Sponsor
Alderman Spangenberg
Title
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF $7,000,000 Note Anticipation Notes
WHEREAS, the City of Racine, Racine County, Wisconsin (the "City") is presently in need of $7,000,000 for the public purpose of financing capital improvement projects and acquisitions set forth in the City’s 2006 Capital Improvement Plan (the "Project"); and
WHEREAS, the Common Council hereby finds and determines that the Project is within the City's power to undertake and therefore serves a "public purpose" as that term is defined in Section 67.04(1)(b) of the Wisconsin Statutes; and
WHEREAS, cities are authorized by the provisions of Chapter 67 of the Wisconsin Statutes to borrow money and issue general obligation promissory notes for such public purpose; and
WHEREAS, the City intends to issue general obligation promissory notes (the "Securities") to provide permanent financing for the Project; and
WHEREAS, the Securities have not yet been issued or sold; and
WHEREAS, it is the finding of the Common Council that it is necessary, desirable and in the best interest of the City to provide for the issuance and sale of note anticipation notes pursuant to Section 67.12(1)(b), Wisconsin Statutes, in anticipation of receiving the proceeds from the issuance and sale of the Securities to provide interim financing to pay the cost of the Project and to sell such notes to Robert W. Baird & Co. Incorporated, Milwaukee, Wisconsin, pursuant to the terms and conditions of its note purchase proposal.
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City that:
Section 1. General Obligation Promissory Notes. The City hereby declares its intention and covenants to issue general obligation promissory notes pursuant to the provisions of Chapter 67 of the Wisconsin Statutes, in an amount sufficient to retire any outstanding note anticipation notes issued for the purpose of paying the cost of the Project (hereinafter, such notes shall be referred to as the "Securities").
Section 2. Authorization of the Notes. For the purpose of paying the cost of the Project, there shall be borrowed pursuant to Section 67.12(1)(b) of the Wisconsin Statutes, the principal sum of SEVEN MILLION DOLLARS ($7,000,000) from Robert W. Baird & Co. Incorporated, Milwaukee, Wisconsin (the "Purchaser") in accordance with the terms and conditions of its note purchase proposal (the "Proposal") attached hereto as Exhibit A and incorporated herein by this reference.
Section 3. Sale of the Notes. To evidence such indebtedness, the Mayor and City Clerk are hereby authorized, empowered and directed to make, execute, issue and sell to the Purchaser for, on behalf of and in the name of the City, note anticipation notes aggregating the principal amount of SEVEN MILLION DOLLARS ($7,000,000) (the "Notes") for the sum set forth on the Proposal, plus accrued interest to the date of delivery.
Section 4. Terms of the Notes. The Notes shall be designated "Note Anticipation Notes"; shall be dated June 26, 2006; shall be in the denomination of $5,000 or any integral multiple thereof; shall be numbered 1 and upward; shall bear interest at the rate and shall mature on the date and in the principal amount as set forth on the schedule prepared by the Purchaser and attached hereto as Exhibit B (the "Schedule"). Interest is payable at maturity.
Section 5. Redemption Provisions. At the option of the City, the Notes shall be subject to redemption prior to maturity on October 10, 2006 or on any date thereafter. Said Notes shall be redeemable as a whole or in part by lot, at the principal amount thereof, plus accrued interest to the date of redemption.
Section 6. Form of the Notes. The Notes shall be issued in registered form and shall be executed and delivered in substantially the form attached hereto as Exhibit C and incorporated herein by this reference.
Section 7. Security. The Notes shall in no event be a general obligation of the City and do not constitute an indebtedness of the City nor a charge against its general credit or taxing power. No lien is created upon the Project or other property of the City as a result of the issuance of the Notes. The Notes shall be payable from (a) any proceeds of the Notes set aside for payment of interest on the Notes as it becomes due, and (b) proceeds to be derived from the issuance and sale of the Securities, which proceeds are hereby declared to constitute a Special Trust Fund, hereby created and established, to be held by the City Clerk and expended solely for the payment of the principal of and interest on the Notes. The City hereby agrees that, in the event such monies are not sufficient to pay the principal of and interest on the Notes when due, if necessary, the City will pay such deficiency out of its tax levy or other available funds of the City; provided, however, that such payment shall be subject to annual budgetary appropriations therefor; and provided further, that neither this Resolution nor any such payment shall be construed as constituting an obligation of the City to make any such appropriation or any further payment.
Section 8. Covenants of the City. The City hereby covenants with the holders of the Notes as follows:
(a) It shall issue and sell the Securities as soon as practicable. The issuance of such Securities is hereby authorized and there shall be levied on all the taxable property in the City a direct, annual, irrepealable tax sufficient to pay the interest on said Securities as it becomes due, and also to pay and discharge the principal thereof within ten years of the date of issuance of the Securities.
