HomeMy WebLinkAboutResolution 052-2009 Resolution No. 52-09
A Resolution Giving Approval to the Acquisition, Construction and
Financing of the City SDSU Innovation Campus Sanitary Sewer and Storm
Project, Giving Approval to the Issuance of a Borrower Bond to Finance a
Portion of the Costs of Such Project and Authorizing
the Sale of Said Bond.
NOW, THEREFORE, BE IT RESOLVED AND ORDAINED by the City Council of the City
of Brookings as follows:
1. Recitals. The City of Brookings (the "City") desires to make a capital improvement to
and finance its SDSU Innovation Campus Sanitary Sewer and Storm Sewer Project, as
described in Exhibit A hereto (the "Project"), details on the project are on file with the
City Manager and open to public inspection.
2. Authority. The City is authorized to issue a Borrower Bond to finance the capital
improvements pursuant to Section 10-52-2.10 of the South Dakota Codified Laws.
Pursuant to Chapter 10-52 of the South Dakota Codified Laws (the "Act") the City
proposes to issue a municipal non ad valorem borrower bond (as herein authorized, the
Bond, or the "Borrower Bond") to finance the Project. The City is authorized by the
Sales Tax Act to levy a "non ad valorem tax" (as defined by the Act) on the sale, use,
storage, and consumption of items taxed under Chapters 10-45 and 10-46 of the South
Dakota Laws, subject to certain, as amended, exceptions.
3. Sales Tax Ordinance. The City Council has adopted Section 78-32 of the Brookings
Code of Ordinances which constitutes the City's effective Sales Tax Ordinance (the
"Sales Tax Ordinance"). The Sales Tax Ordinance has been duly adopted pursuant to the
Act and effectively and validly imposes the sales and use tax Act within the City, such tax
being hereinafter referred to as the "Sales Tax".
4. Cost of the Project. The cost of the Project is approximately $3,884,000. The City
proposes to finance approximately $1,190,000 of the Project through the issuance of the
Borrower Bond (the "Bond"). The Bond shall be payable out of collections of the one
percent (1%) after the first one percent of the Sales Tax as is necessary to pay principal,
administrative expense surcharge and interest on the Bond(the"Pledged Tax").
5. Findings. The City Council hereby finds and determines as follows:
5.1. The Project constitutes capital improvements which qualify for the financing
under and pursuant to SDCL Chapter 10-52, and the Sales Tax Ordinance; and
5.2. The Borrower Bond authorized hereby is being issued to pay costs of the Project
which have not been incurred or paid as of the date hereof and/or which the City
has heretofore declared its intention to finance with bond proceeds and for which
the City has no other available means or source of financing.
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5.3. It is in the best interests of the City to authorize the borrowing of funds to pay a
portion of the costs of the Project by authorizing and issuing its Borrower Bond,
consistent with the terms approved hereby for an aggregate sum not in excess of
the amount of$1,190,000.
6. Sale of Bond. It is hereby determined to be necessary and in the best interests of the City
and its inhabitants that this City Council authorize, issue and sell the Bond in order to
finance a portion of the cost of the Project. The Mayor and City Manager are authorized
to take such action as is necessary to close the loan with the South Dakota Conservancy
District (the "District") upon such terms and conditions as the District may require. The
Mayor and City Manager are authorized to execute the Borrower Bond and Loan
Agreement approved by the District.
7. No Election Required. The Bond may be issued by the City without an election pursuant
to SDCL §10-52-2.10.
8. Approval of the Loan, the Form of Borrower Bond and Loan Agreement. The City does
hereby approve the Loan from the District, the form of the Borrower Bond and Loan
Agreement. The Form of the Borrower Bond and Loan Agreement which are subject to
modification are on file with the City Manager and open to public inspection. The Mayor
and City Manager are authorized to execute a Borrower Bond and Loan Agreement in a
form approved by the District.
