Bond Purchase Agreement_Sales Tax Increment Revenue Bonds Series 2014(A)Masterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
Dubuque
AI-Americacily
11111,
2007 • 2012 • 2013
SUBJECT: Resolutions for the Bond Purchase Agreement and the Master Resolution
in Connection with the Issuance of Sales Tax Increment Revenue Bonds
(Unlimited Property Tax Supported), Second Lien Series 2014A
DATE: May 14, 2014
Budget Director Jennifer Larson is recommending City Council approval of the Bond
Purchase Agreement and the Master Resolution in connection with the issuance of
Sales Tax Increment Revenue Bonds (Unlimited Property Tax Supported), Second Lien
Series 2014A.
The Bee Branch Watershed, which includes the City's most developed areas where
over 50% of city residents either live or work, has experienced repeated flooding
impacting thousands of properties and over seventy businesses. Six Presidential
Disaster Declarations have been issued since 1999 as a result of flood damage to
public and private property.
In 2012 the State of Iowa Flood Mitigation Program was created.
In 2013, the City Council adopted the Drainage Basin Master Plan authored by HDR
Engineering that outlines improvements to mitigate flooding. Collectively, the 12 -phase
project is referred to as the Bee Branch Watershed Flood Mitigation Project.
On December 4, 2013, the Iowa Flood Mitigation Board approved the City's application
and use of $98,494,178.00 in state sales tax increment funds for the Bee Branch
Watershed Flood Mitigation Project.
Through the agreement with the Iowa Flood Mitigation Board, the City will receive up to
$98,494,178.00 in state sales tax increment revenue over a twenty-year period per the
schedule outlined in the City's Project Plan. The first sales tax increment revenue
receipt is projected to be received on July 15, 2014. Subsequent receipts will be
received every three months.
In order to allow for constructing flood mitigation improvements as soon as possible, the
Iowa Flood Mitigation Program specifically allowed for communities to issue debt, build
the improvements, and abate the debt using the annual sales tax increment payments
from the State. This creates the opportunity for cities to sell Sales Tax Increment
Revenue Bonds.
The City's Project Plan outlines issuing $90 million in debt in order to construct nine of
the twelve phases of the Bee Branch Watershed Flood Mitigation Project by 2020 with
the debt to be abated primarily with the State Sales Tax Increment Revenue. City
Stormwater Management Utility Fees will also be used to retire debt.
The first two proposed debt issuances for the Bee Branch Watershed Flood Mitigation
Project are the $7.8 million Series 2014A Sales Tax Increment Revenue Bond and a
$29 million U.S. EPA Clean Water SRF. In late FY 2015, an estimated $16.5 million
Sales Tax Increment Revenue Bond will be issued. Collectively, the first three debt
issuances will provide the necessary funding to complete the Bee Branch Creek
Restoration Project and the Flood Mitigation Gate Replacement Project which involves
the replacement of the gate structure where the Bee Branch Creek flows into the Peosta
Channel. Consistent with the Project Plan, the need for additional debt is anticipated in
future years. However, the Project Plan allows the City the ability to reduce the need for
future debt should the initial debt financing have lower than anticipated interest costs or
project costs come in lower than estimated.
The State Sales Tax Increment Revenue will cover the principal and interest payments
for the first three debt issuances.
The City has instituted six measures to mitigate the risk that actual state sales tax
increment revenue is less than estimated.
First, the projected state sales tax growth was calculated using historic taxable retail
sales for the past ten years provided by the Iowa Department of Revenue. The rate of
change each year was calculated, and the ten year average growth rate of 1.97% was
then used to project future sales tax increment growth by year. The City's financial
advisor, Piper Jaffray, concluded that use of historical sales tax growth average for
purposes of projections is a responsible basis for calculating the sales tax increment
growth.
Second, the City minimized debt service payments until significant sales increment
revenue is available. The Sales Tax Increment Revenue Bonds issued in Fiscal Year
2014 and 2015 will capitalize interest for the first two years and will have no principal
payments until Fiscal Year 2023. The $29 million U.S. EPA SRF loan will have interest
and principal payments beginning in Fiscal Year 2015 based on how much has been
drawn down from the loan.
Third, the Project Plan outlined that some project elements will be done on a pay-as-
you-go basis over a 20 -year period to create more flexibility. The plan allows the City to
adjust the timing of the Bee Branch Watershed improvements and complete them as
funding becomes available.
Fourth, there will be additional Stormwater Management Utility Fee Revenue, not
specifically identified for the Bee Branch Watershed Flood Mitigation Project, which
could be used to make debt payments. This would involve delaying or canceling other
Stormwater Management capital projects that would not be both time sensitive and
critical in nature.
Fifth, instead of issuing the $24.3 million Sales Tax Revenue Bond in one bond
issuance as originally planned, the City is issuing two separate Sales Tax Increment
Revenue Bond issuances. The first $7.8 million Sales Tax Increment Revenue Bond will
be sold in June 2014. The second $16.5 million Sales Tax Increment Revenue Bond
would be issued in late Fiscal Year 2015. The City will have actual sales tax increment
receipts beginning on July 15, 2014. If the actual sales tax increment receipts are not as
projected, the City will have the opportunity to adjust the amount of the second sales tax
increment revenue bond to reflect the revised sales tax increment revenue.
Sixth, the $7.8 million Series 2014A Sales Tax Increment Revenue Bonds are payable
from sales tax increment revenue and backed by the full faith and credit of the City. In
the event that the Sales Tax Increment Revenues are insufficient to pay principal and
interest, the City has the ability to use property tax to make future debt payments;
however the previous five risk mitigation factors would prevent the need for property tax
dollars ever being used to pay the debt payments on the sales tax increment debt.
