HomeMy WebLinkAboutOrdinances - ORD-00-983 - 10/18/2000 - AUTHORIZE SERIES 2000A BO FONDS MFT STREET PROGRAMORDINANCE NUMBER 00-983
AN ORDINANCE authorizing and providing for the issue of
$3,500,000 General Obligation Bonds (Motor Fuel Tax Alternate
Revenue Source), Series 2000A, of the City of McHenry,
McHenry County, Illinois, prescribing the details of said bonds and
providing for collection, segregation and application of certain
motor fuel taxes to pay said Bonds.
PREAMBLES
WHEREAS the City of McHenry, McHenry County, Illinois (the "City"), is a duly
organized and existing municipality and unit of local government of the State of Illinois, and is
operating under and pursuant to the provisions of the Illinois Municipal Code, and all laws
amendatory thereof and supplementary thereto (the "Municipal Code "); and
WHEREAS the City Council of the City (the "City Council') has determined that it is
advisable, necessary and in the best interests of the City, in order to promote and protect the
public health, welfare, safety and convenience of the residents of the City, to finance a street
improvement program (the "Project"); and
WHEREAS the City Council has determined and does hereby determine that the Project is
a lawful corporate purpose; and
WHEREAS the estimated cost of acquiring, constructing and installing the Project,
including engineering, legal, financial, bond discount, printing and publication costs, and other
expenses, is $3,500,000; and
WHEREAS there are insufficient funds on hand and lawfully available to pay costs of the
Project, and there exists a source of funds, other than enterprise revenues, namely, all collections
distributed to the City from those taxes imposed by the State of Illinois pursuant to the Motor
Fuel Tax Law, as supplemented and amended, or substitute taxes therefor as provided by the
applicable law in the future, and as provided in the Local Government Debt Reform Act, as
amended (the "Refo"n Act"), the City is authorized to issue its General Obligation Bonds
(Motor Fuel Tax Alternate Revenue Source) payable from such revenue source; and
WHEREAS the costs of the Project is expected to be defrayed by up to $3,500,000 of the
proceeds of alternate bonds issued pursuant to the Reform Act; and
WHEREAS it is necessary and for the best interests of the City that the Project be
undertaken, and in order to raise the funds required for such purpose, it will be necessary for the
City to borrow an amount not to exceed $3,500,000 and in evidence thereof to issue alternate
bonds, being General Obligation Bonds (Motor Fuel Tax Alternate Revenue Source) payable
from any revenue source as provided by the Reform Act, in an aggregate principal amount not to
exceed $3,500,000, all in accordance with the Reform Act; and
WHEREAS the City Council, on the 19th day of June, 2000, adopted Ordinance
Number ORD-00-961 (the "Authorizing Ordinance"), authorizing the issuance of certain
Alternate Bonds, being General Obligation Bonds (Motor Fuel Tax Alternate Revenue Source)
payable from revenue sources as provided by the Reform Act (the "2000 Alternate Bonds"), in
an amount not to exceed $3,500,000 for the Project; and
WHEREAS on the 20th day of June, 2000, the Authorizing Ordinance, which included
therein a notice in the statutory form, was published in the Northwest Herald, and an affidavit
evidencing the publication of the Authorizing Ordinance and said notice has heretofore been
presented to the City Council and made a part of the permanent records of the City; and
WHEREAS no petition has ever been filed with the City Clerk, requesting that the question
of the issuance of the 2000 Alternate Bonds for the Project be submitted to referendum; and
WHEREAS the City Council has been authorized to issue the 2000 Alternate Bonds to the
amount of $3,500,000 in accordance with the provisions of the Reform Act and the Authorizing
Ordinance; $-0- of such bonds have heretofore been issued by the City; and the City Council
hereby determines that it is necessary and advisable that there be issued at this time $3,500,000
of the authorized amount; and
WHEREAS the 2000 Alternate Bonds to be issued will be payable from the Pledged
Revenues and the Pledged Taxes, both as hereinafter defined; and
WHEREAS the City Council hereby determines that the Pledged Revenues will provide in
each year to final maturity of the proposed 2000 Alternate Bonds an amount not less than 1.25
times debt service of the proposed 2000 Alternate Bonds, said series of bonds being the only
series of alternate bonds payable from the Pledged Revenues; and
WHEREAS such determination is supported by the report dated October 18, 2000 (the
"Report"), of Warren Associates, Northbrook, Illinois (the "Financial Consultant"), which
Report has been presented to the City Council and is now on file with the City Clerk; and
WHEREAS pursuant to and in accordance with the provisions of the Bond Issue
Notification Act of the State of Illinois, as amended, the Mayor of the City, on the 3rd day of
July, 2000, executed an Order calling a public hearing (the "Hearing ") for the 12th day of July,
2000, concerning the intent of the City Council to sell not to exceed $3,500,000 General
Obligation Bonds (Alternate Revenue Source); and
WHEREAS notice of the Hearing was given by (i) publication at least once not less than
seven (7) nor more than thirty (30) days before the date of the Hearing in the Northwest Herald,
the same being a newspaper of general circulation in the City and (ii) posting at least 48 hours
before the Hearing a copy of said notice at the principal office of the City Council; and
WHEREAS the Hearing was held on the 12th day of July, 2000, and at the Hearing, the
City Council explained the reasons for the proposed bond issue and perm=itted. persons desiring to
be heard an opportunity to present written or oral testimony within reasonable time limits; and
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WHEREAS the Hearing was finally adjourned on the l2th day of July, 2000, and not less
than seven (7) days have passed since the final adjournment of the Hearing; and
WHEREAS the Property Tax Extension Limitation Law of the State of Illinois, as
amended (the "Tax Limitation Law"), imposes certain limitations on the "aggregate extension"
of certain property taxes levied by the City, but provides that the definition of "aggregate
extension" contained in Section 18-185 of the Tax Limitation Law does not include "extensions
... payments of principal and interest on bonds issued under Section 15 of the Local Government
Debt Reform Act;" and
WHEREAS the County Clerk of McHenry County, Illinois, is therefore authorized to
extend and collect said direct annual ad valorem tax so levied for the payment of the 2000
Alternate Bonds for the Project without limitation as to rate or amount;
Now THEREFORE Be It Ordained by the City Council of the City of McHenry, McHenry
County, Illinois, as follows:
Section 1. Definitions. The words and terms used in this Ordinance shall have the
meanings set forth and defined for them herein unless the context or use clearly indicates another
or different meaning is intended, including the words and terms as follows:
"Additional Bonds" means any alternate bonds issued in the future in accordance with
the provisions of the Reform Act on a parity with and sharing ratably and equally in the Pledged
Revenues with the 2000 Alternate Bonds.
"Alternate Bonds " means the Bonds and any Additional Bonds.
"Bond" or "Bonds" means one or more, as applicable, of the $3,500,000 General
Obligation Bonds (Motor Fuel Tax Alternate Revenue Source), Series 2000A, authorized to be
issued by this Ordinance.
"Bond Fund" means the City of McHenry 2000 Alternate Bond Fund maintained
hereunder and further described in Section I I of this Ordinance.
"Bond Register" means the books of the City kept by the Bond Registrar to evidence the
registration and transfer of the Bonds, or a successor designated as bond registrar hereunder.
"Bond Registrar" means American National Bank and Trust Company of Chicago,
Chicago, Illinois, or a successor designated as bond registrar hereunder.
"City" means the City of McHenry, McHenry County, Illinois.
"City Council" means the City Council of the City.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Expense Fund" means the fund established hereunder and further described by
Section 12 of this Ordinance.
"Fiscal Year" means that twelve -calendar month period beginning on the first day of
May of any calendar year and ending on the last day of April of the next succeeding calendar
year.
"Municipal Code" means the Illinois Municipal Code, as supplemented and amended.
"Ordinance " means this ordinance as originally adopted and as the same may from time
to time be amended or supplemented in accordance with terms hereof.
"Outstanding " when used with reference to the Bonds and Additional Bonds means such
of those bonds which are outstanding and unpaid; provided, however, such term shall not include
any of the Bonds or Additional Bonds (i) which have matured and for which moneys are on
deposit with proper paying agents or are otherwise sufficiently available to pay all principal
thereof and interest thereon or (ii) the provision for payment of which has been made by the City
by the deposit in an irrevocable trust or escrow of funds or direct, full faith and credit obligations
of the United States of America, the principal of and interest on which will be sufficient to pay at
maturity or as called for redemption all the principal of and interest on such Bonds or Additional
Bonds.
"Paying Agent" means American National Bank and Trust Company of Chicago,
Chicago, Illinois, or a successor designated as paying agent hereunder.
"Pledged Moneys" means the Pledged Revenues and the Pledged Taxes, as all of such
terms are defined herein.
"Pledged Revenues" means all collections distributed to the City from those taxes
imposed by the State of Illinois pursuant to the Motor Fuel Tax Law, as supplemented and
amended or substitute taxes therefor as provided by applicable law in the future.
"Pledged Taxes" means the ad valorem taxes levied against all of the taxable property in
the City without limitation as to rate or amount, pledged hereunder by the City as security for the
Bonds.
"Project" means such projects as described and defined as such in the preambles to this
Ordinance.
"Project Fund" means the fund established hereunder and further described by
Section 12 of this Ordinance.
"Reform Act" means the Local Government Debt Reform Act of the State of Illinois, as
amended.
" Tax-exempt " means, with respect to the Bonds, the status of interest paid and received
thereon as not includible in the gross income of the owners thereof under the Code for federal
income tax purposes except to the extent that such interest will be taken into account in
computing an adjustment used in determining the alternative minimum tax for certain
corporations and in computing the "branch profits tax" imposed on certain foreign corporations.
Section 2. Incorporation of Preambles; Acceptance of Report. The City Council
hereby finds that the recitals contained in the preambles to this Ordinance are true and correct
and does hereby incorporate them into this Ordinance by this reference. The Report is hereby
accepted and approved by the City Council, and it is hereby found and determined that the
Financial Consultant is a feasibility analyst having a national reputation for expertise in such
matters as the Report.
Section 3. Determination to Issue Bonds. It is necessary and in the best interests of the
City for the City to construct the Project for the public health, safety and welfare, in accordance
with the plans and estimates therefor as described, and to issue the Bonds to enable the City to
pay the costs thereof.