9. Terms of Bond.
9.1. Date, Amount, Maturities and Interest Rates.The City Council hereby authorizes
the issuance of the Bond. The Bond shall be dated in 2009. The principal amount
of the Bond shall not exceed any statutory or constitutional debt limitation. The
Bond shall have maturities and interest rates as negotiated by the Mayor and City
Manager.
9.2. Registration. The City hereby appoints The First National Bank in Sioux Falls as
registrar and transfer agent (the "Registrar") for the Bond. The effect of
registration and the rights and duties of the City and the Registrar with respect
thereto shall be as follows:
9.2.1. Register. The Registrar shall keep at its office a register(the "Register") in
which the Registrar shall provide for the registration of ownership of the
Bond and the registration of transfers and exchanges of the Bond entitled
to be registered,transferred or exchanged.
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9.2.2. Transfer of Bond. When the Bond is surrendered for transfer it shall be
duly endorsed by the registered owner thereof or accompanied by a written
instrument of transfer in form satisfactory to the Registrar; duly executed
by the registered owner thereof or by an attorney duly authorized by the
registered owner thereof. If the Bond is properly surrendered as provided
above, the Registrar shall authenticate and deliver, in the name of the
designated transferee, a new Bond of a like aggregate principal amount
and maturity. The Registrar may, however, close the books for registration
of any transfer after the fifteenth day of the month preceding each interest
payment date and until such interest payment date.
9.2.3. Exchange of Bond. Whenever the Bond is surrendered by the registered
owner for exchange the Registrar shall authenticate and deliver the new
Bond of a like aggregate principal amount and maturity, as required by the
registered owner or the owner's attorney in writing.
9.2.4. Cancellation. The Bond surrendered upon any transfer or exchange shall
be promptly canceled by the Registrar and thereafter disposed of as
directed by the City.
9.2.5. Improper or Unauthorized Transfer. When the Bond is presented the
Registrar may refuse to transfer the same until satisfied that the
endorsement on such Bond or separate instrument of transfer is valid and
genuine and that the requested transfer is legally authorized. The Registrar
shall incur no liability for the refusal, in good faith, to make transfer
which, in their judgment, are deemed improper or unauthorized.
9.2.6. Persons Deemed Owners. The City, Paying Agent and Registrar may treat
the person whose name any Bond is at any time registered in the Register
as the absolute owner of such Bond, whether such Bond shall be overdue
or not, for the purpose of receiving payment of or on account of, the
principal of and interest on such Bond and for all other purposes, and all
such payments so made to any such registered owner or upon the owner's
order shall be valid and effectual to satisfy and discharge the liability upon
such Bond to the extent of the sum or sums so paid.
9.2.7. Taxes, Fees and Charges. For every transfer or exchange of Bond, the
Registrar may impose a charge upon the owner thereof sufficient to
reimburse the Registrar for any tax, fee or other governmental charge
required to be paid with respect to such transfer or exchange.
9.2.8. Mutilated, Lost, Stolen or Destroyed Bond. In case the Bond shall
become mutilated or be destroyed, stolen or lost,the Registrar shall deliver
a new Bond of like amount, number, maturity date and tenor in exchange
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and substitution for and upon cancellation of any such mutilated Bond or
in lieu of and in substitution for any such Bond destroyed, stolen or lost,
upon the payment of the reasonable expenses and charges of the Registrar
in connection therewith; and, in the case of a Bond destroyed, stolen or
lost, upon filing with the Registrar of evidence satisfactory that such Bond
was destroyed, stolen or lost, and of the ownership thereof, and upon
furnishing to the Registrar of an appropriate bond or indemnity in form,
substance and amount satisfactory to the Registrar, in which the City and
the Registrar shall be named as obligees. The Bond so surrendered to the
Registrar shall be canceled by him and evidence of such cancellation shall
be given to the City. If the mutilated, destroyed, stolen or lost certificate
has already matured or has been called for redemption in accordance with
its terms it shall not be necessary to issue a new Bond prior to payment.
