be unrated, and the Bonds will not be assigned a CUSIP number. Section 4. Right of Prepayment. The City may prepay the Bonds as set forth in the applicable Bond Purchase Contract. If any Bond is prepaid in full, interest shall cease to accrue on the date such prepayment occurs. Section 5. Form of Bonds. The Bonds shall be in substantially the form set forth in Exhibit A, which is incorporated herein by this reference. Section 6. Execution of Bonds. The Bonds shall be executed on behalf of the City with the manual or facsimile signature of the Mayor, and shall be attested by the manual or facsimile signature of the Clerk. Only such Bonds as shall bear thereon a Certificate of Authentication in the form set forth in Exhibit A, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered hereunder and is entitled to the benefits of this ordinance. CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 7 of 13 37 In case either of the officers who shall have executed any Bond shall cease to be an officer or officers of the City before such Bond so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bond may nevertheless be authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon the City as though those who signed the same had continued to be such officers of the City. Any Bond may also be signed and attested on behalf of the City by such persons who at the date of the actual execution of such Bond, are the proper officers of the City, although at the original date of such Bond any such person shall not have been such officer of the City. Section 7. Application of Bond Proceeds. Proceeds of the Bonds shall be distributed as follows: (a) Project Fund. Net proceeds of the Project Bond shall be deposited in the Project Fund which is hereby authorized to be created, and used to pay costs of the Project and payment of costs of issuance of such Project Bond as set forth in the closing memorandum for such Project Bond. The Finance Director shall invest money in the Project Fund in such obligations as may now or hereafter be permitted by law to cities of the State and which will mature prior to the date on which such money shall be needed, but only to the extent that the same are acquired, valued and disposed of at Fair Market Value. Upon completion of the Project, any remaining Project Bond proceeds (including interest earnings thereon) may be used for other capital projects of the City or shall be transferred to the Debt Service Fund for the Project Bond. (b) Refunding Plan. For the purpose of realizing a debt service savings, the City proposes to refund and/or defease the Refunded Bonds as set forth herein. If the Designated Representative determines that it is in the best interest of the City to proceed with the refunding authorized herein, the Designated Representative shall designate all or a portion of the Refunding Candidates as Refunded Bonds and such designation shall be set forth in a Bond Purchase Contract or certificate of the City. The Designated Representative is hereby authorized to select the Refunded Bonds from the Refunding Candidates, to establish the Call Date for each series of the Refunded Bonds, to provide or cause to be provided notice of redemption of the Refunded Bonds in accordance with the applicable provisions of the Outstanding Bond Ordinances authorizing the issuance of the Refunded Bonds, and to take any action as determined to be necessary and in the best interest of the City to refund the Refunded Bonds. Net proceeds of any Refunding Bond shall either be remitted to the City or deposited with the Escrow Agent pursuant to the Escrow Agreement, and shall be used immediately upon receipt thereof to defease and/or refund the Refunded Bonds as authorized by the applicable Outstanding Bond Ordinances and to pay costs of issuance of such Refunding Bond as set forth in the closing memorandum for such Refunding Bond. CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 8 of 13 38 Any Refunding Bond proceeds and any other available funds of the City, if any, deposited with the Escrow Agent shall be used to defease the applicable series of Refunded Bonds and discharge the obligation thereon by either being held uninvested as cash or by the purchase of Acquired Obligations bearing such interest and maturing as to principal and interest in such amounts and at such times which, together with any necessary beginning cash balance, will provide for the payment of interest on such Refunded Bonds on the Call Date and the redemption price of such Refunded Bonds on the Call Date. Such Acquired Obligations, if any, shall be purchased at a yield not greater than the yield permitted by the Code and regulations relating to acquired obligations in connection with refunding the bond issues. (c) Escrow Agent; Escrow Agreement. U.S. Bank National Association is hereby appointed as Escrow Agent. The proceeds of any Refunding Bonds remaining after acquisition of the Acquired Obligations, if any, and provision for the necessary beginning cash balance shall be used to pay expenses of the acquisition and safekeeping of the Acquired Obligations and costs of issuance of such Refunding Bonds and the administrative costs of the refunding. In order to carry out the purposes of this section, the Designated Representative is authorized and directed to execute and deliver the Escrow Agreement to the Escrow Agent. (d) Call for Redemption of the Refunded Bonds. If the Designated Representative determines to proceed with the refunding of the Refunded Bonds, the City hereby agrees to set aside available funds of the City and sufficient funds out of proceeds of the Refunding Bonds, including from the purchase of the Acquired Obligations, if any, to make payments described above. The City authorizes the Designated Representative to call the Refunded Bonds for redemption in accordance with the provisions of the Outstanding Bond Ordinances. Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the issuance of the Refunding Bonds. The Escrow Agent is hereby authorized to carry out the terms of the Escrow Agent on behalf of the City, including the giving of notice of defeasance and/or redemption of the Refunded Bonds in accordance with the applicable provisions of the Outstanding Bond Ordinances. Section 8. Tax Covenants. The City will take all actions necessary to assure the exclusion of interest on the Tax -Exempt Bonds from the gross income of the owners of the Tax -Exempt Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Tax - Exempt Bonds, including but not limited to the following: (a) Private Activity Bond Limitation. The City will assure that the proceeds of the Tax -Exempt Bonds are not so used as to cause the Tax -Exempt Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code. (b) Limitations on Disposition of Projects. The City will not sell or otherwise transfer or dispose of (i) any personal property components of the projects financed and/or refinanced with proceeds of the Tax -Exempt Bonds other than in the ordinary CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 9 of 13 39 course of an established government program under Treasury Regulation § 1.141- 2(d)(4); or (ii) any real property components of the projects, unless it has received an opinion of Bond Counsel to the effect that such disposition will not adversely affect the treatment of interest on the Tax -Exempt Bonds as excludable from gross income for federal income tax purposes. (c) Federal Guarantee Prohibition. The City will not take any action or permit or suffer any action to be taken if the result of such action would be to cause the Tax - Exempt Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. (d) Rebate Requirement. The City will take any and all actions necessary to assure compliance with Section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Tax -Exempt Bonds. (e) No Arbitrage. The City will not take, or permit or suffer to be taken, any action with respect to the proceeds of the Tax -Exempt Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Tax -Exempt Bonds would have caused the Tax - Exempt Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Code. (f) Registration Covenant. The City will maintain a system for recording the ownership of the Tax -Exempt Bonds that complies with the provisions of Section 149 of the Code until the Tax -Exempt Bonds have been surrendered and canceled. (g) Record Retention. The City will retain its records of all accounting and monitoring it carries out with respect to the Tax -Exempt Bonds for at least three years after the Tax -Exempt Bonds mature or are redeemed (whichever is earlier); however, if the Tax -Exempt Bonds are redeemed and refunded, the City will retain its records of accounting and monitoring at least three years after the earlier of the maturity or redemption of the obligations that refunded the Tax -Exempt Bonds. (h) Compliance with Federal Tax Certificate. The City will comply with the provisions of any Federal Tax Certificate with respect to the Tax -Exempt Bonds. In the event of any conflict between this section and the Tax Certificate, the provisions of the Tax Certificate will prevail. (i) Bank Qualification. In the Federal Tax Certificate executed in connection with the issuance of each series of Tax -Exempt Bonds, the City may designate such Bonds as "qualified tax-exempt obligations" under Section 265(b)(3) of the Code for investment by financial institutions. The covenants of this Section 8 will survive payment in full or defeasance of the Tax - Exempt Bonds. CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 10 of 13 40 Section 9. Pledge of Funds and Credit; General Obligation. The City hereby authorizes the creation of a fund or account to be used for the payment of debt service on each series of Bonds (the "Debt Service Fund"). No later than the date each payment of principal of or interest on the Bonds becomes due, the City shall transmit sufficient funds, from the Debt Service Fund or from other legally available sources, to the Registered Owner for the payment of such principal or interest. Money in the Debt Service Fund may be invested in legal investments for City funds. The City hereby irrevocably covenants and agrees for as long as any Bonds are outstanding and unpaid that each year it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an amount that will be sufficient, together with other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bonds when due. The City hereby irrevocably pledges that the annual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the tax levy permitted to cities without a vote of the people, and that a sufficient portion of each annual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bonds will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the principal of and interest on the Bonds. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of said taxes and for the prompt payment of the principal of and interest on the Bonds when due. Section 10. Sale of the Bonds. The Council has determined it would be in the best interest of the City to delegate to the Designated Representative for a limited time the authority to approve the final terms of each series of Bonds subject to the provisions of this ordinance. The Designated Representative has solicited proposals from bond purchasers and is hereby authorized to select a Purchaser for each series of Bonds that submits the proposal for such series that is in the best interest of the City. Each Bond issued under this ordinance shall be sold to the selected Purchaser pursuant to the terms of the Bond Purchase Contract for such Bond. Subject to the terms and conditions set forth in this Section 10, the Designated Representative is hereby authorized to approve the issuance, from time to time on a single date or on multiple dates to be determined to be in the best interest of the City, of one or more series of Bonds; to designate each series of Bonds as Tax -Exempt Bonds or Taxable Bonds; to select the Refunded Bonds from the Refunding Candidates; to select one or more Call Dates for the Refunded Bonds, to select one or more Purchasers; to approve the dated date, principal payment dates, interest payment dates, redemption/prepayment provisions, the Maturity Date, and the Interest Rate for each Bond; to agree to any additional terms and covenants that are in the best interest of the City and consistent with this ordinance; and to execute the sale of each Bond issued hereunder to the applicable Purchaser, provided that: (a) the aggregate principal (face) amount of all Bonds issued from time to time under this ordinance does not exceed $7,200,000, CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 11 of 13 41 (b) the Maturity Date for each series of Bonds issued under this ordinance is no later than December 1, 2034, (c) the aggregate purchase price for each series of Bonds shall not be less than 98% of the aggregate stated principal amount of such series of Bonds, excluding any original issue discount, (d) the true interest cost for all Tax -Exempt Bonds (in the aggregate) does not exceed 2.50%, (e) the true interest cost for all Taxable Bonds (in the aggregate) does not exceed 3.00%, and (f) any Refunding Bond is sold for a price that results in a minimum aggregate net present value debt service savings over the Refunded Bonds to be refunded by such Refunding Bonds of at least 0.50%. Subject to the terms and conditions set forth in this section, the Designated Representative is hereby authorized to execute the one or more Bond Purchase Contracts for the sale of the Bonds. Following the sale of a series of Bonds, the Designated Representative shall provide a report to Council describing the sale and final terms of such Bonds approved pursuant to the authority delegated in this section. The authority granted to the Designated Representative by this Section 10 shall expire on December 31, 2021. Upon passage and approval of this ordinance, the proper officials of the City including the Designated Representative, the Mayor, the City Administrator and the City Clerk are authorized and directed to undertake all action necessary for the prompt execution and delivery of the Bonds to the Purchaser thereof and further to execute all closing certificates, agreements, and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the Bond Purchase Contract. Section 11. Ongoing Disclosure; Covenants. The Bonds are exempt from ongoing disclosure requirements of the Rule. The City may agree in a Bond Purchase Contract to provide the Purchaser of a series of Bonds certain financial or other information and agree to such covenants as determined to be necessary by the Designated Representative. Section 12. Lost, Stolen or Destroyed Bonds. In case any Bond shall be lost, stolen or destroyed while in the Registered Owner's possession, the Bond Registrar may at the request of the Registered Owner execute and deliver a new Bond of like date, number and tenor to the Registered Owner thereof upon the Registered Owner's paying the expenses and charges of the City and the Bond Registrar in connection therewith and upon its filing with the City written certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof. In the case any Bond shall be lost, stolen, or destroyed while in the Registered Owner's possession, the Registered Owner may elect upon final payment of principal and interest of such Bond to surrender a photocopy of the Bond for cancellation at the office of the Bond Registrar CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 12 of 13 42 together with written certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof. Section 13. Severability; Ratification. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction 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 of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bonds. All acts taken pursuant to the authority granted in this ordinance but prior to its effective date are hereby ratified and confirmed. Section 14. Corrections by Clerk. Upon approval of the City Attorney and Bond Counsel, the City Clerk is hereby authorized to make necessary corrections to this ordinance, including but not limited to the correction of clerical errors; references to other local, state or federal laws, codes, rules, or regulations; ordinance numbering and section/subsection numbering; and other similar necessary corrections. Section 15. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a regular meeting thereof this day of , 2021. ATTEST/AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk Allan Ekberg, Mayor APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Ordinance Number: Pacifica Law Group LLP, Bond Counsel Attachment: Exhibit A — Form of Bond; Certificate of Authentication and Registration CC:\Legislative Development\LTGO-Refunding Bond 2020—PW facilities 4-20-21 VC:bjs Review and analysis by Barbara Saxton Page 13 of 13 43 Exhibit A Form of Bond [TRANSFER RESTRICTIONS] UNITED STATES OF AMERICA NO. R-1 $ STATE OF WASHINGTON CITY OF TUKWILA LIMITED TAX GENERAL OBLIGATION [AND] [REFUNDING] BOND, 2021 [(TAXABLE)] INTEREST RATE: MATURITY DATE: REGISTERED OWNER: PRINCIPAL AMOUNT: The City of Tukwila, Washington, a municipal corporation organized and existing under and by virtue of the laws of the State of Washington (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, on or before the Maturity Date identified above, the