The Series 2014A Sales Tax Increment Revenue Bonds are the first of its kind being
sold in the Iowa Market. The Preliminary Official Statement has been reviewed by City
Staff, bond underwriter R.W. Baird and their bond counsel, financial advisor Piper
Jaffray and their bond counsel and City bond counsel Bill Noth.
The Bond Purchase Agreement is between the City of Dubuque and the City's
underwriter, Robert W. Baird & Co., in connection with the Series 2014A Sales Tax
Increment Revenue Bonds. The Bond Purchase Agreement is a legally binding
document between the bond issuer (City) and the underwriter (Baird) establishing the
terms of the bond sale. The terms of a bond purchase agreement includes sale
conditions, sales price, bond interest rate, bond maturity, bond redemption provisions,
sinking fund provisions and conditions under which the agreement may be canceled.
After the issuer delivers the bonds to the underwriter and the underwriter pays the
issuer for them, the underwriter will put the bonds on the market at the price and yield
established in the bond purchase agreement and investors will purchase the bonds from
the underwriter. The underwriter collects the proceeds from the sale and earns a profit
based on the difference between the price at which it purchased the bonds and the
price at which it sells the bonds.
The Master Resolution establishes the different funds/accounts and covenants that will
be used for all future Sales Tax Increment Bonds. The Master Resolution also includes
the particular details of the Series 2014A Bonds, found in Section 2.2 of the resolution.
The Master Resolution also has a number of blank spaces in it that will be completed
once the specific terms of the Series 2014A are established on May 19, 2014. The City
Council will be provided the completed version during the City Council meeting on May
19, 2014.
concur with the recommendation and respectfully request Mayor and City Council
approval.
V,7),(14.,
Michael C. Van Milligen
MCVM/jml
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Jennifer Larson, Budget Director
Kenneth TeKippe, Finance Director
Gus Psihoyos, City Engineer
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Budget Director
Dubuque
krattli
ar-amerlcacnr
1 I lel
2007 • 2012 •2013
SUBJECT: Resolutions for the Bond Purchase Agreement and the Master Resolution in
Connection with the Issuance of Sales Tax Increment Revenue Bonds (Unlimited
Property Tax Supported), Second Lien Series 2014A
DATE: May 14, 2014
INTRODUCTION
The purpose of this memorandum is to request approval of the resolution approving the form
and authorizing execution of a Bond Purchase Agreement and the approval of the Master
Resolution authorizing the issuance of the initial series of bonds in connection with the issuance
of Sales Tax Increment Revenue Bonds (Unlimited Property Tax Supported), Second Lien
Series 2014A.
BACKGROUND
The Bee Branch Watershed, which includes the City's most developed areas where over 50% of
city residents either live or work, has experienced repeated flooding impacting thousands of
properties and over seventy businesses. Six Presidential Disaster Declarations have been
issued since 1999 as a result of flood damage to public and private property.
In 2012 the State of Iowa Flood Mitigation Program (Program) was created. It established two
possible funding sources for flood mitigation projects: a Flood Mitigation Fund and a Sales Tax
Increment Fund. To date, no funds have been appropriated for the Flood Mitigation Fund. The
Sales Tax Increment Fund is to consist of the increase in the state share of the sales tax
revenues from communities with qualifying applications. The maximum state share of sales tax
increment that can be diverted from the state and used instead for flood mitigation projects is
$30 million per year for twenty (20) years or a total of $600 million. The maximum award for any
qualifying single community is $15 million per year. To qualify for sales tax increment funding,
federal financial assistance must have been secured for the project. A local match is also
required and the state sales tax increment cannot exceed 50% of the total project cost. In April
of 2013 the State Flood Mitigation Program Board (the Board) was established. And at its third
meeting in July of 2013, the Board adopted the administrative rules for the Program.
In 2013, the City Council adopted the Drainage Basin Master Plan authored by HDR
Engineering that outlines improvements to mitigate flooding. Collectively, the 12 -phase project is
referred to as the Bee Branch Watershed Flood Mitigation Project.
In November of 2013 the City Council adopted Resolution 336-13 authorizing the City's
application to the State for the use of up to $98,494,178.00 in sales tax increment funds for the
Bee Branch Watershed Flood Mitigation Project. The City's application included a Project Plan
that included information about the various phases of the project, the schedule for construction,
and a financing plan.
On December 4, 2013, the Iowa Flood Mitigation Board approved the City's application and use
of $98,494,178.00 in state sales tax increment funds for the Bee Branch Watershed Flood
Mitigation Project.
In February of 2014, the City Council adopted Resolution 31-14 authorizing the execution of an
agreement with the Iowa Flood Mitigation Board binding the City to the terms of the agreement
as required for the City's receipt of up to $98,494,178.00 in state sales tax increment funds for
the Bee Branch Watershed Flood Mitigation Project through the State Flood Mitigation Program.
The City's application (and associated Project Plan) was established as an integral part of the
agreement.