Section 4. Bond Details. For the purpose of providing for the payment of costs of the
Project, there shall be issued and sold the Bonds in the aggregate principal amount of
$3,500,000. The Bonds shall each be designated "General Obligation Bond (Motor Fuel Tax
Alternate Revenue Source), Series 2000A"; and shall be dated November 1, 2000, and shall also
bear the date of authentication thereof. The Bonds shall be in fully registered form, shall be in
denominations of $5,000 or authorized integral multiples thereof (but no single Bond shall
represent principal maturing on more than one date), shall be numbered in such reasonable
fashion as may be selected by the Bond Registrar, and shall become due and payable on
December I of the years, in the amounts and bearing interest at the rates percent per annum as
follows (subject to the right of redemption hereinafter stated):
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YEAR
AMOUNT
RATE
2001
$200,000
4.80%
2002
300,000
4.80%
2003
300,000
4.80%
2004
300,000
4.80%
2005
350,000
4.85%
2006
350,000
4.85%
2007
400,000
4.85%
2008
400,000
4.85%
2009
450,000
4.85%
2010
450,000
4.85%
Each Bond shall bear interest from the later of its Dated Date or from the most recent
interest payment date to which interest has been paid or duly provided for, until the principal
amount of such Bond is paid or duly provided for, such interest (computed upon the basis of a
360-day year of twelve 30-day months) being payable on June 1, 2001, and semiannually
thereafter on June I and December I of each year. Interest on each Bond shall be paid by check
or draft of the Paying Agent, payable upon presentation in lawful money of the United States of
America, to the person in whose name such Bond is registered at the close of business on the
applicable record date. The applicable record date (the "Record Date") is the 15th day of the
month next preceding any regular interest payment date and the 15th day preceding any other
interest payment date which may be occasioned by a redemption of Bonds. The principal of the
Bonds shall be payable upon presentation in lawful money of the United States of America at the
principal corporate trust office of the Paying Agent.
Section 5. Redemption. (a) Optional Redemption. The Bonds maturing on or after
December 1, 2008, are subject to redemption prior to maturity at the option of the City as a
whole, or in part in any order of maturity determined by the City (less than all of the Bonds of a
single maturity to be selected by the Bond Registrar), on December 1, 2007, or on any date
thereafter, at the redemption price of par plus accrued interest to the date of redemption.
(b) Mandatory Redemption. The Bonds are not subject to mandatory sinking fund
redemption.
(c) Redemption Procedure. The Bond Registrar shall proceed with mandatory
redemption without further notice or direction from the City. For redemptions at the option of
the City, the City shall, at least 45 days prior to the redemption date (unless a shorter time period
shall be satisfactory to the Bond Registrar), notify the Bond Registrar of such redemption date
and of the principal amount and maturities of Bonds to be redeemed. For purposes of any
redemption of less than all of the Bonds of a single maturity, the particular Bonds or portions of
Bonds to be redeemed shall be selected by lot not more than 60 days prior to the redemption date
by the Bond Registrar for the Bonds of such series and maturity by such method of lottery as the
Bond Registrar shall deem fair and appropriate; provided, that such lottery shall provide for the
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selection for redemption of Bonds or portions thereof so that any $5,000 Bond or $5,000 portion
of a Bond shall be as likely to be called for redemption as any other such $5,000 Bond or $5,000
portion.
The Bond Registrar shall promptly notify the City and the Paying Agent in writing of the
Bonds or portions of Bonds selected for redemption and, in the case of any Bond selected for
partial redemption, the principal amount thereof to be redeemed.
Unless waived by the registered owner of Bonds to be redeemed, official notice of any
such redemption shall be given by the Bond Registrar on behalf of the City by mailing the
redemption notice by first-class mail not less than 30 days and not more than 60 days prior to the
date fixed for redemption to each registered owner of the Bond or Bonds to be redeemed at the
address shown on the Bond Register or at such other address as is furnished in writing by such
registered owner to the Bond Registrar.
All official notices of redemption shall include the name of the Bonds and at least the
information as follows:
(1) the redemption date;
(2) the redemption price;
(3) if less than all of the Bonds of a single maturity are to be redeemed, the
identification (and, in the case of partial redemption of any Bonds, the respective
principal amounts) of the Bonds to be redeemed;
(4) a statement that on the redemption date the redemption price will become
due and payable upon each such Bond or portion thereof called for redemption and that
interest thereon shall cease to accrue from and after said date; and
(5) the place where such Bonds are to be surrendered for payment of the
redemption price, which place of payment shall be the principal corporate trust business
office of the Paying Agent.
Prior to any redemption date, the City shall deposit with the Paying Agent an amount of
money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to
be redeemed on that date.
Official notice of redemption having been given as aforesaid, the Bonds or portions of
Bonds so to be redeemed shall, on the redemption date, become due and payable at the
redemption price therein specified, and from and after such date (unless the City shall default in
the payment of the redemption price), such Bonds or portions of Bonds shall cease to bear
interest. Neither the failure to mail such redemption notice, nor any defect in any notice so
mailed, to any particular registered owner, shall affect the sufficiency of such notice with respect
to other Bonds. Notice having, been properly given, failure of a registered owner to receive such
notice shall not be deemed to invalidate, limit or delay the effect of the notice or redemption
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action described in the notice. Such notice may be waived in writing by the registered owner
entitled to receive such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by registered owners shall be filed with the Bond
Registrar, but such filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds
shall be paid by the Paying Agent at the redemption price. The procedure for payment of interest
due on or prior to the redemption date shall be as herein provided for payment of interest
otherwise due. Upon surrender for any partial redemption of any Bond, there shall be prepared
for the registered owner a new Bond or Bonds of like tenor, of authorized denominations, of the
same maturity and bearing the same rate of interest in the amount of the unpaid principal. If any
Bond or portion of Bond called for redemption shall not be so paid upon surrender thereof for
redemption, the principal shall, until paid or duly provided for, bear interest from the redemption
date at the rate borne by the Bond or portion of Bond so called for redemption. All Bonds which
have been redeemed shall be cancelled and destroyed by the Bond Registrar and shall not be
reissued.
Section 6. Execution; Authentication. The Bonds shall be executed on behalf of the
City with the manual or facsimile signature of the Mayor and attested with the manual or
facsimile signature of the City Clerk, as they may determine, and shall have impressed or
imprinted thereon the corporate seal or facsimile thereof of the City. In case any officer whose
signature shall appear on any Bond shall cease to be such officer before the delivery of such
Bond, such signature shall nevertheless be valid and sufficient for all purposes, the same as if
such officer had remained in office until delivery.
All Bonds shall have thereon a certificate of authentication substantially in the form
hereinafter set forth duly executed by the Bond Registrar as authenticating agent of the City and
showing the date of authentication. No Bond shall be valid or obligatory for any purpose or be
entitled to any security or benefit under this Ordinance unless and until such certificate of
authentication shall have been duly executed by the Bond Registrar by manual signature, and
such certificate of authentication upon any such Bond shall be conclusive evidence that such
Bond has been authenticated and delivered under this Ordinance. The certificate of
authentication on any Bond shall be deemed to have been executed by it if signed by an
authorized officer of the Bond Registrar, but it shall not be necessary that the same officer sign
the certificate of authentication on all of the Bonds issued hereunder.
Section 7. Registration of Bonds; Persons Treated as Owners; Global Book -Entry
System. (a) General. The City shall cause books (the "Bond Register") for the registration and
for the transfer of the Bonds as provided in this Ordinance to be kept at the principal corporate
trust office of the Bond Registrar, which is hereby constituted and appointed the registrar of the
City. The City is authorized to prepare, and the Bond Registrar shall keep custody of, multiple
Bond blanks executed by the City for use in the transfer and exchange of Bonds.
Upon surrender for transfer of any Bond at the principal corporate trust office of the
Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of
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transfer in form satisfactory to the Bond Registrar and duly executed by, the registered owner or
his attorney duly authorized in writing, the City shall execute and the Bond Registrar shall
authenticate, date and deliver in the name of the transferee or transferees a new fully registered
Bond or Bonds of the same maturity of authorized denominations, for a like aggregate principal
amount. Any fully registered Bond or Bonds may be exchanged at said principal corporate trust
office of the Bond Registrar for a like aggregate principal amount of Bond or Bonds of the same
maturity of other authorized denominations. The execution by the City of any fully registered
Bond shall constitute full and due authorization of such Bond and the Bond Registrar shall
thereby be authorized to authenticate, date and deliver such Bond, provided, however, the
principal amount of outstanding Bonds of each maturity authenticated by the Bond Registrar
shall not exceed the authorized principal amount of Bonds for such maturity less previous
retirements.
The Bond Registrar shall not be required to transfer or exchange any Bond during the
period beginning at the close of business on the 15th day of the month next preceding the interest
payment date on such Bond and ending at the opening of business on such interest payment date
nor to transfer or exchange any Bond after notice calling such Bond for redemption has been
mailed, nor during a period of fifteen days next preceding mailing of a notice of redemption of
any Bonds.
The person in whose name any Bond shall be registered shall be deemed and regarded as
the absolute owner thereof for all purposes, and payment of the principal of or interest on any
Bond shall be made only to or upon the order of the registered owner thereof or his legal
representative. All such payments shall be valid and effectual to satisfy and discharge the
liability upon such Bond to the extent of the sum or sums so paid.
No service charge shall be made for any transfer or exchange of Bonds, but the City or
the Bond Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or exchange of Bonds
except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a Bond
surrendered for redemption.
(b) Global Book -Entry System. The Bonds shall be initially issued in the form of a
separate single fully registered Bond for each of the maturities of the Bonds as provided in
Section 4 hereof, and the ownership of each such Bond shall be registered in the Bond Register
in the name of Cede & Co., or any successor thereto ("Cede"), as nominee of The Depository
Trust Company, New York, New York, and its successors and assigns ("DTC"). All of the
outstanding Bonds shall be registered in the Bond Register in the name of Cede, as nominee of
DTC, except as hereinafter provided. The Mayor, the Treasurer and City Clerk are hereby
authorized to execute and deliver on behalf of the City such letters to or agreements with DTC
and the Bond Registrar as shall be necessary to effectuate such book -entry system (any such
letter or agreement being referred to herein as the "Representation Letter").
With respect to the Bonds registered in the Bond Register in the name of Cede, as
nominee of DTC, the City and the Bond Registrar shall have no responsibility or obligation to
any broker -dealer, bank or other financial institution for which DTC holds Bonds from time to
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time as securities depository (each such broker -dealer, bank or other financial institution being
referred to herein as a "DTC Participant") or to any person on behalf of whom such a DTC
Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence,
the City and the Bond Registrar shall have no responsibility or obligation with respect to (1) the
accuracy of the records of DTC, Cede or any DTC Participant with respect to any ownership
interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a
registered owner of a Bond as shown in the Bond Register, of any notice with respect to the
Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any
other person, other than a registered owner of a Bond as shown in the Bond Register, of any
amount with respect to principal of or interest on the Bonds. The City and the Bond Registrar
may treat and consider the person in whose name each Bond is registered in the Bond Register as
the holder and absolute owner of such Bond for the purpose of payment of principal and interest
with respect to such Bond, for the purpose of giving notices of redemption and other matters
with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and
for all other purposes whatsoever. The Bond Registrar shall pay all principal of and interest on
the Bonds only to or upon the order of the respective registered owners of the Bonds, as shown
in the Bond Register, or their respective attorneys duly authorized in writing, and all such
payments shall be valid and effective to fully satisfy and discharge the City's obligations with
respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so
paid. No person other than a registered owner of a Bond as shown in the Bond Register, shall
receive a Bond certificate evidencing the obligation of the City to make payments of principal
and interest with respect to any Bond. Upon delivery by DTC to the Bond Registrar of written
notice to the effect that DTC has determined to substitute a new nominee in place of Cede, the
name "Cede " in this Ordinance shall refer to such new nom�inee of DTC.