9.3. Preparation and Delivery. The Bond shall be prepared under the direction of the
City Manager and shall be executed on behalf of the City by the facsimile or
manual signatures of the Mayor and the City Manager and countersigned by the
facsimile or manual signature of an attorney actually residing in the State of South
Dakota and duly licensed to practice therein.
9.4. Security Provisions; Funds and Accounts and Other Covenants and
Determinations.
9.4.1. Drinking Water Borrower Bond Fund 2009. The Finance Officer is hereby
authorized and directed to establish and shall maintain the Drinking Water
Borrower Bond Fund 2009 as a separate and special fund in the financial
records of the City until the Bond issued and made payable therefrom, and
interest due thereon, have been duly paid or discharged. All collections of
the Pledged Tax, as hereinafter defined, shall be credited, as received, to
the Drinking Water Borrower Bond Fund 2009. Within the Drinking
Water Borrower Bond Fund 2009 are various separate accounts to be
maintained by the City.
9.4.2. Pledged Tax. Pursuant to the Act and the Sales Tax Ordinance, the City
has levied the Sales Tax on the sale, use, storage and consumption of items
taxes under Section 10-45 and 10-46 of South Dakota Codified Laws,
subject to certain exceptions. The proceeds of the Pledged Tax are
irrevocably pledged and appropriated and amounts sufficient to pay the
principal of and interest on the Outstanding Bond as the same become due
shall be deposited to the Drinking Water Borrower Bond Fund 2009. For
purposes of this Resolution, "Outstanding Bond" shall mean the Bond and
any parity lien Bond hereafter issued pursuant to this Resolution. The
Pledged Tax and the Drinking Water Borrower Bond Fund 2009 shall be
used and applied only in the manner and order hereinafter set forth.
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9.4.3. Construction Account. There is hereby created and established as an
account of the Drinking Water Borrower Bond Fund 2009, a"Construction
Account". There shall be credited to the Construction Account the
proceeds from the sale of the Bond remaining after payment of the
expenses of issuing the Bond. All moneys credited to the Construction
Account shall be applied solely to the payment of the costs of the Project.
For the purposes of this Resolution, "costs of the Project" shall include
costs of acquiring, construction, and installing the Project including cost of
labor, services, materials and supplies, financial, architectural,
engineering, legal, accounting and other professional expenses relating to
the Project, the costs of acquisition or properties, rights, easements, or
other interest in properties, insurance premiums, and the costs of
publishing, posting or mailing notices in connection with the Project. All
sums derived from the investment of moneys in the Construction Account
shall remain in and become part of such account. Upon completion of the
Project and when all costs of the Project have been paid, any balance
remaining in the Construction Account shall be credited to the Principal
and Interest Account hereinafter established.
9.4.4. Principal and Interest Account. There is hereby created and established as
an account of the Drinking Water Borrower Bond Fund 2009, a "Principal
and Interest Account." Immediately upon delivery of the Bond, there shall
be credited to the Principal and Interest Account the amount of any
accrued interest received from the Purchaser. Commencing on the first
day of the month following the month in which the Bond is delivered to
the Purchaser,there shall be withdrawn from the Drinking Water Borrower
Bond Fund 2009, at least monthly and credited to the Principal and Interest
Account an amount which will equal at least one-third (1/3) of the
principal, interest and administrative surcharge becoming due on the next
succeeding interest payment date with respect to the Outstanding Bond
issued. In all events there shall be credited to the Principal and Interest
Account amounts sufficient to pay the principal of and interest on the
Outstanding Bond as the same become due.
9.4.5. Subordinate Lien Bond. After making the above-required payments, any
remaining Pledged Tax shall be used for the payment of the principal of
and interest on any additional sales tax revenue bonds having a lien which
is on a parity to or subordinate to the lien of the Outstanding Bond, and for
a reserve fund as additional security for the payment of such subordinate
lien Bond.