(b) It shall segregate the proceeds derived from the sale of the Securities into a Special Trust Fund created above and constituted as a special trust fund and shall permit such Special Trust Fund to be used for no purpose other than the payment of principal of and interest on the Notes until paid.
(c) It shall maintain a debt limit capacity such that the combined outstanding principal amount of general obligation bonds or notes or certificates of indebtedness of the City and the $7,000,000 authorized for the issuance of the Securities shall at no time exceed the constitutional debt limit of the City.
Section 9. Segregated Debt Service Fund Account. There is hereby established in the City treasury a fund account separate and distinct from all other funds or accounts of the City designated "Debt Service Fund Account for $7,000,000 City of Racine Note Anticipation Notes, dated June 26, 2006", which fund account shall be used solely for the purpose of paying the principal of and interest on the Notes. There shall be deposited in said fund account (i) all accrued interest paid on the Notes at the time the Notes are delivered to the Purchaser; (ii) any proceeds of the Notes representing capitalized interest on the Notes and deposited in the Borrowed Money Fund (hereinafter created), as needed to pay the interest on the Notes when due; (iii) proceeds of the Securities (or other obligations of the City issued to pay principal of or interest on the Notes) to the extent necessary to pay principal of or interest on the Notes; (iv) such other sums, including tax monies, as may be necessary at any time to pay principal of and interest on the Notes when due and which are appropriated by the Common Council for that purpose; and (v) surplus monies in the Borrowed Money Fund as specified in Section 10 hereof. Said Fund shall be used for the sole purpose of paying the principal of and interest on the Notes and shall be maintained for such purpose until such indebtedness is fully paid or otherwise extinguished, and shall at all times be invested in a manner that conforms with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and any applicable income tax regulations (the "Regulations").
Section 10. Segregated Borrowed Money Fund; Reimbursement. The proceeds of the Notes (the "Note Proceeds"), other than any premium and accrued interest which must be paid at the time of delivery of the Notes into the Debt Service Fund Account created above, shall be deposited into an account separate and distinct from all other funds and accounts and disbursed solely for the purposes for which borrowed or for the payment of the principal of and interest on the Notes. Said proceeds may be temporarily invested in legal investments in the manner set forth below.
The City declares its reasonable expectation to reimburse itself from the Note Proceeds for expenditures relating to the Project which it pays from other funds of the City prior to receipt of the Note Proceeds no more than 60 days prior to the date this Resolution is adopted. The City may also reimburse itself for preliminary expenditures relating to the Project (such as architectural, engineering, surveying, soil testing, costs of issuance and similar costs but not including land acquisition, site preparation and similar costs incident to the commencement of construction) which are in an amount which is less than 20% of the issue price of the Notes. This declaration and the Resolution of which it is a part, shall be publicly available in the official books, records or proceedings of the Common Council.
Section 11. Arbitrage Covenant. The City shall not take any action with respect to the Note Proceeds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken on the date of the delivery of and payment for the Notes (the "Closing"), would cause the Notes to be "arbitrage bonds" within the meaning of Section 148 of the Code and the Regulations.
The Note Proceeds may be temporarily invested in legal investments until needed, provided however, that the City hereby covenants and agrees that so long as the Notes remain outstanding, monies on deposit in any fund or account created or maintained in connection with the Notes, whether such monies were derived from the Note Proceeds or from any other source, will not be used or invested in a manner which would cause the Notes to be "arbitrage bonds" within the meaning of the Code or Regulations. The City covenants that it will not invest in any obligation if such investment would violate the "prohibited payment" requirement of Section 148 of the Code.
The City Clerk, or other officer of the City charged with the responsibility for issuing the Notes, shall provide an appropriate certificate of the City, for inclusion in the transcript of proceedings, setting forth the reasonable expectations of the City regarding the amount and use of the Note Proceeds and the facts and estimates on which such expectations are based, all as of the Closing.
Section 12. Additional Tax Covenants; Two Year Expenditure Exemption from Rebate. The City hereby further covenants and agrees that it will take all necessary steps and perform all obligations required by the Code and Regulations (whether prior to or subsequent to the issuance of the Notes) to assure that the Notes are obligations described in Section 103(a) of the Code, the interest on which is excludable from gross income for federal income tax purposes, throughout their term. The City further covenants that it will not take any action, omit to take any action or permit the taking or omission of any action within its control (including, without limitation, making or permitting any use of the proceeds of the Notes) if taking, permitting or omitting to take such action would cause any of the Notes to be an arbitrage bond or a private activity bond within the meaning of the Code or would otherwise cause interest on the Notes to be included in the gross income of the recipients thereof for federal income tax purposes. The City Clerk or other officer of the City charged with the responsibility of issuing the Notes, shall provide an appropriate certificate of the City as of the Closing, for inclusion in the transcript of proceedings, certifying that it can and covenanting that it will comply with the provisions of the Code and Regulations.