In the event that (i) the City determines that DTC is incapable of discharging its
responsibilities described herein and in the Representation Letter, (ii) the agreement among the
City, the Bond Registrar and DTC evidenced by the Representation Letter shall be term=inated for
any reason or (iii) the City determines that it is in the best interests of the beneficial owners of
the Bonds that they be able to obtain certificated Bonds, the City shall notify DTC and DTC
Participants of the availability through DTC of Bond certificates and the Bonds shall no longer
be restricted to being registered in the Bond Register in the name of Cede, as nominee of DTC.
At the tirne, the City may determine that the Bonds shall be registered in the name of and
deposited with such other depository operating a global book -entry system, as may be acceptable
to the City, or such depository's agent or designee, and if the City does not select such alternate
global book -entry system, then the Bonds may be registered in whatever name or names
registered owners of Bonds transferring or exchanging Bonds shall designate, in accordance with
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the provisions of Section 7(a) hereof.
Notwithstanding any other provision of this Ordinance to the contrary, so long as any
Bond is registered in the name of Cede, as nominee of DTC, all payments with respect to
principal of and interest on such Bond and all notices with respect to such Bond shall be made
and given, respectively, in the manner provided in the Representation Letter.
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Section 8. Form of Bonds. The Bonds shall be in substantially the form hereinafter set
forth, prov0ed, howevet-, that if the text of the Bonds is to be printed in its entirety on the front
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side of the Bonds, then the second paragraph on the front side and the legend "See Reverse Side
for Additional Provisions" shall be omitted and the text of paragraphs set forth for the reverse
side shall be inserted immediately after the first paragraph.
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[Form of Bond - Front Side]
REGISTERED REGISTERED
No. $
UNITED STATES OF AMERICA
STATE OF ILLINOIS
COUNTY OF McHENRY
CITY OF MCHENRY
GENERAL OBLIGATION BOND (MOTOR FUEL TAx ALTERNATE REVENUE
SOURCE)
SERIES 2000A
See Reverse Side for
Additional Provisions
Interest Maturity Dated
Rate: _% Date: December 1, Date: November 1, 2000 CUSIP:
Registered Owner: CEDE & CO.
Principal Amount: DOLLARS
KNOW ALL PERSONS By THESE PRESENTS that the City of McHenry, McHenry County,
Illinois, a municipality and political subdivision of the State of Illinois (the "City"), hereby
acknowledges itself to owe and for value received promises to pay to the Registered Owner
identified above, or registered assigns as hereinafter provided, on the Maturity Date identified
above, the Principal Amount identified above, and to pay interest (computed on the basis of a
360-day year of twelve 30-day months) on such Principal Amount from the later of the Dated
Date of this Bond identified above or from the most recent interest payment date to which
interest has been paid or duly provided for, at the Interest Rate per annum identified above, such
interest to be payable on June 1, 2001, and semiannually thereafter on June I and December I of
each year until the Principal Amount is paid or duly provided for, except as the provisions
hereinafter set forth with respect to redemption prior to maturity may be and become applicable
hereto. The Principal Amount of this Bond is payable in lawful money of the United States of
America upon presentation and surrender hereof at the principal corporate trust office of
American National Bank and Trust Company of Chicago, Chicago, Illinois, as bond registrar and
t' 0 tD
paying agent (the "Bond Registrar"). Payment of the installments of interest shall be made to
the Registered Owner hereof as shown on the registration books of the City maintained by the
Bond Registrar at the close of business on the 15th day of the month next preceding each interest
payment date and shall be paid by check or draft of the Bond Registrar, payable upon
presentation in lawful money of the United States of America, mailed to the address of such
Registered Owner as it appears on such registration books or at such other address fumished in
writing by such Registered Owner to the Bond Registrar, or as otherwise agreed by the City and
Cede & Co., as nominee, or successor, for so long as this Bond is held by The Depository Trust
Company, New York, New York, the depository, or nominee, in book -entry only form as
provided for same.
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Reference is hereby made to the further provisions of this Bond set forth on the reverse
hereof, and such further provisions shall for all purposes have the same effect as if set forth at
this place.
It is hereby certified and recited that all acts, conditions and things required to be done
precedent to and in the issuance of this Bond have been done and have happened and have been
performed in regular and due form of law; that the indebtedness of the City, including the issue
of Bonds of which this is one, does not exceed any limitation imposed by law; that provision has
been made for the collection of the Pledged Revenues, the levy and collection of the Pledged
Taxes, and the segregation of all Pledged Moneys to pay the interest hereon as it falls due and
also to pay and discharge the principal hereof at maturity; and that the City hereby covenants and
agrees that it will properly account for said Pledged Moneys and will comply with all the
covenants of and maintain the funds and accounts as provided by the Ordinance.
FOR THE PROMPT PAYMENT OF THIS BOND, BOTH PRINCIPAL AND INTEREST AT
MATURITY, THE FULL FAITH, CREDIT AND RESOURCES OF THE CITY ARE HEREBY IRREVOCABLY
PLEDGED.
THE CITY HAS DESIGNATED THIS BOND AS A "QUALIFIED TAX-EXEMPT CBLIGATION"
PURSUANT TO SECTION 265(b)(3) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
This Bond shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by the Bond Registrar.
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IN WITNESS WHEREOF the City of McHenry, McHenry County, Illinois, by its City
Council, has caused this Bond to be executed with the manual or duly authorized facsimile
signature of its Mayor and attested by the manual or duly authorized facsimile signature of its
City Clerk and its corporate seal or a facsimile thereof to be impressed or reproduced hereon, all
as appearing hereon and as of the Dated Date identified above.
ATTEST:
City Clerk
City of McHenry
McHenry County, Illinois
[SEAL]
Date of Authentication:
CERTIFICATE
OF
AUTHENTICATION
This Bond is one of the Bonds described
in the within mentioned ordinance and is
one of the General Obligation Bonds (Motor
Fuel Tax Alternate Revenue Source),
Series 2000A, of the City of McHenry,
McHenry County, Illinois.
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, Chicago, Illinois,
as Bond Registrar
a
Authorized Signatory
Mayor
City of McHenry
McHenry County, Illinois
Bond Registrar and Paying Agent:
American National Bank and Trust
Company of Chicago,
Chicago, Illinois
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[Form of Bond - Reverse Side]
CITY OF MCHENRY, NICHENRY COUNTY, ILLINOIS
GENERAL OBLIGATION BOND (MOTOR FUEL TAx ALTERNATE REVENUE
SOURCE)
SERIES 2000A
This bond and the bonds of the series of which it forms a part ("Bond" and "Bonds"
respectively) are of an authorized issue of Three Million Five Hundred Thousand Dollars
($3,500,000) Series 2000A Bonds, of like dated date and tenor except as to maturity, rate of
interest, and privilege of redemption and are issued pursuant to applicable provisions of the
Illinois Municipal Code, as amended (the "Code"), and the Local Government Debt Reform Act
of the State of Illinois, as amended (the "Reform Act"). The Bonds are issued for the purpose of
paying the costs to finance a street improvement program.
The Bonds are payable from the Pledged Revenues of the City and from the Pledged
Taxes of the City.
The Bonds are issued pursuant to an authorizing ordinance passed by the City Council of
the City (the "City Council") on 19th day of June, 2000, and by a more complete bond ordinance
passed by the City Council on the 18th day of October, 2000 (the "Ordinance"), to which
reference is hereby expressly made for further definitions and terms and to all the provisions of
which the Registered Owner by the acceptance of this Bond assents. This Bond does not and
will not constitute an indebtedness of the City within the meaning of any constitutional or
statutory provision or limitation, unless the Pledged Taxes shall be extended pursuant to the
general obligation, full faith and credit promise supporting the Bonds, in which case the amount
of the Bonds then Outstanding shall be included in the computation of indebtedness of the City
for purposes of all statutory provisions or limitations until such time as an audit of the City shall
show that the Bonds shall have been paid from the Pledged Revenues for a complete Fiscal Year.
The City reserves the right to issue Additional Bonds without limit from time to time
payable from the Pledged Revenues, and any such Additional Bonds shall share ratably and
equally in the Pledged Revenues with the Bonds; provided, however, that no Additional Bonds
shall be issued except in accordance with the provisions of the Reform Act.
The Bonds are subject to optional redemption as set forth in the Ordinance. Notice of
any such redemption shall be given by the Bond Registrar on behalf of the City as set forth in the
Ordinance.
This Bond may be transferred or exchanged, but only in the manner, subject to the
lim�itations, and upon payment of the charges as set forth in the Ordinance.
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The City, the Paying Agent and the Bond Registrar may deem and treat the Registered
Owner hereof as the absolute owner hereof for the purpose of receiving payment of or on
account of principal hereof, premium, if any, hereon and interest due hereon and for all other
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purposes; and none of the City, the Paying Agent and the Bond Registrar shall be affected by any
notice to the contrary.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto
(Name and Address of Assignee)
the within Bond and does hereby irrevocably constitute and appoint
as attorney to transfer the said Bond on the books kept for registration thereof with full power of
substitution in the prem�ises.
Dated:
Signature Guaranteed:
NOTICE: The signature to this assignment must correspond with the name of the registered
owner as it appears upon the face of the within Bond in every particular, without
alteration or enlargement or any change whatever.
M
Section 9. Sale of the Bonds. The Bonds hereby authorized shall be executed as in this
Ordinance provided as soon after the passage hereof as may be, and thereupon be deposited with
the Treasurer of the City, and be by said Treasurer delivered to William R. Hough & Co., St.
Petersburg, Florida, the purchaser thereof (the "Purchaser"), upon receipt of the purchase price
therefor, the same being $3,482,779, plus accrued interest to date of delivery; the contract for the
sale of the Bonds heretofore entered into (the "Purchase Contract") is in all respects ratified,
approved and confirmed, it being hereby found and determined that the Bonds have been sold at
such price and bear interest at such rates that neither the true interest cost (yield) nor the net
interest rate received upon such sale exceed the maximum rate otherwise authorized by Illinois
law and that the Purchase Contract is in the best interests of the City and that no person holding
any office of the City, either by election or appointment, is in any manner financially interested
directly in his own name or indirectly in the name of any other person, association, trust or
corporation, in the Purchase Contract.