9.4.6. Inter-fund Transfer. So long as the revenues from the Pledged Tax are
sufficient to make all required deposits to the Principal and Interest
Account, the City may deposit the excess revenues from the Pledged Tax
to the general fund or any other City fund as determined by the City and as
permitted by law.
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9.4.7. Deposit and Investment of Funds. The Finance Officer shall cause all
moneys pertaining to the Fund to be deposited as received with one or
more banks which are duly qualified public depositories under the
provisions of Chapter 4-6A, South Dakota Codified Laws, in a deposit
account or accounts, which shall be maintained separate and apart from all
other accounts of the City, so long as the Bond and the interest thereon
shall remain unpaid. Any of such moneys not necessary for immediate use
may be deposited with such depository banks in savings or time deposits.
No moneys shall at any time be withdrawn from such deposit accounts
except for the purposes of the Fund as authorized in this Resolution;
except that moneys from time to time on hand in the Fund may at any
time, in the discretion of this Council , be invested in securities permitted
by the provisions of Section 4-5-6, South Dakota Codified Laws, maturing
and bearing interest at the times and in the amounts estimated to be
required to provide cash when needed for the purposes of the respective
accounts. Income received from the deposit or investment of moneys shall
be credited to the account from whose moneys the deposit was made or the
investment was purchased, and handled and accounted for in the same
manner as other moneys in that account.
9.5. Additional Debt. The Borrower shall not incur any Debt which has a lien on or
right to payment from the Pledged Tax which is superior to that of this Loan
Agreement and the Borrower Bond. The Borrower may incur Debt which is on a
parity with this Loan Agreement and the Borrower Bond under the following
conditions:
9.5.1. Debt secured by Pledged Tax may be incurred to pay or prepay or defease
other Debt secured by Pledged Tax if the maximum annual Debt Service
of the new Debt is no greater than that of the Debt being paid, prepaid or
defeased.
9.5.2. Debt secured by Pledged Tax may be incurred for any purpose so long as
prior to the issuance of such Debt the Borrower has delivered to the
Trustee and the District a certificate prepared by a Consultant showing that
the Pledged Tax collected for any 12 consecutive months out of the 15
consecutive months immediately preceding the issuance of the proposed
Debt was at least equal to 110% of maximum annual Debt Service for all
Debt secured by Pledged Tax which will be outstanding immediately after
the issuance of the proposed Debt.
9.5.3. The Borrower may not, without the written consent of the District, incur
any (i) variable rate Debt secured by Pledged Tax or (ii) Debt secured by
Pledged Tax the payments of principal of and interest on which in any
fiscal year are 150% or more of the payments of principal and interest for
any other fiscal year.
9.5.4. Nothing herein shall prevent the City from issuing Bonds payable from the
Pledged Tax and the Drinking Water Borrower Bond Fund 2009 or having
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a lien thereon which is junior and subordinate to the lien of the Bonds
authorized herein.
9.6. Covenants of the City. The City hereby irrevocably covenants and agrees with
each and every holder of the Bonds that so long as any of the Bonds remain
outstanding:
9.6.1. It will not amend or repeal the Sales Tax Ordinance relating to the Sales
Tax by decreasing the Sales Tax rate or the allocation of revenues thereof
to the Drinking Water Borrower Bond Fund 2009, or in any way that
would adversely affect the amount of Sales Tax revenues which would
otherwise be collected and deposited to the Drinking Water Borrower
Bond Fund 2009. However, nothing shall prevent the City from amending
the Sales Tax Ordinance in order to make certain changes in the
administration, collection or enforcement of the Sales Tax, provided that
such changes would not materially adversely affect the owners of the
Bonds.
9.6.2. It will administer, enforce, and collect, or cause to be administered,
enforced or collected, the Sales Tax authorized by the Sales Tax
Ordinance and shall take such necessary action to collect delinquent
payments in accordance with law.