The following table shows the projected uses of the sales tax increment revenue by the City:
Table 1
Bee Branch Watershed Flood Mitigation
Estimated Sales Tax Increment Uses
Estimated
Sales Tax
Project Funding Source Increment
U.S. EPA Clean Water SRF loan repayment $24,491,634
Sales Tax Increment Bond interest, issuance fees & reserve $21,880,000
Flood Gate Replacements $2,099,000
Lower Bee Branch $362,243
Upper Bee Branch & Culvert $20,680,809
Permeable Pavement Alleys $8,760,492
North End Storm Sewer Improvements $1,160,000
22"d Street Storm Sewer Improvements $3,380,000
Flood Control Maintenance Facility $4,360,000
Water Plant Flood Control $3,800,000
17th Street Storm Sewer $7,520,000
Total Project Funding Source $98,494,178
Percent of Total Cost 49.02%
DISCUSSION
Through the agreement with the Iowa Flood Mitigation Board, the City will receive up to
$98,494,178.00 in sales tax increment revenue over a twenty-year period per the schedule
outlined in the City's Project Plan. There is a three month delay from the time sales tax quarterly
returns are submitted to the Iowa Department of Revenue and when the sales tax increment is
remitted to the City of Dubuque. The first sales tax increment revenue receipt is projected to be
received on July 15, 2014. Subsequent receipts will be received every three months.
2
The estimated sales tax increment revenue receipts for the City are shown in following table.
Table 2
Estimated Sales Tax Increment Revenue Receipts to
City of Dubuque
Fiscal Year
Esti mated
Sales Tax Increment
Revenue Receipts
2015
2016
$1,068,677
$1,786,625
2017 $2,518,644
2018 $3,265,011
2019 $4,026,006
2020 $4,801,918
2021 $5,593,037
2022 $6,399,662
2023 $6,869,796
2024 $6,956,900
2025 $6,956,900
2026 $6,952,300
2027 $6,952,300
2028 $6,947494
2029 $6,713,458
2030 $6,238,500
2031 $5,738,500
2032 $4,328,480
2033 $3,032,469
2034 $1,347,501
Total $98,494,178
In order to allow for constructing flood mitigation improvements as soon as possible, the Iowa
Flood Mitigation Program specifically allowed for communities to issue debt, build the
improvements, and abate the debt using the annual sales tax increment payments from the
State. This creates the opportunity for cities to sell Sales Tax Increment Revenue Bonds.
The City's Project Plan outlines issuing $90 million in debt in order to construct nine of the
twelve phases of the Bee Branch Watershed Flood Mitigation Project by 2020 with the debt to
be abated primarily with the State Sales Tax Increment Revenue. City Stormwater Management
Utility Fees will also be used to retire debt.
The project plan does allow the flexibility to adjust the project schedule and the need for debt.
Therefore, the City has been working with its bond counsel, financial advisor, and the
underwriter for the Sales Tax Increment Revenue Bond to establish the details of the first debt
issuances.
The first two proposed debt issuances for the Bee Branch Watershed Flood Mitigation Project
are the $7.8 million Series 2014A Sales Tax Increment Revenue Bond and a $29 million U.S.
EPA Clean Water SRF. In late FY 2015, an estimated $16.5 million Sales Tax Increment
Revenue Bond will be issued. Collectively, the first three debt issuances will provide the
necessary funding to complete the Bee Branch Creek Restoration Project and the Flood
Mitigation Gate Replacement Project which involves the replacement of the gate structure
3
where the Bee Branch Creek flows into the Peosta Channel. The gate structure works in
conjunction with the John C. Culver Floodwall/Levee System that provides the City protection
from the Mississippi River when it is above flood stage. Consistent with the Project Plan, the
need for additional debt is anticipated in future years. This will likely be a combination of U.S.
EPA Clean Water SRF and General Obligation Bonds to be abated with revenue from the
Stormwater Management Utility Fee. However, the Project Plan allows the City the ability to
reduce the need for future debt should the initial debt financing have lower than anticipated
interest costs or project costs come in lower than estimated.
The following table shows that the State Sales Tax Increment Revenue will cover the principal
and interest payments for the first three debt issuances.
Fiscal
Year
Estimated Sales
Table 3
Tax Increment Revenues and Anticipated Debt Service Requirements
Estimated
Sales Tax
Increment
Revenue
Receipts
Se
D
$7.8M
ries 2014A
ebt Service
$29M
Series 2014B
SRF Loan
Debt Service
Sales Tax
$16.5M* Increment
Series 2015A Balance after
Debt Service Debt Service
Cumulative
Sales Tax
Increment
Balance after
Debt Service
2015
$1,068,677
$0
($320,000)
$0
$748,677
$748,677
2016
$1,786,625
$0
($1,587,274)
$0
$199,351
$948,028
2017
$2,518,644
($276,902)
($1,586,821)
$0
$654,921
$1,602,949
2018
$3,265,011
($276,902)
($1,586,358)
($677,330)
$724,421
$2,327,370
2019
$4,026,006
($276,902)
($1,585,887)
($677,330)
$1,485,887
$3,813,257
2020
$4,801,918
($276,902)
($1,585,405)
($677,330)
$2,262,281
$6,075,538
2021
$5,593,037
($276,902)
($1,584,915)
($677,330)
$3,053,890
$9,129,428
2022
$6,399,662
($276,902)
($1,584,414)
($677,330)
$3,861,016
$12,990,444
2023
$6,869,796
($451,902)
($1,583,903)
($677,330)
$4,156,661
$17,147,105
2024
$6,956,900
($1,428,152)
($1,583,383)
($3,152,330)
$793,035
$17,940,140
2025
$795,317
$18,735,457
$6,956,900
($1,425,152)
($1,582,851)
($3,153,580)
2026
$6,952,300
($1,428,824)
($1,582,310)
($3,152,640)
$788,526
$19,523,983
2027
$6,952,300
($1,424,668)
($1,581,757)
($3,149,692)
$796,183
$20,320,166
2028
$6,947,494
($1,427,742)
($1,581,193)
($3,154,288)
$784,271
$21,104,437
2029
$6,713,458
($1,427,886)
($1,580,618)
($3,151,142)
$553,812
$21,658,249
2030
$6,238,500
$0
($1,580,031)
$0
$4,658,469
$26,316,718
2031
$5,738,500
$0
($1,579,433)
$0
$4,159,067
$30,475,785
2032
$4,328,480
$0
($1,633,358)
$0
$2,695,122
$33,170,907
2033
$3,032,469
$0
($1,771,487)
$0
$1,260,982
$34,431,889
2034
$1,347,501
$0
$0
$0
$1,347,501
$35,779,390
Total
$98,494,178
($10,675,738)
($29,061,398)
($22,977,652)
$35,779,390
*The first quarterly sales tax increment revenue will be received on July 15, 2014.