The use by the Purchaser of any Preliminary Official Statement and any final Official
Statement relating to the Bonds and before the City Council at the time of the adoption hereof is
hereby ratified, approved and authorized; the execution and delivery of said final Official
Statement is hereby authorized; and the officers of the City Council are hereby authorized to take
any action as may be required on the part of the City to consummate the transactions
contemplated by the Purchase Contract, this Ordinance, said Preliminary Official Statement, said
final Official Statement and the Bonds.
Section 10. Treatment of Bonds As Debt. The Bonds shall be payable from the Pledged
Moneys and do not and shall not constitute an indebtedness of the City within the meaning of
any constitutional or statutory limitation, unless the Pledged Taxes shall be extended pursuant to
the general obligation, full faith and credit promise supporting the Bonds, as set forth in
Section 13 hereof, in which case the amount of the Bonds then Outstanding shall be included in
the computation of indebtedness of the City for purposes of all statutory provisions or limitations
until such time as an audit of the City shall show that the Bonds have been paid from the Pledged
Revenues for a complete Fiscal Year, in accordance with the Reform Act.
Section 11. Series 2000A Alternate Bond Fund There is hereby created a special fund
of the City, which fund shall be held separate and apart from all other funds and accounts of the
City and shall be known as the "City of McHenry 2000A Alternate Bond Fund" (the "Bon'l
Fund"). The purpose of the Bond Fund is to provide a fund to receive and disburse the Pledged
Moneys for any of the Bonds. All payments with respect to the Bonds shall be made directly
from the Bond Fund. There are hereby created two accounts of the Bond Fund, designated the
Pledged Revenues Account and the Pledged Taxes Account. All Pledged Revenues to be applied
to the payment of the Bonds shall be deposited to the credit of the Pledged Revenues Account
and all Pledged Taxes shall be deposited to the credit of the Pledged Taxes Account. The Bond
Fund and its respective accounts constitute a trust fund established for the purpose of carrying
out the covenants, terms and conditions imposed upon the City by this Ordinance.
Any Pledged Taxes received by the City shall promptly be deposited into the Pledged
Taxes Account of the Bond Fund. Pledged Taxes on deposit to the credit of the Pledged Taxes
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Account shall be fully spent to pay the principal of and interest on the Bonds for which such
taxes were levied and collected prior to use of any moneys on deposit in the Pledged Revenues
Account of the Bond Fund.
There shall be credited to the Pledged Revenues Account of the Bond Fund and held, in
cash and investments, on or before the first day of each month by the financial officer of the
City, without any further official action or direction, the Pledged Revenues. Each monthly
deposit shall be a fractional amount of the interest becoming due on the next succeeding interest
payment date on all Bonds and also a fractional amount of the principal becoming due on the
next succeeding maturity date of all of the Bonds until there shall have been accumulated and
held, in cash and investments, in the Pledged Revenues Account on or before the month
preceding such maturity date of interest or maturity date of principal, an amount sufficient to pay
such principal or interest, or both.
In computing the fractional amount to be set aside each month in the Pledged Revenues
Account, the fraction shall be so computed that a sufficient amount will be set aside in said
Account and will be available for the prompt payment of such principal of and interest on all
Bonds and shall be not less than one -sixth of the interest becoming due on the succeeding
interest payment date and not less than one -twelfth of the principal becoming due on the next
succeeding principal payment date on all Bonds outstanding until there is sufficient money in
said Account to pay such principal or interest, or both.
Credits to the Pledged Revenues Account need not be made at such time as there shall be
a sufficient sum, held in cash and investments, in said Account to meet principal and interest
requirements in said Account on the next two (2) succeeding debt service payment dates on the
Bonds outstanding.
Section 12. Use of Bond Proceeds. The proceeds derived from the sale of the Bonds
shall be used as follows:
A. Accrued interest received by the City upon the sale of the Bonds shall be
remitted by the City Treasurer for deposit into the Bond Fund, and be used to pay first
interest coming due on the Bonds.
B. The City shall then allocate from the Bond proceeds the sum necessary for
expenses incurred in the issuance of the Bonds which shall be deposited into an "Expense
Fund" to be maintained by the City Treasurer and disbursed for such issuance expenses
from time to time in accordance with usual City procedures for the disbursement of
funds, which disbursements are hereby expressly authorized. Moneys not disbursed from
the Expense Fund within six months shall be transferred by the City for deposit in the
hereinafter described Project Fund, and any deficiencies in the Expense Fund shall be
paid by disbursement from the Project Fund.
C. The remaining, funds shall be set aside in a separate fund hereby created and
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designated as the "Project Fund (2000)" (the "Project Fund"), which the City shall
maintain as a separate and segregated account. Monies in said fund shall be withdrawn
C)
M.
from time to time as needed for the payment of costs of the Project, and paying the fees
and expenses incidental thereto not paid out of the Expense Fund; and said monies shall
be disbursed by the City from time to time only upon submission to the City Treasurer of
the following:
(1) If such disbursement is for payment to a supplier, materialman, or
contractor for work done in connection with the Project, a certificate executed by
the engineer or architect or City officer in charge of the construction or
acquisition of the pertinent project stating the amount of materials supplied or the
nature of the work completed, that such materials have been properly accepted or
such work approved by him, the amount due and payable thereon, and the amount
remaining to be paid in connection with the project as applicable; and
(2) A duplicate copy of the order signed by an officer of the City, stating
specifically the purpose for which the order is issued and indicating that the
payment for which the order is issued has been approved by the City.
Funds on deposit in the Project Fund may be invested by the City Treasurer of the City in
any lawful manner. All investment earnings in the Project Fund shall first be reserved and
transferred to such other account as and to the extent necessary to pay any "excess arbitrage
profits" or "penalty in lieu of rebate" under Section 148 of the Code to maintain the Tax -Exempt
status of the Bonds, and the remainder shall be retained in the Project Fund and appropriate
account for costs of the Project.
Within sixty (60) days after full depletion of any account of the Project Fund, or if the
Project has been completed and accepted, the City Treasurer of the City shall certify to the City
Council the fact of such depletion or the engineer or architect or City officer in responsible
charge of the pertinent project shall certify to the City Council the fact that the work has been
completed and accepted, and upon approval of such certification by the City Council, funds (if
any) remaining in the Project Fund shall be credited by the City Treasurer of the City to the
appropriate account for payment of the Bonds; and the Project Fund shall be closed.
Section 13. Pledged Taxes; Tax Levy. For the purpose of providing necessary funds to
pay the principal of and interest on the Bonds at maturity, and as provided in Section 15 of the
Reform Act, there is hereby levied upon all of the taxable property within the City, in the years
for which any of the Bonds are Outstanding, a direct annual tax in amounts sufficient for that
purpose, and there be and there hereby is levied upon all of the taxable property in the City the
following direct annual taxes (the Pledged Taxes):
NUM
FOR THE YEAR A TAX SUFFICIENT TO PRODUCE THE SUM OF:
2000 $ 364,400.00 for principal and interest up to June 1, 2002 (net of
funds on hand)
2001
452,400.00
for principal and interest
2002
438,000.00
for principal and interest
2003
423,600.00
for principal and interest
2004
457,912.50
for principal and interest
2005
440,937.50
for principal and interest
2006 472,750.00 for principal and interest
2007 453,350.00 for principal and interest
2008 482,737.50 for principal and interest
2009 460,912.50 for principal and interest
Principal or interest maturing at any time when there are insufficient funds on hand from
the Pledged Moneys to pay the same shall be paid promptly when due from current funds on
hand in advance of the collection of the Pledged Moneys herein pledged and levied; and when
the Pledged Moneys shall have been collected, reimbursement shall be made to said funds in the
amount so advanced. The City covenants and agrees with the purchasers and registered owners
of the Bonds that so long as any of the Bonds remain outstanding, the City will take no action or
fail to take any action which in any way would adversely affect the ability of the City to levy and
collect the foregoing tax levy. The City and its officers will comply with all present and future
applicable laws in order to assure that the Pledged Taxes may be levied, extended and collected
as provided herein and deposited into the Bond Fund.
Section 14. Filing with County Clerk. After this Ordinance becomes effective, a copy
hereof, certified by the City Clerk, shall be filed with the County Clerk of The County of
McHenry, Illinois (the "County Clerk"). The County Clerk shall in and for each of the years
required ascertain the rate percent required to produce the aggregate Pledged Taxes hereinbefore
provided to be levied in each of said years; and the County Clerk shall extend the same for
collection on the tax books in connection with other taxes levied in said years in and by the City
for general corporate purposes of the City; and the County Clerk, or other appropriate officers or
designees, shall remit the Pledged Taxes for deposit to the credit of the Bond Fund, and in said
years the Pledged Taxes shall be levied and collected by and for and on behalf of the City in like
manner as taxes for general municipal purposes of the City for said years are levied and
collected, and in addition to and in excess of all other taxes. The Pledged Taxes are hereby
irrevocably pledged to and shall be used only for the purpose of paying principal of and interest
on the Bonds.
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Section 15. Abatement of Pledged Taxes. As provided in the Reform Act, whenever the
Pledged Revenues shall have been determined by the City Council to provide in any year an
amount not less than 1.25 times debt service of the Bonds payable from the Pledged Revenues
for such years, the City Council or the officers of the City acting with proper authority, shall
direct the abatement of the Pledged Taxes, and proper notification of such abatement shall be
filed with the County Clerk in a timely manner to effect such abatement.
At the time of delivery of the Bonds, there shall be credited to the Bond Fund, the surn of
$98,699.98 derived from funds of the City on hand and lawfully available therefor. Such amount
shall represent the amount sufficient to pay debt service on the Bonds up to and including June 1,
2001.
Section 16. Pledged Revenues; General Covenants. The City covenants and agrees
with the holders of the Alternate Bonds that, so long as any Alternate Bonds remain Outstanding:
A. The Pledged Revenues are hereby pledged to the payment of the Alternate
Bonds; and the City Council covenants and agrees to provide for, collect and apply the
Pledged Revenues to the payment of all of such bonds as are from time to time
Outstanding Bonds and the provision of not less than an additional 0.25 times debt
service thereon, all in accordance with Section 15 of the Reform Act.
B. The City will punctually pay or cause to be paid from the Bond Fund the
principal of, interest on and premium, if any, to become due in respect to the Alternate
Bonds in strict conformity with the terms of the Alterriate Bonds and this Ordinance, and
it will faithfully observe and perform all of the conditions, covenants and requirerrients
thereof.
C. The City will pay and discharge, or cause to be paid and discharged, from
the Bond Fund any and all lawful claims which, if unpaid, might become a lien or charge
upon the Pledged Revenues, or any part thereof, or upon any such funds in the hands of
the Paying Agent, or which might impair the security of the Alternate Bonds. Nothing
herein contained shall require the City to make any such payment so long as the City in
good faith shall contest the validity of said claims.