9.6.3. It will keep or cause to be kept such books and records showing the
proceeds of the Sales Tax, in which complete entries shall be made in
accordance with standard principles of accounting, and any owner of any
Bond shall have the right at all reasonable times to inspect the records and
accounts relating to the collection and receipts of such Sales Tax.
9.6.4. In the event the Sales Tax of the City is replaced and superseded by the
state collected-locally shared sales tax or taxes, or is replaced and
superseded in some other manner form other source or sources, the
revenues derived by the City from the replacement source or sources, as
received by the City shall be appropriated in the same manner as if the
City had levied and imposed a sales tax. From and after the date of a
replacement, the Outstanding Bonds shall have a first and prior lien, but
not necessarily an exclusive lien, upon such replacement revenues to the
extent therein specified.
9.7. Defeasance. When the Bond issued has been discharged as provided in this
section, all pledges, covenants, and other rights granted by this resolution to the
registered owners of the Bond shall cease. The City may discharge its obligations
with respect to any Bond which is due on any date by providing to the Paying
Agent on or before that date a sum sufficient for the payment thereof in full; or, if
the any Bond should not be paid when due, it may nevertheless be discharged by
providing to the Paying Agent a sum sufficient for the payment thereof in full with
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interest accrued to the date of such deposit. The City may also discharge its
liability with reference to all Bonds which are called for redemption on any date in
accordance with their terms by depositing funds with the Paying Agent on or
before that date in accordance with their terms by depositing funds with the
Paying Agent on or before that date, in an amount equal to the principal, interest,
and premium, if any, which are then due thereon, provided that notice of such
redemption has been duly given. The City may also at any time discharge this
issue of Bonds in its entirety, subject to the provisions of law now or hereafter
authorizing and regulating such action, by depositing irrevocably in escrow,with a
bank qualified by law as an escrow agent for this purpose, cash or United States
government obligations which are authorized by law to be so deposited, bearing
interest payable at such times and at such rates and maturing on such dates as shall
be required to provide funds (without an reinvestment) sufficient to pay all
principal, interest and premiums, if any, to become due on all Bonds on and
before maturity, or, if a Bond has been duly called for redemption, on or before
the designated redemption date.
9.8. Tax Matters; Certification of Proceedings and Miscellaneous.
9.8.1. Tax Matters. The City covenants and agrees with the registered owners
from time to time of the Bonds that it will not take or permit to be taken by
any of its officers, employees or agents any action which would cause the
interest on the Bond to become subject to taxation under the Internal
Revenue Code of 1986, as amended (the "Code"), and applicable Treasury
Regulations (the "Regulations"), and covenants to take any and all actions
within its powers to ensure that the interest on the Bond will not become
subject to taxation under the Code and the Regulations. The City will
cause to be filed with the Secretary of Treasury an information reporting
statement in the form and at the time prescribed by the Code.
9.8.2. The Mayor and City Manager, being the officers of the City charged with
the responsibility for issuing the Bond pursuant to this resolution, are
authorized and directed to execute and deliver to the purchaser thereof a
certificate in accordance with the provisions of Section 148 of the Code
and Sections 1.103-13, 1.103-14 and 1.103-15 of the Regulations, stating
the facts estimates and circumstances in existence on the date of issue and
delivery of the Bond which make it reasonable to expect that the proceeds
of the Bond will not be used in a manner that would cause the Bond to be
arbitrage bonds within the meaning of the Code and Regulations.
9.8.3. The City recognizes its obligation to comply with the provisions of
Section 148(f) of the Code relating to the rebate of certain amounts to the
United States, and covenants that it will take or refrain from any actions,
the result of which would be to cause the interest on the Bond to become
subject to federal income taxation as a result of the failure to comply with
Section 148(f) of the Code and applicable Treasury Regulations. The City
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will take all actions necessary to comply with the rebate requirement,
including making or causing to be made the computations of rebate or
penalty amounts. The City will make any payments of rebate or penalty
amounts, and will pay the costs of computing any such rebate or penalty
amounts.