4
The US EPA SRF loan funding is administered by the Iowa Department of Natural Resources
(IDNR) with assistance from the Iowa Finance Authority (IFA). It carries a pre -established, low
interest rate and instead of being dispersed all up -front in a lump sum payment, the funds are
dispersed as expended. The US EPA SRF loans have an attractive interest rate of 2.00% for a
twenty year loan whereas a general obligation bond has an estimated interest rate of
approximately 3.50%. The City will issue as much of the necessary debt in the form of the US
EPA SRF loans instead of General Obligation Bonds. Not all project elements are eligible for
funding through US EPA SRF.
The City has instituted six measures to mitigate the risk that actual state sales tax increment
revenue is less than estimated.
First, the projected state sales tax growth was calculated using historic taxable retail sales for
the past ten years provided by the Iowa Department of Revenue. The rate of change each year
was calculated, and the ten year average growth rate of 1.97% was then used to project future
sales tax increment growth by year. The City's financial advisor, Piper Jaffray, concluded that
use of historical sales tax growth average for purposes of projections is a responsible basis for
calculating the sales tax increment growth.
Second, the City minimized debt service payments until significant sales tax increment revenue
is available. The Sales Tax Increment Revenue Bonds issued in Fiscal Year 2014 and 2015 will
capitalize interest for the first two years and will have no principal payments until Fiscal Year
2023. The $29 million U.S. EPA SRF loan will have interest and principal payments beginning in
Fiscal Year 2015 based on how much has been drawn down from the loan.
Third, the Project Plan outlined that some project elements will be done on a pay-as-you-go
basis over a 20 -year period to create more flexibility. The plan allows the City to adjust the
timing of the Bee Branch Watershed improvements and complete them as funding becomes
available.
5
The following table shows the amount of sales tax
committed to pay-as-you-go projects as part of the
Estimated Sales Tax Increment after Debt Service
Tax Increment Balance after Debt Service (column
increment and stormwater user fees
Bee Branch Watershed project. The
column (column 2) is the same as the Sales
6) in Table 3.
Estimated Funding
Table 4
Available for Debt and Capital Improvements
Fiscal
Year
Esti mated
Sales Tax
Increment
After Debt
Service
Stormwater
Utility
Committed to
Bee Branch
Watershed
Total $$
Available for
Capital
Projects
Cumulative
Total $$ Available
for Capital
Projects
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
$748,677
$199,351
$654,921
$724,421
$1,485,887
$2,262,281
$3,053,890
$3,861,016
$4,156,661
$793,035
$795,317
$788,526
$796,183
$784,271
$553,812
$4,658,469
$4,159,067
$2,695,122
$1,260,982
$0
$8,050
$8,050
$346,050
$332,050
$998,050
$1,404,050
$1,379,050
$1,428,050
$1,761,313
$2,143,899
$2,583,250
$2,545,384
$2,670,937
$3,048,196
$3,101,000
$3,322,000
$3,681,000
$1,600,000
$748,677
$207,401
$662,971
$1,070,471
$1,817,937
$3,260,331
$4,457,940
$5,240,066
$5,584,711
$2,554,348
$2,939,216
$3,371,776
$3,341,567
$3,455,208
$3,602,008
$7,759,469
$7,481,067
$6,376,122
$2,860,982
$748,677
$956,078
$1,619,049
$2,689,520
$4,507,457
$7,767,788
$12,225,728
$17,465,794
$23,050,505
$25,604,853
$28,544,069
$31,915,845
$35,257,412
$38,712,620
$42,314,628
$50,074,097
$57,555,164
$63,931,286
$66,792,268
2034 $1,347,501
$0
$1,347,501
$68,139,769
Total $35,779,390
$32,360,379
$68,139,769
Fourth, there will be additional Stormwater Management Utility Fee Revenue, not specifically
identified for the Bee Branch Watershed Flood Mitigation Project, which could be used to make
debt payments. This would involve delaying or canceling other Stormwater Management capital
projects that would not be both time sensitive and critical in nature.
6
The following table shows the additional funding that would become available if other capital
projects are delayed or canceled due to actual project costs higher than projected or sales tax
increment revenue is lower than projected. The Funding Committed to Bee Branch Watershed
Available for Debt Service column (column 2) is the same as the Total $$ Available for Capital
Projects column (column 4) in Table 4.