D. The City will keep, or cause to be kept, proper books of record and
accounts, separate from all other records and accounts of the City, in which complete and
correct entries shall be made of all transactions relating to the Project, to the Pledged
Revenues and to the Bond Fund. Such books of record and accounts shall at all times
during, business hours be subject to the inspection of the holders of not less than ten per
cent (10%) of the principal amount of the Outstanding Alternate Bonds or their
representatives authorized in writing.
E. The City will preserve and protect the security of the Alternate Bonds and
the rights of the registered owners of the Alternate Bonds, and will warrant and defend
their rights against all claims and demands of all persons. From and after the sale and
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delivery of any of the Alternate Bonds by the City, the Alternate Bonds shall be
incontestable by the City.
F. The City will adopt, make, execute and deliver any and all such further
ordinances, resolutions, instruments and assurances as may be reasonably necessary or
proper to carry out the intention of, or to facilitate the performance of, this Ordinance,
and for the better assuring and confirming unto the holders of the Alternate Bonds of the
rights and benefits provided in this Ordinance.
G. As long as any Alternate Bonds are Outstanding, the City will continue to
deposit the Pledged Revenues and, if necessary, the Pledged Taxes to the appropriate
accounts of the Bond Fund. The City covenants and agrees with the purchasers of the
Alternate Bonds and with the registered owners thereof that so long as any Alternate
Bonds remain Outstanding, the City will take no action or fail to take any action which in
any way would adversely affect the ability of the City to collect the Pledged Revenues.
The City and its officers will comply with all present and future applicable laws in order
to assure that the Pledged Revenues and the Pledged Taxes may be collected as provided
herein and deposited into the Bond Fund.
H. Once issued, the Alternate Bonds shall be and forever remain until paid or
defeased the general obligation of the City, for the payment of which its full faith and
credit are pledged, and shall be payable, in addition to the Pledged Revenues, from the
levy of the Pledged Taxes as provided in the Reform Act.
Section 17. Additional Bonds. The City reserves the right to issue Additional Bonds
without limit from time to time payable from the Pledged Revenues, and any such Additional
Bonds shall share ratably and equally in the Pledged Revenues with the Bonds; provided,
however, that not Additional Bonds shall be issued except in accordance with the provisions of
the Reform Act.
Section 18. Defeasance. Bonds which are no longer Outstanding Bonds as defined in
this Ordinance shall cease to have any lien on or right to receive or be paid from Pledged
Revenues or the Pledged Revenues, as applicable, or the Pledged Taxes, for either series, and
shall no longer have the benefits of any covenant for the registered owners of Outstanding Bonds
as set forth herein as such relates to lien and security for the Bonds in the Pledged Revenues or
the Pledged Taxes.
Section 19. This Ordinance a Contract. The provisions of this Ordinance shall
constitute a contract between the City and the registered owners of the Bonds, and no changes,
additions or alterations of any kind shall be made hereto, except as herein provided.
Section 20. Continuing Disclosure Undertaking. The Mayor or Treasurer of the City is
hereby authorized, empowered and directed to execute and deliver the Continuing Disclosure
Under -taking (the " Continuing Disclosure Undertaking ") in substantially the same form as now
before the City Council, or with such changes therein as the individual executing the Continuing
Disclosure Undertaking on behalf of the City shall approve, the official's execution thereof to
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constitute conclusive evidence of the approval of such changes. When the Continuing
Disclosure Undertaking is executed and delivered on behalf of the City as herein provided, the
Continuing Disclosure Undertaking will be binding on the City and the officers, employees and
agents of the City, and the officers, employees and agents of the City are hereby authorized,
empowered and directed to do all such acts and things and to execute all such documents as may
be necessary to carry out and comply with the provisions of the Continuing Disclosure
Undertaking as executed. Notwithstanding any other provision of this Ordinance, the sole
remedies for failure to comply with the Continuing Disclosure Undertaking shall be the ability of
the beneficial owner of any Bond to seek mandamus or specific performance by court order, to
cause the City to comply with its obligations under the Continuing Disclosure Undertaking.
Section 21. Non -Arbitrage and Tax -Exemption. One purpose of this Section is to set
forth various facts regarding the Bonds and to establish the expectations of the City Council and
the City as to future events regarding the Bonds and the use of Bond proceeds. The
certifications, covenants and representations contained herein and at the time of the Closing are
made on behalf of the City for the benefit of the owners from time to time of the Bonds. In
addition to providing the certifications, covenants and representations contained herein, the City
hereby 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 Bonds) if taking, permitting or omitting to take such action would
cause any of the Bonds to be an arbitrage bond or a private activity bond within the meaning of
the Code or would otherwise cause the interest on the Bonds to be included in the gross income
of the recipients thereof for federal income tax purposes. The City acknowledges that, in the
event of an examination by the Internal Revenue Service of the exemption from Federal income
taxation for interest paid on the Bonds, under present rules, the City is treated as the "taxpayer"
in such examination and agrees that it will respond in a commercially reasonable manner to any
inquiries from the Internal Revenue Service in connection with such an examination. The City
Council and the City certify, covenant and represent as follows:
I.L Definitions. In addition to such other words and terms used and defined in
this Ordinance, the following words and terms used in this Section shall have the
following meanings unless, in either case, the context or use clearly indicates another or
different meaning is intended:
"Bond Counsel" means Chapman and Cutler or any other nationally recognized
firm of attorneys experienced in the field of municipal bonds whose opinions are
generally accepted by purchasers of municipal bonds.
"Capital Evpenditures" means costs of a type that would be properly chargeable
to a capital account under the Code (or would be so chargeable with a proper election)
under federal income tax principles if the City were treated as a corporation subject to
federal income taxation, takina into account the definition of PI aced- i n-Service set forth
t:1
herein.
"Closing" means the first date on which the City is receiving the purchase price
for the Bonds.
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"Code" means the Internal Revenue Code of 1986.
"Commingled Fund" means any fund or account containing both Gross Proceeds
and an amount in excess of $25,000 that are not Gross Proceeds if the amounts in the
fund or account are invested and accounted for, collectively, without regard to the source
of funds deposited in the fund or account. An open-ended regulated investment company
under Section 851 of the Code is not a commingled fund.
"Control" means the possession, directly or indirectly through others, of either of
the following discretionary and non -ministerial rights or powers over another entity:
(a) to approve and to remove without cause a controlling portion of the
governing body of a Controlled Entity; or
(b) to require the use of funds or assets of a Controlled Entity for any
purpose.
"Controlled Entity" means any entity or one of a group of entities that is subject
to Control by a Controlling Entity or group of Controlling Entities.
"Controlled Group" means a group of entities directly or indirectly subject to
Control by the same entity or group of entities, including the entity that has the Control of
the other entities.
"Controlling Entity" means any entity or one of a group of entities directly or
indirectly having Control of any entities or group of entities.
"Costs of Issuance " means the costs of issuing the Bonds, including underwriters'
discount and legal fees, but not including the fees for the Credit Facility described in
paragraph 5.5 hereof.
"De nzininzis Aniount of Original Issue Discount or Premium " means(a)any
original issue discount or premium that does not exceed two percent of the stated
redemption price at maturity of the Bonds plus (b) any original issue premium that is
attributable exclusively to reasonable underwriter's compensation.
"External Commingled Fund" means a Commingled Fund in which the City and
all members of the same Controlled Group as the City own, in the aggregate, not more
than ten percent of the beneficial interests.
"GIC" means (a) any investment that has specifically negotiated withdrawal or
reinvestment provisions and a specifically negotiated interest rate and (b) any agreement
to supply investments on two or more future dates (e.g., a forward supply contract).
"Gross Proceeds" means amounts in the Bond Fund and the Project Fund.
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"Placed- in -Service" means the date on which, based on all facts and
circumstances (a) a facility has reached a degree of completion that would permit its
operation at substantially its design level and (b) the facility is, in fact, in operation at
such level.
"Qualified Administrative Costs of Investments " means (a) reasonable, direct
administrative costs (other than carrying costs) such as separately stated brokerage or
selling commissions (other than a broker's commission paid on behalf of either the City
or the provider of a GIC to the extent such commission exceeds the lesser of a reasonable
amount or the present value of annual payments equal to 0.05 percent of the weighted
average amount reasonably expected to be invested each year of the term of the GIC; for
this purpose, present value is computed using the taxable discount rate used to compute
the commission or, if not readily ascertainable, a reasonable taxable discount rate), but
not legal and accounting fees, recordkeeping, custody and similar costs; (b) all
administrative costs, direct or indirect, incurred by a publicly offered regulated
investment company or an External Commingled Fund; or (c) in the case of purpose
investments, costs or expenses paid directly to purchase, carry, sell or retire the
investment and costs of issuing, carrying, or repaying the Bonds, and any placement
agent fee or underwriter's discount.
"Qualified Tax Exempt Obligations" means (a) any obligation described in
Section 103(a) of the Code, the interest on which is excludable from gross income of the
owner thereof for federal income tax purposes and is not an item of tax preference for
purposes of the alternative minimum tax imposed by Section 55 of the Code; (b) an
interest in a regulated investment company to the extent that at least ninety-five percent
of the income to the holder of the interest is interest which is excludable from gross
income under Section 103 of the Code of any owner thereof for federal income tax
purposes and is not an item of tax preference for purposes of the alternative minimum tax
imposed by Section 55 of the Code; and (c) certificates of indebtedness issued by the
United States Treasury pursuant to the Demand Deposit State and Local Government
Series program described in 31 C.F.R. part 344.
"Rebate Fund" means the fund, if any, identified and defined in paragraph 4.1
herein.
"Rebate Provisions" means the rebate requirements contained in Section 148(f)
of the Code and in the Regulations.
"Regulations" means United States Treasury Regulations dealing with the tax-
exempt bond provisions of the Code.
"Reimbursed Expenditures " means amounts, if any, used from Sale Proceeds or
investment earnings thereon to reimburse the City for an expenditure paid prior to
Closing.
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"Sale Proceeds" means amounts actually or constructively received from the sale
of the Bonds, including (a) amounts used to pay underwriters' discount or compensation
and accrued interest, other than accrued interest for a period not greater than one year
before Closing but only if it is to be paid within one year after Closing and (b) amounts
derived from the sale of any right that is part of the terms of a Bond or is otherwise
associated with a Bond (e.g., a redemption right).
"Sale Proceeds Funds" means the funds containing amounts derived by the sale
of the Bonds or investment earnings thereon.
"Yield" means that discount rate which when used in computing the present value
of all payments of principal and interest paid and to be paid on an obligation (using
semiannual compounding on the basis of a 360-day year) produces an amount equal to
the obligation's purchase price (or in the case of the Bonds, the issue price as established
in paragraph 5.1 hereof), including accrued interest.