Further, it is the intent of the City to take all reasonable and lawful actions to comply with any new tax laws enacted so that the Notes will continue to be obligations described in Section 103(a) of the Code, the interest on which is excludable from gross income for federal income tax purposes throughout their term.
The City covenants that it is a governmental unit with general taxing powers and that the Notes are not "private activity bonds" as defined in Section 141 of the Code.
In accordance with Section 148(f)(4)(C) of the Code, the City covenants that at least 75% of the available construction proceeds of the Notes shall be used for construction expenditures with respect to property owned by the City as provided in Section 148(f)(4)(C)(iv) of the Code. If at least 10% of the available construction proceeds of the Notes (including investment earnings thereon) are expended for the governmental purposes of the issue within six months of the Closing; at least 45% are expended for such purposes within one year; at least 75% are expended for such purposes within eighteen months; and 100% are expended for such purposes within two years, the Notes will qualify for the two year expenditure exception from the rebate requirements of the Code. If for any reason the Notes did not qualify for the two year expenditure exemption from the rebate requirements of the Code, the City covenants that it would take all necessary steps to comply with such requirements.
Section 13. Execution of the Notes. The Notes shall be prepared in typewritten or printed form, executed on behalf of the City by the manual or facsimile signatures of the Mayor and City Clerk, authenticated, if required, by its fiscal agent, if any, sealed with its official or corporate seal, if any, or a facsimile thereof and delivered to the Purchaser upon payment to the City of the purchase price thereof, plus accrued interest to the date of delivery. In the event that either of the officers whose signatures appear on the Notes shall cease to be such officers before the delivery of the Notes, such signatures shall, nevertheless, be valid and sufficient for all purposes to the same extent as if they had remained in office until such delivery. The aforesaid officers are hereby authorized to do all acts and execute all documents as may be necessary and convenient to effectuate the Closing.
Section 14. Payment of the Notes. The principal of and interest on the Notes shall be paid in lawful money of the United States of America by the City Clerk or City Finance Director/Treasurer.
Section 15. Persons Treated as Owners; Transfer of Notes; Record Date. The City shall keep books for the registration and for the transfer of the Notes. The persons in whose name any Note shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes and payment of either principal or interest on any Note shall be made only to the registered owner thereof. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Note to the extent of the sum or sums so paid.
Any Note may be transferred by the registered owner thereof by surrender of the Note at the office of the City Clerk, duly endorsed for the transfer or accompanied by an assignment duly executed by the registered owner or his attorney duly authorized in writing. Upon such transfer, the Mayor and City Clerk shall execute and deliver in the name of the transferee or transferees a new Note or Notes of a like aggregate principal amount, series and maturity and the City Clerk shall record the name of each transferee in the registration book. No registration shall be made to bearer. The City Clerk shall cancel any Note surrendered for transfer.
The City shall cooperate in any such transfer, and the Mayor and City Clerk are authorized to execute any new Note or Notes necessary to effect any such transfer.
The fifteenth calendar day next preceding each interest payment date shall be the record date for the Notes. Payment of interest on the Notes on any interest payment date shall be made to the registered owners of the Notes as they appear on the registration book of the City at the close of business on the corresponding record date.
Section 16. Utilization of The Depository Trust Company Book-Entry-Only System. In order to make the Notes eligible for the services provided by The Depository Trust Company, New York, New York ("DTC"), the City agrees to the applicable provisions set forth in the Blanket Issuer Letter of Representations previously executed on behalf of the City and on file in the City Clerk's office.
Section 17. Undertaking to Provide Continuing Disclosure. The City hereby covenants and agrees, for the benefit of the holders of the Notes, to enter into a written undertaking (the "Undertaking") required by SEC Rule 15c2-12 promulgated by the Securities and Exchange Commission pursuant to the Securities and Exchange Act of 1934 (the "Rule") to provide timely notices of the occurrence of certain events in accordance with the Rule. The Undertaking shall be enforceable by the holders of the Notes or by the Purchaser on behalf of such holders (provided that the rights of the holders and the Purchaser to enforce the Undertaking shall be limited to a right to obtain specific performance of the obligations thereunder and any failure by the City to comply with the provisions of the Undertaking shall not be an event of default with respect to the Notes).
The City Clerk, or other officer of the City charged with the responsibility for issuing the Notes, shall provide a Continuing Disclosure Certificate for inclusion in the transcript of proceedings, setting forth the details and terms of the City's Undertaking.
Section 18. Conflicting Resolutions; Severability; Effective Date. All prior resolutions, rules or other actions of the Common Council or any parts thereof in conflict with the provisions hereof shall be, and the same are, hereby rescinded insofar as the same may so conflict. In the event that any one or more provisions hereof shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provisions hereof. The foregoing shall take effect immediately upon adoption and approval in the manner provided by law.
FISCAL NOTE: 2006 Capital Projects are budgeted at $7,049,300.