Table 5
Cumulative Sales Tax Increment Revenue & Stormwater Utility Fee Revenue
Available for Debt Service
Fiscal
Year
Funding Committed to
Bee Branch Watershed
Available for Debt
Service
Non -Bee Branch
Watershed Capital
Projects Funded By
Stormwater
Cumulative $
Available for Debt
Service
2015 $748,677 $923,251
$1,671,928
2016 $207,401 $1,061,003
$2,940,332
2017 $662,971 $1,365,953
$4,969,256
2018 $1,070,471 $1,380,763
$7,420,490
2019
2020
2021
2022
2023
$1,817,937
$3,260,331
$4,457,940
$5,240,066
$5,584,711
$1,770,581
$1,508,818
$1,557,598
$1,765,935
$1,815,222
$11,009,008
$15,778,157
$21,793,695
$28,799,696
$36,199,629
2024 $2,554,348 $1,731,115
$40,485,092
2025 $2,939,216 $1,585,528
$45,009,836
2026 $3,371,776 $1,516,789 $49,898,401
2027 $3,341,567 $1,614,850 $54,854,818
2028 $3,455,208
$1,596,972 $59,906,998
2029 $3,602,008 $1,759,349 $65,268,355
2030 $7,759,469
$1,902,029 $74,929,853
2031
2032
2033
$7,481,067
$6,376,122
$2,860,982
$1,917,026
$2,024,968
$4,253,953
$84,327,946
$92,729,036
$99,843,971
2034 $1,347,501
$5,973,498 $107,164,970
Total $68,139,769 $39,025,201
Fifth, instead of issuing the $24.3 million Sales Tax Revenue Bond in one bond issuance as
originally planned, the City is issuing two separate Sales Tax Increment Revenue Bond
issuances. The first $7.8 million Sales Tax Increment Revenue Bond will be sold in June 2014.
The second $16.5 million Sales Tax Increment Revenue Bond would be issued in late Fiscal
Year 2015. The City will have actual sales tax increment receipts beginning on July 15, 2014. If
the actual sales tax increment receipts are not as projected, the City will have the opportunity to
adjust the amount of the second sales tax increment revenue bond to reflect the revised sales
tax increment revenue.
Sixth, the $7.8 million Series 2014A Sales Tax Increment Revenue Bonds are payable from
sales tax increment revenue and backed by the full faith and credit of the City. In the event that
the Sales Tax Increment Revenues are insufficient to pay principal and interest, the City has the
ability to use property tax to make future debt payments; however the previous five risk
7
mitigation factors would prevent the need for property tax dollars ever being used to pay the
debt payments on the sales tax increment debt.
The Series 2014A Sales Tax Increment Revenue Bonds are the first of its kind being sold in the
Iowa Market. Financing for the project was reviewed by the City's financial advisor, Piper
Jaffray. In addition, the bond structure, timing and marketing of the bonds was reviewed by the
City's underwriter, R.W. Baird.
The Bond Purchase Agreement is between the City of Dubuque and the City's underwriter,
Robert W. Baird & Co., in connection with the Series 2014A Sales Tax Increment Revenue
Bonds. The Bond Purchase Agreement is a legally binding document between the bond issuer
(City) and the underwriter (Baird) establishing the terms of the bond sale. The terms of a bond
purchase agreement includes sale conditions, sales price, bond interest rate, bond maturity,
bond redemption provisions, sinking fund provisions and conditions under which the agreement
may be canceled. After the issuer delivers the bonds to the underwriter and the underwriter
pays the issuer for them, the underwriter will put the bonds on the market at the price and yield
established in the bond purchase agreement and investors will purchase the bonds from the
underwriter. The underwriter collects the proceeds from the sale and earns a profit based on the
difference between the price at which it purchased the bonds and the price at which it sells the
bonds.
The Master Resolution establishes the different funds/accounts and covenants that will be used
for all future Sales Tax Increment Bonds. The Master Resolution also includes the particular
details of the Series 2014A Bonds, found in Section 2.2 of the resolution. The Master Resolution
also has a number of blank spaces in it that will be completed once the specific terms of the
Series 2014A are established on May 19, 2014. The City Council will be provided the completed
version during the City Council meeting on May 19, 2014.
RECOMMENDATION
I respectfully recommend the adoption of the enclosed resolutions approving the Bond
Purchase Agreement and the Master Resolution in connection with the issuance of Sales Tax
Increment Revenue Bonds (Unlimited Property Tax Supported), Second Lien Series 2014A.
JML
Attachments
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Ken TeKipper, Finance Director
Gus Psihoyos, City Engineer
8
AHLERS COONEY, P.C.
100 COURT AVENUE. SUITE 600
DES MOINES. IOWA 50309-2231
PHONE: 515-243-7611
FAX: 515-243-2149
WWW.AHLERSLAW.COM
William J. Neth
wnoth@ahlerslaw.com
May 12, 2014
Mr. Ken TeKippe
Finance Director
City of Dubuque
50 West 13th Street
Dubuque, Iowa 52001-4864
RE: Sales Tax Increment Revenue Bonds (Unlimited Property Tax
Supported), Second Lien Series 2014
Dear Mr. TeKippe:
Direct Dial:
(515)246-0332
With this letter I am enclosing suggested proceedings to be acted upon by the
Council in approving a Bond Purchase Agreement ("Agreement") between the City and
Robert W. Baird & Co. in connection with the issuance of the above-described Bonds. It
is my understanding that such a proposal is expected to be received and considered at the
May 19th meeting of the Council.
The form of Agreement will be delivered to you separately, once it has been
finalized. Certain details of the Agreement, particularly Exhibit A, will not be
determined until the day of the Council meeting; those replacement pages will be
forwarded as soon as the Bond pricing has been finalized.