"Yield Reduction Payment" means a rebate payment or any other amount paid to
the United States in the same manner as rebate amounts are required to be paid or at such
other time or in such manner as the Internal Revenue Service may prescribe that will be
treated as a reduction in Yield of an investment under the Regulations.
2. L Purpose of the Bonds. The Bonds are being issued to finance the Project in
a prudent manner consistent with the revenue needs of the City. A breakdown of the
sources and uses of funds is set forth in Section 12 of this Ordinance. At least 75% of the
sum of (i) Sale Proceeds plus (ii) investment earnings thereon, less (iii) Costs of Issuance
paid from Sale Proceeds or investment earnings thereon, less (iv) Sale Proceeds or
investment earnings thereon deposited in a reasonably required reserve or replacement
fund, are expected to be used for construction purposes with respect to property owned
by a govemmental unit or a Section 50 1 (c)(3) organization.
2.2. The Project — Binding Commitment and Timing. The City has incurred or
w ill, within six months of the Closing, incur a substantial binding obligation (not subject
to contingencies within the control of the City or any member of the same Controlled
Group as the City) to a third party to expend at least five percent of the Sale Proceeds on
the Pr *ect. It is expected that the work of acquiring and constructing the Project and the
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expenditure of amounts deposited into the Project Fund will continue to proceed with due
diligence through November 1, 2003, at which time it is anticipated that all Sale Proceeds
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and investment earnings thereon will have been spent.
The investment earnings on the Project Fund will be spent to pay costs of the
Project and interest on the Bonds not later than the date set forth in the preceding
paragraph, the investment earnings on the Bond Fund xvill be spent to pay interest on the
Bonds, or to the extent permitted by law, investment earnings on amounts in the Project
Fund and the Bond Fund will be commingled with substantial revenues from the
govemmental operations of the City, and the earnings are reasonably expected to be spent
for governmental purposes within six months of the date earned. Interest earnings on the
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Project Fund and the Bond Fund have not been earmarked or restricted by the City
Council for a designated purpose. No proceeds of the Bonds will be used more than
30 days after the date of issue of the Bonds for the purpose of paying any principal or
interest on any issue of bonds, notes, certificates or warrants or on any installment
contract or other obligation of the City or for the purpose of replacing any funds of the
City used for such purpose.
2.3. Reimbursement. None of the Sale Proceeds or investment earnings thereon
will be used for Reimbursed Expenditures.
2.4. Working Capital. All amounts in the Sale Proceeds Funds will be used,
directly or indirectly, to finance Capital Expenditures other than the following:
(a) an amount not to exceed five percent of the Sale Proceeds for working
capital expenditures directly related to Capital Expenditures financed by the
Bonds;
(b) payments of interest on the Bonds for a period commencing at
Closing and ending on the later of the date three years after Closing or one year
after the date on which the Project is PI aced- in -Service;
(c) Costs of Issuance and Qualified Administrative Costs of Investments;
(d) payments of rebate or Yield Reduction Payments made to the United
States under the Regulations; and
(e) principal of or interest on the Bonds paid from unexpected excess
Sale Proceeds and investment earnings thereon.
2.5. Consequences of Contrary Expenditure. The City acknowledges that if
amounts in the Sale Proceeds Funds and investment earnings thereon are spent for non -
Capital Expenditures other than as permitted by paragraph 2.4 hereof, a like amount of
then available funds of the City will be treated as unspent Sale Proceeds.
2.6. Investment of Bond Proceeds. Not more than 50% of the Sale Proceeds and
investment earnings thereon are or will be invested in investments (other than Qualified
Tax Exempt Obligations) having, a Yield that is substantially guaranteed for four years or
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more. No portion of the Bonds is being issued solely for the purpose of investing a
portion of Sale Proceeds or investment earnings thereon at a Yield higher than the Yield
on the Bonds.
2.7. No Grants. None of the Sale Proceeds or investment earnings thereon will
be used to make grants to any person.
2.8. Hedges. Neither the City nor any member of the same Controlled Group as
the City has entered into or expects to enter into any hedge (e.g., an interest rate swap,
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interest rate cap, futures contract, forward contract or an option) with respect to the
Bonds. The City acknowledges that any such hedge could affect the calculation of Bond
Yield under the Regulations, and that the Internal Revenue Service could recalculate
Bond Yield if the failure to account for the hedge fails to clearly reflect the economic
substance of the transaction.
3.1. Use of Proceeds. (a) The use of the Sale Proceeds and investment earnings
thereon and the funds held under the Ordinance at the time of Closing are described in the
preceding Section of this Ordinance.
M Only the funds and accounts described in said Section will be funded at
Closing. There are no other funds or accounts created under this Ordinance.
(c) Principal of and interest on the Bonds will be paid from the Bond Fund.
(d) Any Costs of Issuance incurred in connection with the Bonds to be paid by
the City will be paid from the Project Fund.
(e) The costs of the Project will be paid from the Project Fund and no other
moneys (except for investment earnings on amounts in the Project Fund) are expected to
be deposited therein.
3.2. Purpose of Bond Fund. The Bond Fund will be used primarily to achieve a
proper matching of revenues and earnings with principal and interest payments on the
Bonds in each bond year. It is expected that the Bond Fund will be depleted at least once
a year, except for a reasonable carry over amount not to exceed the greater of (a) the
earnings on the investment of moneys in the Bond Fund for the immediately preceding
bond year or (b) 1/12th of the principal and interest payments on the Bonds for the
immediately preceding bond year.
3.3. No Other Gross Proceeds. (a) Except for the Bond Fund and the Project
Fund, and except for investment earnings that have been commingled as described in
paragraph 2.2 and any credit enhancement or liquidity device related to the Bonds, after
the issuance of the Bonds, neither the City nor any member of the same Controlled Group
as the City has or will have any property, including cash or securities that constitutes:
(i) Sale Proceeds;
(ii) amounts in any fund and account with respect to the Bonds (other
than the Rebate Fund);
(iii) amounts that have a sufficiently direct nexus to the Bonds or to the
governmental purpose of the Bonds to conclude that the arnounts would have
been used for that governmental purpose if the Bonds were not used or to be used
for that governmental purpose (the mere availability or preliminary earmarking of
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such amounts for a governmental purpose, however, does not itself establish such
a sufficient nexus);
(iv) amounts in a debt service fund, redemption fund, reserve fund,
replacement fund or any similar fund to the extent reasonably expected to be used
directly or indirectly to pay principal of or interest on the Bonds or any amounts
for which there is provided, directly or indirectly, a reasonable assurance that the
amount will be available to pay principal of or interest on the Bonds or any
obligations under any credit enhancement or liquidity device with respect to the
Bonds, even if the City encounters financial difficulties;
(v) any amounts held pursuant to any agreement (such as an agreement to
maintain certain levels of types of assets) made for the benefit of the Bondholders
or any credit enhancement provider, including any liquidity device or negative
pledge (any amount pledged to pay principal of or interest on an issue held under
an agreement to maintain the amount at a particular level for the direct or indirect
benefit of Bondholders or a guarantor of the bonds); or
(vi) amounts actually or constructively received from the investment and
reinvestment of the amounts described in (1) or (Ii) above.
(b) No compensating balance, liquidity account, negative pledge of property
held for investment purposes or similar arrangement exists with respect to, in any way,
the Bonds or any credit enhancement or liquidity device related to the Bonds.
(c) The term of the Bonds is not longer than is reasonably necessary for the
governmental purposes of the Bonds. The average reasonably expected economic life of
the Project is at least 20 years. The weighted average maturity of the Bonds does not
exceed 6 years and does not exceed 120 percent of the average reasonably expected
economic life of the Project. The maturity schedule of the Bonds (the "Principal
Payment Schedule ") is based on an analysis of revenues expected to be available to pay
debt service on the Bonds. The Principal Payment Schedule is not more rapid (i.e.,
having a lower average maturity) because a more rapid schedule would place an undue
burden on tax rates and cause such rates to be increased beyond prudent levels, and
would be inconsistent with the governmental purpose of the Bonds as set forth in
paragraph 2.1 hereof.
4.1. Rebate Fund. The City is hereby authorized to create and establish a
special fund to be known as the Rebate Fund (the "Rebate Fund"), which, if created,
shall be continuously held, invested, expended and accounted for in accordance with this
Ordinance. Moneys in the Rebate Fund shall not be considered moneys held for the
benefit of the Bondholders. Except as provided in the Regulations, moneys in the Rebate
Fund (including, earnings and deposits therein) shall be held in trust for payment to the
United States as required by the Rebate Provisions and by the Regulations and as
contemplated under the provisions of this Ordinance.
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4.2. Compliance with Rebate Provisions. The City covenants to take such
actions and make, or cause to be made, all calculations, transfers and payments that may
be necessary to comply with the Rebate Provisions applicable to the Bonds. The City
will make, or cause to be made, rebate payments with respect to the Bonds in accordance
with law.
4.3. Records. The City agrees to keep and retain or cause to be kept and retained
until six years after the Bonds are paid in full adequate records with respect to the
investment of all Gross Proceeds and amounts in the Rebate Fund. Such records shall
include: (a) purchase price; (b) purchase date; (c) type of investment; (d) accrued interest
paid; (e) interest rate; (f) principal amount; (g) maturity date; (h) interest payment date;
(i) date of liquidation; and 0) receipt upon liquidation.
If any investment becomes Gross Proceeds on a date other than the date such
investment is purchased, the records required to be kept shall include the fair market
value of such investment on the date it becomes Gross Proceeds. If any investment is
retained after the date the last Bond is retired, the records required to be kept shall
include the fair market value of such investment on the date the last Bond is retired.
Amounts or investments will be segregated whenever necessary to maintain these
records.
4.4. Prohibited Payments; Certificates of Deposit and Investment Agreements.
In making investments of Gross Proceeds, the City shall take into account prudent
investment standards includina the date on which moneys to be invested may be needed.
The City shall provide that all amounts which constitute Gross Proceeds and any amounts
in the Rebate Fund shall be invested at all times to the greatest extent practicable in
investments permitted under this Ordinance, and no amounts may be held as cash or be
invested in zero Yield investments other than obligations of the United States purchased
directly from the United States; provided, however, that in the event moneys cannot be
invested, other than as provided in this sentence, due to the denomination, price or
availability of investments, such amounts shall be invested in an interest bearing deposit
account of a bank with a Yield not less than that paid to the general public or held
uninvested (but uninvested amounts shall be held to the minimum amount necessary).
For purposes of determining, the purchase price of investments (for either yield
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restriction or rebate purposes), Gross Proceeds and any amounts in the Rebate Fund that
are invested in certificates of deposit or in GICs shall be invested only in accordance with
the following provisions:
(a) Investments in certificates of deposit of banks or savings and loan
associations that have a fixed interest rate, fixed payment schedules and
substantial penalties for early withdrawal shall be made only if either (1) the Yield
on the certificate of deposit (A) is not less than the Yield on reasonably
comparable direct obligations of the United States and (B) is not less than the
highest Yield that is published or posted by the provider to be currently available
from the provider on reasonably comparable certificates of deposit offered to the
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public or (ii) the investment is an investment in a GIC and qualifies under
paragraph (b) below.