Principal Amount identified above and to pay interest thereon from the date of delivery, or the most recent date to which interest has been paid or duly provided for, at the Interest Rate set forth above (the "Interest Rate"). Interest on this bond shall accrue from its dated date until paid and shall be computed per annum on the principal amount outstanding on a 30/360 basis. Principal of and accrued interest on this bond shall be payable on the dates set forth in the payment scheduled attached hereto. Both principal of and interest on this bond shall be payable in lawful money of the United States of America. Principal and interest on this bond shall be payable by check or warrant or by other means mutually acceptable to the Registered Owner and the City. Upon final payment of principal and interest of this bond, the Registered Owner shall surrender this bond for cancellation at the office of the Bond Registrar in accordance with Ordinance No. of the City (the "Bond Ordinance"). This bond is issued pursuant to the Bond Ordinance to provide funds [to finance and/or reimburse the City for costs of acquiring, improving, developing and equipping certain capital improvements to the City's public works facilities] [to refund certain outstanding general obligations bonds of the City] and to pay costs of issuance. Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. [Prepayment provisions] This bond [has/has not] been designated by the City as a "qualified tax-exempt obligation" within the meaning of Section 265(b) of the Internal Revenue Code of 1986, as amended. A-1 44 The City has in the Bond Ordinance authorized the creation of a fund to be used for the payment of debt service on this bond, designated as the Debt Service Fund. The Debt Service Fund shall be drawn upon for the sole purpose of paying the principal of and interest on this bond. The City hereby irrevocably covenants and agrees with the owner of this bond that it will include in its annual budget and levy taxes annually, within and as a part of the tax levy permitted to the City without a vote of the electorate, upon all the property subject to taxation in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond as the same shall become due. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. Owners of this bond do not have a security interest in particular revenues or assets of the City. This bond is not a debt or indebtedness of the State of Washington, or any political subdivision thereof other than the City. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is issued pursuant to the Constitution and laws of the State of Washington, and duly adopted ordinances of the City. This bond is transferable upon compliance with the conditions set forth in the Bond Ordinance. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, to have happened, been done and performed precedent to and in the issuance of this bond exist, have happened, been done and performed and that the issuance of this bond does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Tukwila, Washington, has caused this bond to be executed by the manual or facsimile signature of the Mayor of the City of Tukwila and attested by the manual or facsimile signature of the City Clerk, as of this day of , 2021. [SEAL] ATTEST: Christy O'Flaherty, MMC, City Clerk A-2 CITY OF TUKWILA, WASHINGTON By Allan Ekberg, Mayor 45 CERTIFICATE OF AUTHENTICATION AND REGISTRATION This bond is the City of Tukwila, Limited Tax General Obligation and Refunding Bond, 2021 [(Taxable)] described in the within mentioned Bond Ordinance and is registered in the name of the Registered Owner on the books of the City, in the office of the City Finance Director (the "Bond Registrar"), as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this bond shall be made by the City to the Registered Owner from the Debt Service Fund.] Date of Registration 46 2021 Name and Address of Registered Owner A-3 Signature of Bond Registrar Finance Director City of Tukwila City Council Finance & Governance Committee Meeting Minutes Apr/126, 2021- 5:30 p. m. - Electronic Meeting due to COVID-19 Emergency CouncilmembersPresent: Zak Idan, Chair; Kathy Hougardy, Cynthia Delostrinos Johnson Staff Present: Rachel Bianchi, Vicky Carlsen, Joel Bush, Tony Cullerton, Laurel Humphrey, Jay Wittwer, Nora Gierloff, Aaron Williams, Eric Dreyer, Guests Present: Deanna Gregory, Duncan Brown, SteveAmano Chair Idan called the meeting to order at 5:30 p.m. I. BUSINESS AGENDA A. Grant Application: South 115th St. Property Acquisition Staff is seeking Committee approval to apply for $365,000 in King County Conservation Futures Trust Tax Levy (CFT) grant funding to purchase property at S. 115th Street adjacent to Duwamish Hill Preserve. Committee Recommendation Chair Idan recused himself from making a recommendation due to his employment with King County. Majority approval to apply for grant. B. Ordinance: Debt Issuance Staff is seeking Council approval of an ordinance to issue debt to fund the General Fund portion of the Public Works Shops Phase I Project, refunding outstanding 2011 Limited Tax Obligation Bonds, and refund outstanding 2014 Limited Tax Obligation Bonds Committee Recommendation Unanimous approval. Forward to May 10, 2021 Committee of the Whole. C. Service Restoration Prioritization Staff presented the requested updates to the service level memo along with a suggested phased approach. Items Requiring Follow-up • Move Economic Development Plan to Phase 1, including cost estimate • Add Streamlined Sales Tax Mitigation update • Add associated costs to departmental reductions listed in Appendix. • Add information from 2020 community budget survey to help inform Council on service restoration. Committee Recommendation Forward to May 10, 2021 Committee of the Whole. 47