Also enclosed are suggested proceedings to authorize the issuance of the initial
series of the Bonds. This is referred to as the "Master Resolution" because it establishes
the different funds/accounts and covenants that will be used for all future Sales Tax
Increment Bonds. The Master Resolution also includes the particular details of the Series
2014 Bonds, found in Section 2.2. This document also has a number of blank spaces in it
that will be completed once the specific terms of the Series 2014 Bonds are established
on May 19th. I will forward a redline of the Master Resolution to you on May 19th as
soon as those details are known. Jenny and I have talked about giving Council the
completed version during the meeting when this agenda item is reached.
May 12, 2014
Page 2
Extra copies of the proceedings are enclosed to be completed as the originals and
returned to us for our transcript of the action taken.
Should you have any questions, please don't hesitate to contact me.
Very truly yours,
William J. Noth
WJN:dc
Enclosures
cc: Barry Lindahl (w/encl.)
Jenny Larson (w/encl.)
Tim Oswald (w/encl.)
01019708-1\10422-148
(This Notice to be posted)
NOTICE AND CALL OF PUBLIC MEETING
Governmental Body: The City Council of the City of Dubuque, Iowa.
Date of Meeting: May 19 , 2014.
Time of Meeting: 6 : 30 o'clock P.M.
Place of Meeting: Historic Federal Building, 350 West 6th Street, Dubuque,
Iowa.
PUBLIC NOTICE IS HEREBY GIVEN that the above mentioned governmental
body will meet at the date, time and place above set out. The tentative agenda for the
meeting is as follows:
Sales Tax Increment Revenue Bonds (Unlimited Property Tax Supported), Second Lien
Series 2014
• Resolution approving the form and authorizing execution of a Bond Purchase
Agreement in connection with the issuance of Sales Tax Increment Revenue
Bonds (Unlimited Property Tax Supported), Second Lien Series 2014
Such additional matters as are set forth on the additional 4 page(s) attached hereto.
(number)
This notice is given at the direction of the Mayor pursuant to Chapter 21, Code of
Iowa, and the local rules of the governmental body.
City Cle ' , City of I buque, Iowa
May 19, 2014
The City Council of the City of Dubuque, Iowa, met in regular in the Historic Federal
Building, 350 West 6th Street, Dubuque, Iowa, at 6:30 o'clock P.M., on the above date.
There were present Mayor Roy D. Buol the chair, and the following named Council
Members:
Karla Braig, Joyce Connors, Ric Jones, Kevin Lynch,
David Resnick, Lynn Sutton
Absent:
-1-
Council Member Ric Jones introduced the following Resolution entitled "RESOLUTION
APPROVING THE FORM AND AUTHORIZING EXECUTION OF A BOND PURCHASE
AGREEMENT IN CONNECTION WITH THE ISSUANCE OF SALES TAX INCREMENT
REVENUE BONDS (UNLIMITED PROPERTY TAX SUPPORTED), SECOND LIEN SERIES
2014" and moved that it beadopted. Council Member seconded the motion to adopt, and the roll
being called thereon, the vote was as follows:
AYES: Buol, Connors, Jones, Lynch, Resnick, Sutton, Braig
NAYS:
Whereupon, the Mayor declared the Resolution duly adopted as follows:
RESOLUTION NO. 158-14
RESOLUTION APPROVING THE FORM AND
AUTHORIZING EXECUTION OF A BOND PURCHASE
AGREEMENT IN CONNECTION WITH THE
ISSUANCE OF SALES TAX INCREMENT REVENUE
BONDS (UNLIMITED PROPERTY TAX SUPPORTED),
SECOND LIEN SERIES 2014
WHEREAS, the City of Dubuque, Iowa (the "Issuer") is a municipal corporation
organizing and existing under the laws of the State of Iowa; and
WHEREAS, the Bee Branch Watershed, which includes the Issuer's most
developed areas where over 50% of city residents either live or work, has experienced
flooding impacting thousands of properties and over seventy businesses; and
WHEREAS, the City Council has adopted a drainage basin master plan authored
by HDR Engineering that outlines improvements to mitigate flooding, collectively
referred to as the Bee Branch Watershed Flood Mitigation Project (defined herein as the
"Bee Branch Project"); and
WHEREAS, the Flood Mitigation Program (Iowa Code Chapter 418) was
established by the State of Iowa ("State") to support community projects for the
construction and reconstruction of levees, embankments, impounding reservoirs, or
-2-
conduits that are necessary for the protection of property from the effects of floodwaters
and may include the deepening, widening, alteration, change, diversion, or other
improvement of watercourses if necessary for the protection of such property from the
effects of floodwaters; and
WHEREAS, the Issuer submitted an application to the Iowa Flood Mitigation
Board requesting the use of $98,494,178 in sales tax increment funds for the Bee Branch
Watershed Flood Mitigation Project; and
WHEREAS, the Iowa Flood Mitigation Board, acting on December 4, 2013, voted
to approve the Issuer's application for construction of the Bee Branch Project, subject to
the requirements set forth in Iowa Code Chapter 418 and the administrative rules
promulgated under it; and
WHEREAS, the Iowa Flood Mitigation Board and the Issuer have entered into an
Award Agreement relating to the approved Bee Branch Project activities; and
WHEREAS, under the Award Agreement a Flood Project Fund shall be created
for the Bee Branch Project consisting of state sales tax revenue and any other moneys
lawfully received by the Issuer to be used to fund the Bee Branch Project and to pay
principal and interest on bonds issued for the Bee Branch Project; and
WHEREAS, the notice of intention of the Issuer to take action for the issuance of
not to exceed $29,000,000 Sales Tax Increment Revenue Bonds has heretofore been duly
published and no objections to such proposed action have been filed; and
WHEREAS, pursuant to the provisions of Section 418.14 of the Code of Iowa, a
proposal to purchase the initial series of the above mentioned Bonds has been made by
Robert W. Baird & Co., pursuant to the terms and conditions of a Bond Purchase
Agreement with such firm, dated as of the date hereof, which is now before this Council.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF DUBUQUE, AS FOLLOWS:
Section 1. That the form and content of the Bond Purchase Agreement, the
provisions of which are incorporated herein by reference, be and the same hereby are in
all respects authorized, approved and confirmed, and the Mayor and the City Clerk be
and they hereby are authorized, empowered and directed to execute, attest, seal and
deliver the Bond Purchase Agreement for and on behalf of the City in substantially the
form and content now before this meeting, but with such changes, modifications,
additions or deletions therein as shall be approved by such officers, upon the advice of
the City Attorney, and that from and after the execution and delivery of the Bond
Purchase Agreement, the Mayor and the City Clerk are hereby authorized, empowered
-3-
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 Bond Purchase Agreement
as executed.