(b) Investments in GICs shall be made only if
(i) the bid specifications are in writing, include all material terms
of the bid and are timely forwarded to potential providers (a term is
material if it may directly or indirectly affect the yield on the GIC);
(ii) the terms of the bid specifications are commercially reasonable
(a term is commercially reasonable if there is a legitimate business
purpose for the term other than to reduce the yield on the GIC);
(iii) all bidders for the GIC have equal opportunity to bid so that,
for example, no bidder is given the opportunity to review others bids (a
last look) before bidding;
(iv) any agent used to conduct the bidding for the GIC does not bid
to provide the GIC;
(v) at least three of the providers solicited for bids for the GIC are
reasonably competitive providers of investments of the type purchased
(i.e., providers that have established industry reputations as competitive
providers of the type of investments being purchased);
(vi) at least three of the entities that submit a bid do not have a
financial interest in the Bonds;
(vii) at least one of the entities that provided a bid is a reasonably
competitive provider that does not have a financial interest in the Bonds;
(viii) the bid specifications include a statement notifying potential
providers that submission of a bid is a representation that the potential
provider did not consult with any other provider about its bid, that tile bid
was determined without regard to any other formal or informal agreement
that the potential provider has with the City or any other person (whether
or not in connection with the Bonds) and that the bid is not being
submitted solely as a courtesy to the City or any other person for purposes
of satisfying the federal income tax requirements relating to the bidding
for the GIC;
(ix) the determination of the terms of the GIC takes into account the
reasonably expected deposit and drawdown schedule for the amounts to be
invested;
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(x) the highest -yielding GIC for which a qualifying bid is made
(determined net of broker's fees) is in fact purchased; and
(xi) the obligor on the GIC certifies the administrative costs that it
is paying or expects to pay to third parties in connection with the GIC.
(c) If a GIC is purchased, the City will retain the following records with
its bond documents until three years after the Bonds are redeemed in their
entirety:
(i) a copy of the GIC;
(ii) the receipt or other record of the amount actually paid for the
GIC, including a record of any administrative costs paid, and the
certification under paragraph (b)(m) of this Section;
(iii) for each bid that is submitted, the name of the person and entity
submitting the bid, the time and date of the bid, and the bid results; and
(iv) the bid solicitation form and, if the terms of the GIC deviated
from the bid solicitation form or a submitted bid is modified, a brief
statement explaining the deviation and stating the purpose for the
deviation.
Moneys to be rebated to the United States shall be invested to mature on or prior
to the anticipated rebate payment date. All investments made with Gross Proceeds or
amounts in the Rebate Fund shall be bought and sold at fair market value. The fair
market value of an investment is 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
investments specifically described in this Section and United States Treasury obligations
that are purchased directly from the United States Treasury, only investments that are
traded on an established securities market, within the meaning, of regulations promulgated
under Section 1273 of the Code, will be purchased with Gross Proceeds. In general, an
"established securities market" includes: (i) property that is listed on a national securities
exchange, an interdealer quotation system or certain foreign exchanges; (ii) property that
is traded on a Commodities Futures Trading Commission designated board of trade or an
interbank market; (iii) property that appears on a quotation medium; and (iv) property for
which price quotations are readily available from dealers and brokers. A debt instrument
is not treated as traded on an established market solely because it is convertible into
property which is so traded.
An investment of Gross Proceeds in an External Commingled Fund shall be made
only to the extent that such investment is made without an intent to reduce the amount to
be rebated to the United States Government or to create a smaller profit or a larger loss
than would have resulted if the transaction had been at arm's length and had the rebate or
Yield restriction requirements not been relevant to the City. An investment of Gross
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Proceeds shall be made in a Commingled Fund other than an External Commingled Fund
only if the investments made by such Commingled Fund satisfy the provisions of this
paragraph.
The foregoing provisions of this paragraph 4.4 satisfy various safe harbors set
forth in the Regulations relating to the valuation of certain types of investments. The safe
harbor provisions of this paragraph 4.4 are contained herein for the protection of the City,
who has covenanted not to take any action to adversely affect the tax-exempt status of the
interest on the Bonds. The City will contact Bond Counsel if it does not wish to comply
with the provisions of this paragraph 4.4 and forego the protection provided by the safe
harbors provided herein.
4.5. Arbitrage Elections. The Mayor, Clerk and Treasurer of the City are hereby
authorized to execute one or more elections regarding certain matters with respect to
arbitrage.
5.1. Issue Price. For purposes of determining the Yield on the Bonds, the
purchase price of the Bonds is equal to the first offering price at which the Purchaser sold
at least ten percent of each maturity of the Bonds or is equal to par, plus accrued interest,
if the Purchaser does not intend to resell the Bonds.
5.2. Yield Lintits. (a) Except as provided in paragraph (b) or (c), all Gross
Proceeds shall be invested at market pfices and at a Yield (after taking into account any
Yield Reduction Payments) not in excess of the Yield on the Bonds plus, for amounts in
the Project Fund only, 1/8th of one percent.
(b) The following may be invested without Yield restriction:
(1) amounts invested in Qualified Tax Exempt Obligations (to the extent
permitted by the Act and this Ordinance);
(il) amounts in the Rebate Fund;
(ill) amounts on deposit in the Bond Fund (except for capitalized interest)
that have not been on deposit under the Ordinance for more than 13 months, so
long as the Bond Fund continues to qualify as a bona fide debt service fund as
described in paragraph 3.2 hereof;
ID
(lv) amounts on deposit in the Project Fund prior to the earlier of three
years after Closing or the completion (or abandonment) of the Project;
(v) arnounts in the Bond Fund to be used to pay capitalized interest on the
Bonds prior to the earlier of three years after Closing or the payment of all
capitalized interest;
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(vi) all amounts other than Sale Proceeds for the first 30 days after they
become Gross Proceeds; and
(vii) all amounts derived from the investment of Sale Proceeds or
investment earnings thereon for a period of one year from the date received.
(c) An amount not to exceed the lesser of $100,000 or five percent of the Sale
Proceeds may be invested without regard to Yield restriction.
5.3. Continuing Nature of Yield Limits. Except as provided in paragraph 7.6,
once moneys are subject to the Yield limits of paragraph 5.2 hereof, such moneys remain
Yield restricted until they cease to be Gross Proceeds.
5.4. Federal Guarantees. Except for investments meeting the requirements of
paragraph 5.2(b) hereof, investments of Gross Proceeds shall not be made in
(a) investments constituting obligations of or guaranteed, directly or indirectly, by the
United States (except obligations of the United States Treasury, obligations guaranteed
by the Federal Housing Administration, the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, the Government National Mortgage
Association, the Student Loan Marketing Association, any guarantee by the Bonneville
Power Authority pursuant to the Northwest Power Act (16 U.S.C. 839d) as in effect on
the date of enactment of the Tax Reform Act of 1984, or investments in obligations
issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank, as amended (e.g.,
Refcorp Strips)); or (b) federally insured deposits or accounts (as defined in
Section 149(b)(4)(B) of the Code). Except as permitted in the immediately prior sentence
and in the Regulations, no portion of the payment of principal or interest on the Bonds or
any other credit enhancement or liquidity device relating to the foregoing is or will be
guaranteed, directly or indirectly (in whole or in part), by the United States (or any
agency or instrumentality thereof). No portion of the Gross Proceeds has been or will be
used to make loans the payment of principal or interest with respect to which is or will be
guaranteed (in whole or in part) by the United States (or any agency or instrumentality
thereof).
5.5. Treatment of Certain Credit Facility Fees. The fee paid to the Credit
Facility Provider with respect to the Credit Facility may be treated as interest in
computing Bond Yield. Neither the City nor any member of the same Controlled Group
as the City is a Related Person as defined in Section 144(a)(3) of the Code to the Credit
Facility Provider. The fee paid to the Credit Facility Provider does not exceed ten
percent of the Sale Proceeds. Other than the fee paid to the Credit Facility Provider,
neither the Credit Facility Provider nor any person who is a Related Person to the Credit
Facility Provider within the meaning of Section 144(a)(3) of the Code will use any Sale
Proceeds or investment earninas thereon.
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6. 1. Payinent and Use Tests. (a) No more than five percent of the Sale Proceeds
plus investment earnings thereon will be used, directly or indirectly, in whole or in part,
in any activity carried on by any person other than a state or local governmental unit.
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(b) The payment of more than five percent of the principal of or the interest on
the Bonds will not be, directly or indirectly (i) secured by any interest in (A) property
used or to be used in any activity carried on by any person other than a state or local
governmental unit or (B) payments in respect of such property or (ii) on a present value
basis, derived from payments (whether or not to the City or a member of the same
Controlled Group as the City) in respect of property, or borrowed money, used or to be
used in any activity carried on by any person other than a state or local governmental
unit.
(c) No more than the lesser of five percent of the Sale Proceeds and investment
earnings thereon or $5,000,000 will be used, directly or indirectly, to make or finance
loans to any persons.
(d) No user of the Project other than a state or local governmental unit will use
more than five percent of the Project, in the aggregate, on any basis other than the same
basis as the general public; and no person other than a state or local governmental unit
will be a user of more than five percent of the Project, in the aggregate, as a result of
(i) ownership, (ii) actual or beneficial use pursuant to a lease or a management, service,
incentive payment, research or output contract, or (iii) any other similar arrangement,
agreement or understanding, whether written or oral.
(e) The City has not and will not enter into any arrangement that conveys to any
person, other than a state or local government unit, special legal entitlements to any
portion of the Project that is available for use by the general public. No person, other
4:1
than a state or local governmental unit, is receiving or will receive any special economic
benefit from use of any portion of the Project that is not available for use by the general
public.
(f) No more than the lesser of five percent of the proceeds of the Bonds or
$5,000,000 have been or will be used to provide professional sports facilities. For
purposes of this paragraph, the term "professional sports facilities" (1) means real
property or related improvements used for professional sports exhibitions, games or
training, regardless of whether the admission of the public or press is allowed or paid and
(ii) includes any use of a facility that generates a direct or indirect monetary benefit
(other than reimbursement for out-of-pocket expenses) for a person who uses such
facilities for professional sport exhibitions, games or training.
6.2. I.R.S. Forin 8038-G The information contained in the Information Return
for Tax -Exempt Governmental Obligations, Form 8038-G, is true and complete. The
City will file Form 8038-G (and all other required information reporting forms) in a
timely manner.