9.8.4. It is hereby determined that the Bond is not and will not be "private
activity bonds" as defined in Section 141(a) of the Code, and in support of
such conclusion the City Council covenants, represents, and certifies as
follows:
9.8.4.1.none of the proceeds of the Bond will be used, directly or
indirectly, or will be used to replace funds which were used, in any
trade or business carried on by any person other than a state or
local governmental unit;
9.8.4.2.no direct or indirect payments of the principal of or interest on the
Bond will be derived from payments (whether or not to the City),
in respect of property, or borrowed money, used or to be used for a
private business use by any person other than a state or local
governmental unit;
9.8.4.3.none of the proceeds of the Bond are to be used directly or
indirectly, to make or finance loans to persons other than a state or
local governmental unit; and
9.8.4.4.no user of any facilities or improvements financed with the
proceeds of the Bond will use the same on any basis other than the
same basis as the general public; and no person other than the City
will be a user of said, facilities as a result of (i) ownership; (ii)
actual or beneficial use pursuant to a lease or a management or
incentive payment contract; or(iii) any other arrangement.
9.8.5. The City reasonably anticipates that the amount of tax exempt obligations
which will be issued by the City and all entities subordinate to, or treated
as one issuer with, the City during calendar year 2009 will not exceed
$30,000,000. The Bond is hereby designated as "qualified tax-exempt
obligations" within the meaning of Section 265(b)(3) of the Code. The
City does not reasonably expect that it or any subordinate entity will issue,
and will not request any other governmental entity to issue on its behalf, in
calendar year 2009, more than $30,000,000 of obligations which it or any
such entity could designate as "qualified tax-exempt obligations".
9.8.6. If the City agrees to comply with all provisions of the Code, which if not
complied with by the City, would cause the interest on the Bond not to be
tax-exempt in the hands of a holder who is a natural person, including, if
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determined to be necessary upon advice of bond counsel, the payment of
any rebate amount necessity to preserve such tax exemption pursuant to
Section 148 of the Code. The City further agrees: (1) through its officers,
to make such further specific covenants, representations as shall be
truthful, and assurances as may be necessary or advisable; (2) to consult
with bond counsel and to comply with such advice as may be given; (3)to
file such forms, statements, and supporting documents as may be required
and to do so in a timely manner; and (4) if deemed necessary or advisable
by its officers, to employ and pay fiscal agents, financial advisors,
attorneys, and other persons to assist the City in such compliance.
10. Principal Forgiveness. The City shall request to have up to 10% of the total principal
amount of the Loan forgiven by the District. The City officials are directed to cause the
compliance with the following deadlines:
10.1. Submit complete plans and specifications for the Project to the Department on or
before October 1,2009;
10.2. Advertise for bids and open bids for the project in accordance with SDCL Chapter
5-18 on or before December 10,2009;
10.3. Submit the bid of the apparent lowest bidder to the Department for review on or
before December 21,2009; and
10.4. Award construction contracts on or before January 15, 2010.
11. Certification of Proceedings. The officers of the City are authorized and directed to
prepare and furnish to the purchaser of the Bond certified copies of all proceedings and
records of the City relating to the authorization and issuance of the Bond and such other
affidavits and certificates as may reasonably be required to show the facts relating to the
legality and marketability of the Bond as such facts appear from the officer's books and
records or are otherwise known to them. All such certified copies, certificates and
affidavits, including any heretofore furnished, shall constitute representations of the City
as to the correctness of the facts recited therein and the action stated therein to have been
taken.
Passed and approved this 26th day of May 2009.
CITY OF BROOKINGS
oa�,.'A • T: Tim Reed, Mayor
A9: 'NCO O'1,
: J."9. vtz
so, lati,o,)
);;rl� Thornes City Clerk
Published: May 29, 2009
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EXHIBIT A
DESCRIPTION OF THE PROJECT
City of Brookings Phase II—SDSU Innovation Campus Sanitary Sewer and Storm Sewer Project as
outlined in the facilities plan dated December 2008.
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