Passed and approved this 19th day of May, 2014.
ATTEST:
Kevin S. ' irnstahl, City Clerk
Roy D. Buol Mayor
CERTIFICATE
STATE OF IOWA )
COUNTY OF DUBUQUE )
SS
I, the undersigned City Clerk of the City of Dubuque, Iowa, do hereby certify that
attached is a true and complete copy of the portion of the corporate records of the City
showing proceedings of the City Council, and the same is a true and complete copy of the
action taken by the Council with respect to the matter at the meeting held on the date
indicated in the attachment, which proceedings remain in full force and effect, and have
not been amended or rescinded in any way; that meeting and all action thereat was duly
and publicly held in accordance with a notice of public hearing and tentative agenda, a
copy of which was timely served on each member of the Council and posted on a bulletin
board or other prominent place easily accessible to the public and clearly designated for
that purpose at the principal office of the Council (a copy of the face sheet of the agenda
being attached hereto) pursuant to the local rules of the Council and the provisions of
Chapter 21, Code of Iowa, upon reasonable advance notice to the public and media at
least twenty-four hours prior to the commencement of the meeting as required by law and
with members of the public present in attendance; I further certify that the individuals
named therein were on the date thereof duly and lawfully possessed of their respective
City offices as indicated therein, that no Council vacancy existed except as may be stated
in the proceedings, and that no controversy or litigation is pending, prayed or threatened
involving the incorporation, organization, existence or boundaries of the City or the right
of the individuals named therein as officers to their respective positions.
WITNESS my hand and the seal of the City hereto affixed this 20th day of May,
2014.
City t' erk, City o Dubuque, Iowa
(SEAL)
01019709-1\10422-148
ROLL CALL ORDER FOR MEETING OF 5/19/2014
Braig, Buol, Connors, Jones, Lynch, Resnick, Sutton
CITY OF DUBUQUE, IOWA
CITY COUNCIL MEETING
Historic Federal Building
350 W. 6th Street
May '19, 2014
Council meetings are video streamed live and archived at
www.citvofdubuque.org/media and on Dubuque's CityChannel on the
Mediacom cable system at Channel 8 (analog) and 85.2 (digital).
WORK SESSION
5:15 PM
PAYDAY LENDERS
Work Session on Payday Lenders -MVM Memo Staff Memo Staff Materials Map 1 Mao 2 Mao 3 Mao 4 Citizen Input 1 Citizen Input 2 Citizen Input
3,
REGULAR SESSION
6:30 PM
PLEDGE OF ALLEGIANCE
CONSENT ITEMS
The consent agenda items are considered to be routine and non -controversial and all consent items will be normally voted upon in a single
motion without any separate discussion on a particular item. If you would like to discuss one of the Consent Items, please go to the microphone
and be recognized by the Mayor and state the item you would like removed from the Consent Agenda for separate discussion and
consideration.
1. Minutes and Reports Submitted
Cable TV Commission of 4/2, City Council proceedings of 5/5, Five Flags Civic Center Advisory Commission of 4/28, Human Rights
Commission of 4/14, Library Board of Trustees of 2/27, Zoning Advisory Commission of 5/7, Proof of Publication for City Council
proceedings of 4/21, Proof of Publication for List of Claims and Summary of Revenues for Month Ended 3/31
Suggested Disposition: Receive and File
Cable TV 4/2 City Council Proceedings 5/5 FF Civic Center 4/28 Human Rights 4/14 Library Board of Trustees 2/27 Zoning Advisory 5/7
Proof - Council Proceedings 4/21 Proof - List of Claims/Revenues
2. Humanities Iowa Grant - Sister City Commission
City Clerk Kevin Firnstahl recommending approval of the submission of a Humanities Iowa mini grant application in the amount of
$3,000 for the Handan, China, Sister City photo display.
Suggested Disposition: Receive and File; Approve
Humanities Iowa Grant for Sister City Exhibit -MVM Memo Staff Memo Grant Application Proiect Narrative
3. Community Development Block Grant (CDBG) Request to Release Funds
City Manager recommending approval of the Request for Release of Funds for the proposed projects approved in the Fiscal Year 2015
(Program Year 2014) Annual Action Plan for Community Development Block Grant activities.
RESOLUTION Authorizing request for release of Community Development Block Grant funds for Fiscal Year 2015 (Program Year
2014)
Suggested Disposition: Receive and File; Adopt Resolution(s)
CDBG Request to Release Funds -MVM Memo Staff Memo Resolution Request to Release Funds
4. Iowa Department of Transportation
Correspondence from the Iowa Department of Transportation advising the City that it proposes to let a bridge rehabilitation project on
US 52 at Grandview Avenue on October 21, 2014.