6.3. Bank Qualification. (a) The City hereby designates each of the Bonds as a
"qualified tax-exempt obligation" for the purposes and within the meaning of
Section 265(b)(3) of the Code. In support of such designation, the City hereby certifies
that (i) none of the Bonds will be at anytime a "private activity bond" (as defined in
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Section 141 of the Code) other than a "qualified 501(c)(3) bond" (as defined in
Section 145 of the Code), (ii) as of the date hereof, the City has not issued any tax-
exempt obligations of any kind in calendar year 2000 other than the Bonds nor have any
tax-exempt obligations of any kind been issued on behalf of the City, except for the
City's Special Service Area Number One A Bonds, Series 2000 and General Obligation
Refunding Bonds (Sales Tax Alternate Revenue Source), Series 2000B (collectively, the
"Other 2000 Bonds"), and (iii) not more than $10,000,000 of obligations of any kind
(including the Bonds and the Other 2000 Bonds) issued by or on behalf of the City during
calendar year 2000 will be designated for purposes of Section 265(b)(3) of the Code.
(b) The City is not subject to Control by any entity, and there are no entities
subject to Control by the City.
(c) On the date hereof, the City does not reasonably anticipate that for calendar
year 2000 it will issue any Section 265 Tax -Exempt Obligations (other than the Bonds
and the Other 2000 Bonds), or that any Section 265 Tax -Exempt Obligations will be
issued on behalf of it. "Section 265 Tax -Exempt Obligations" are obligations the interest
on which is excludable from gross income of the owners thereof under Section 103 of the
Code, except for private activity bonds other than qualified 501 (c)(3) bonds, both as
defined in Section 141 of the Code. The City will not issue or permit the issuance on
behalf of it or by any entity subject to Control by the City (which may hereafter come
into existence) of Section 265 Tax -Exempt Obligations (including the Bonds and the
Other 2000 Bonds) that exceed the aggregate amount of $ 10,000,000 during calendar
year 2000 unless it first obtains an opinion of Bond Counsel to the effect that such
issuance will not adversely affect the treatment of the Bonds as "qualified tax-exempt
obligations" for the purposes and within the meaning of Section 265(b)(3) of the Code.
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7. 1. Termination; Interest of City in Rebate Fund. The terms and provisions set
forth in this Section shall terminate at the later of (a) 75 days after the Bonds have been
fully paid and retired or (b) the date on which all amounts remaining on deposit in the
Rebate Fund, if any, shall have been paid to or upon the order of the United States and
any other payments required to satisfy the Rebate Provisions of the Code have been made
to the United States. Notwithstanding the foregoing, the provisions of paragraph 4.3
hereof shall not terminate until the sixth anniversary of the date the Bonds are fully paid
and retired.
7.2. No Conzinon Plan of Financing. Since a date that is 15 days prior to the date
of sale of the Bonds by the City to the Purchaser, neither the City nor any member of the
same Controlled Group as the City has sold or delivered any obligations other than the
Bonds that are reasonably expected to be paid out of substantially the same source of
funds as the Bonds. Neither the City nor any member of the same Controlled Group as
the City will sell or deliver within 15 days after the date hereof any obligations other than
the Bonds that are reasonably expected to be paid out of substantially the same source of
funds as the Bonds. No obligation other than the Bonds were sold on the same date as
the Bonds, are being issued on the date of the Closing and were or are being offered
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pursuant to a single offering document, except for the General Obligation Refunding
Bonds (Sales Tax Alternate Revenue Source), Series 2000B.
7.3. No Sale of the Project. (a) Other than as provided in the next sentence,
neither the Project nor any portion thereof has been, is expected to be, or will be sold or
otherwise disposed of, in whole or in part, prior to the earlier of (i) the last date of the
reasonably expected economic life to the City of the property (determined on the date of
issuance of the Bonds) or (ii) the last maturity date of the Bonds. The City may dispose
of personal property in the ordinary course of an established government program prior to
the earlier of (i) the last date of the reasonably expected economic life to the City of the
property (determined on the date of issuance of the Bonds) or (ii) the last maturity of the
Bonds, provided: (A) the weighted average maturity of the Bonds financing the personal
property is not greater than 120 percent of the reasonably expected actual use of that
property for governmental purposes; (B) the City reasonably expects on the issue date
that the fair market value of that property on the date of disposition will be not greater
than 25 percent of its cost; (C) the property is no longer suitable for its governmental
purposes on the date of disposition; and (D) the City deposits amounts received from the
disposition in a commingled fund with substantial tax or other governmental revenues
and the City reasonably expects to spend the amounts on governmental programs within
six months from the date of the commingling.
(b) The City acknowledges that if Bond -financed property is sold or otherwise
disposed of in a manner contrary to (a) above, such sale or disposition may constitute a
"deliberate action" within the meaning of the Regulations that may require remedial
actions to prevent the Bonds from becoming private activity bonds. The City shall
promptly contact Bond Counsel if a sale or other disposition of bond -financed property is
considered by the City.
7.4. Use of Project. The City acknowledges and agrees that it will not use, or
allow the Project to be used, in a manner which is prohibited by the Establishment of
Religion Clause of the First Amendment to the Constitution of the United States of
America or by any comparable provisions of the Constitution of the State of Illinois.
7.5. Future Ev-ents. The City acknowledges and agrees that any changes in facts
or expectations from those set forth herein may result in different Yield restrictions or
rebate requirements from those set forth herein. Such changes in facts or expectations
might include, but are not in any respect whatsoever limited to, moneys or investments
being pledged or otherwise set aside for payment of principal of or interest on the Bonds,
amounts being, derived from the sale of any right that is part of the terms of a Bond or is
otherwise associated with a Bond (e.g., a redemption right) or the City entering into any
agreement to maintain certain levels of types of assets for the benefit of a holder of a
bond or any credit enhancement with respect to the Bonds or the sale of any Bond -
financed property. The City shall promptly contact Bond Counsel if such changes do
occur.
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7.6. Permitted Changes; Opinion of Bond Counsel. The Yield restrictions
contained in paragraph 5.2 or any other restriction or covenant contained herein need not
be observed or may be changed if the City receives an opinion of Bond Counsel to the
effect that such nonobservance or change will not result in the loss of any exemption for
the purpose of federal income taxation to which interest on the Bonds is otherwise
entitled.
7.7. Successors and Assigns. The terms, provisions, covenants and conditions of
this Section shall bind and inure to the benefit of the respective successors and assigns of
the City Council and the City.
7.8. Eypectations. The City Council has reviewed the facts, estimates and
circumstances in existence on the date of issuance of the Bonds. Such facts, estimates
and circumstances, together with the expectations of the City as to future events, are set
forth in summary form in this Section. Such facts and estimates are true and are not
incomplete in any material respect. On the basis of the facts and estimates contained
herein, the City has adopted the expectations contained herein. On the basis of such
facts, estimates, circumstances and expectations, it is not expected that the Sale Proceeds
or any other moneys or property will be used in a manner that will cause the Bonds to be
arbitrage bonds within the meaning of the Rebate Provisions and the Regulations. Such
expectations are reasonable and there are no other facts, estimates and circumstances that
would materially change such expectations.
The City also agrees and covenants with the purchasers and holders of the Bonds from
time to time outstanding that, to the extent possible under Illinois law, it will comply with
whatever federal tax law is adopted in the future which applies to the Bonds and affects the tax-
exempt status of the Bonds.
The City Council hereby authorizes the officials of the City responsible for issuing the
Bonds, the same being the Mayor, Clerk and Treasurer of the City, to make such further
covenants and certifications as may be necessary to assure that the use thereof will not cause the
Bonds to be arbitrage bonds and to assure that the interest on the Bonds will be exempt from
federal income taxation. In connection therewith, the City and the City Council further agree:
(a) through their officers, to make such further specific covenants, representations as shall be
truthful, and assurances as may be necessary or advisable; (b) to consult with counsel approving
the Bonds and to comply with such advice as may be given; (c) to pay to the United States, as
necessary, such sums of money representing required rebates of excess arbitrage profits relating
to the Bonds; (d) to file such forms, statements, and supporting documents as may be required
and in a timely manner; and (e) if deemed necessary or advisable by their officers, to employ and
pay fiscal agents, financial advisors, attorneys, and other persons to assist the City in such
compliance.
Section 22. Registered Form. The City recognizes that Section 149(a) of the Code
requires the Bonds to be issued and to remain in fully registered form in order that interest
thereon is exempt from federal income taxation under laws in force at the time the Bonds are
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delivered. In this connection, the City agrees that it will not take any action to permit the Bonds
to be issued in, or converted into, bearer or coupon form.
Section 23. Bond Registrar Covenants. If requested by the Bond Registrar, the Mayor
and City Clerk are authorized to execute the Bond Registrar's standard form of agreement
between the City and the Bond Registrar with respect to the obligations and duties of the Bond
Registrar hereunder. Subject to modification by the express terms of any such agreement, such
duties shall include the following:
(a) to act as bond registrar, authenticating agent, paying agent and transfer agent
as provided herein;
(b) to maintain a list of Bondholders as set forth herein and to furnish such list
to the City upon request, but otherwise to keep such list confidential to the extent
permitted by law;
(c) to give notice of redemption of Bonds as provided herein;
(d) to cancel and/or destroy Bonds which have been paid at maturity or upon
earlier redemption or submitted for exchange or transfer;
(e) to furnish the City at least annually a certificate with respect to Bonds
cancelled and/or destroyed; and
(f) to furnish the City at least annually an audit confirmation of Bonds paid,
Outstanding Bonds and payments made with respect to interest on the Bonds.
The City Clerk is hereby directed to file a certified copy of this Ordinance with the Bond
Registrar.
Section 24. Municipal Bond Insurance. In the event the payment of principal and
interest on the Bonds is insured pursuant to a municipal bond insurance policy (the "Municipal
Bond Insurance Policy") issued by a bond insurer (the "Bond Insurer"), and as long as such
Municipal Bond Insurance Policy shall be in full force and effect, the City and the Bond
Registrar agree to comply with such usual and reasonable provisions regarding presentment and
payment of the Bonds, subrogation of the rights of the Bondholders to the Bond Insurer when
holding Bonds, amendment hereof, or other terms, as approved by the City Council on advice of
counsel, their approval to constitute full and complete acceptance by the City of such terms and
provisions under authority of this section.
Section 25. Severability. If any section, paragraph, clause or provision of this
Ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision
shall not affect any of the other provisions of this Ordinance.
Section 26. Repealer. All ordinances, resolutions or orders, or parts thereof, in conflict
with the provisions of this Ordinance are to the extent of such conflict hereby repealed.
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Section 27. Effective Date. This Ordinance shall be effective immediately upon
adoption.
AYES:
Passed by the City Council on October 18, 2000.
Bolger, Glab, McClatchey, Murgatroyd, Baird
None
NAYS:
ABSENT: None
RECORDED in the City Records on October 18, 2000.
ATTEST:
City Clerk
[SEAL]
APPROVED: October 18, 2000.
Mayor
M