Suggested Disposition: Receive and File
Pg. 1
Page 1 of 1
Kevin Firnstahl - Monday's Bond Sale
From: Jenny Larson
To: Tekippe, Ken; Van Milligen, Mike
Date: 5/16/2014 11:11 AM
Subject: Monday's Bond Sale
CC: Firnstahl, Kevin
The schedule for the bond sale on Monday is as follows:
8:30 - 10:00 a.m. - Baird goes out to market and takes orders from investors on the bonds
Noon - Baird will have the orders wrapped up and a proposal to the City shortly after
Baird will be sending an agreement to the City at that point which will show the interest terms and repayment
schedule. Baird's attorneys will be preparing appendix A to the Bond Purchase Agreement which will need to go
to Council Monday night.
Bill Noth will be taking the completed appendix A of the Bond Purchase Agreement to fill in the blanks of the
Master Resolution.
Both the completed Bond Purchase agreement and the completed Master Resolution will need to go to City
Council and media at Monday Night's City Council meeting.
There are signatures that are required on the Bond Purchase Agreement which Baird will want by Tuesday, May
20th.
Since I am in Minneapolis at GFOA, I will count on Ken to facilitate all of the above and bring the completed
documents to the Council Meeting on Monday night. Tim Oswald from Piper Jaffray will be making a
presentation to City Council on the bond sale Monday night.
I will be participating in the City Council meeting by phone. I will also participate in the 8 a.m. pricing call with
Baird and be in conversation with Piper on Monday morning after we get the offer from Baird. I will be pushing
to get the rates very close to what a GO bond would trade for.
Thanks
Jenny
file:///C:/Users/kfirnsta/AppData/Local/Temp/XPgrpwise/53 75F25ADBQ... 5/16/2014
4q.
(This Notice to be posted)
NOTICE AND CALL OF PUBLIC MEETING
Governmental Body: The City Council of Dubuque, Iowa.
Date of Meeting: May 19 , 2014
Time of Meeting: 6 : 30 o'clock P .M.
Place of Meeting: Historic Federal Building, 350 West 6th Street, Dubuque,
Iowa
PUBLIC NOTICE IS HEREBY GIVEN that the above mentioned governmental
body will meet at the date, time and place above set out. The tentative agenda for the
meeting is as follows:
Sales Tax Increment Revenue Bonds (Unlimited Property Tax Supported), Second Lien
Series 2014
• Approval of Tax Exemption Certificate.
• Approval of Continuing Disclosure Certificate.
• Resolution authorizing the issuance.
Such additional matters as are set forth on the additional 49 page(s) attached hereto.
(number)
This notice is given at the direction of the Mayor pursuant to Chapter 21, Code of
Iowa, and the local rules of the governmental body.
City C -rk, City o Dubuque, Iowa
May 19, 2014
The City Council of the City of Dubuque, Iowa, met in regular in the Historic Federal
Building, 350 West 6th Street, Dubuque, Iowa, at 6:30 o'clock P.M., on the above date.
There were present Mayor Roy D. Buol the chair, and the following named Council
Members:
Karla Braig, Joyce Connors, Ric Jones, Kevin Lynch,
David Resnick, Lynn Sutton
Absent:
-1-
Council Member Ric Jones moved that the form of Tax Exemption Certificate be
placed on file and approved. Council Member Joyce Connors seconded the motion. The
roll was called and the vote was,
AYES: Buol, Connors, Jones, Lynch, Resnick, Sutton, Braig
NAYS:
Council Member Ric Jones moved that the form of Continuing Disclosure
Certificate be placed on file and approved. Council Member Joyce Connors seconded the
motion. The roll was called and the vote was,
AYES: Buol, Connors, Jones, Lynch, Resnick, Sutton, Braig
NAYS:
Council Member Ric Jones introduced the following Resolution entitled
"MASTER RESOLUTION RELATING TO THE ISSUANCE OF SALES TAX
INCREMENT REVENUE BONDS BY THE CITY OF DUBUQUE UNDER THE
PROVISIONS OF CHAPTER 418 OF THE CODE OF IOWA, AUTHORIZING AND
PROVIDING FOR THE ISSUANCE AND SECURING THE PAYMENT OF SALES
TAX INCREMENT REVENUE BONDS (UNLIMITED PROPERTY TAX
SUPPORTED), SECOND LIEN SERIES 2014, AND PROVIDING FOR A METHOD
OF PAYMENT THEREOF, AND RELATED MATTERS" and moved that it be adopted.
Council Member Joyce Connors seconded the motion to adopt, and the roll being called
thereon, the vote was as follows:
2
AYES: Buol, Connors, Jones, Lynch, Resnick, Sutton, Braig
NAYS:
Whereupon, the Mayor declared said Resolution duly adopted as follows:
RESOLUTION NO. 159-14
MASTER RESOLUTION RELATING TO THE ISSUANCE OF SALES
TAX INCREMENT REVENUE BONDS BY THE CITY OF DUBUQUE
UNDER THE PROVISIONS OF CHAPTER 418 OF THE CODE OF IOWA,
AUTHORIZING AND PROVIDING FOR THE ISSUANCE AND
SECURING THE PAYMENT OF SALES TAX INCREMENT REVENUE
BONDS (UNLIMITED PROPERTY TAX SUPPORTED), SECOND LIEN
SERIES 2014, AND PROVIDING FOR A METHOD OF PAYMENT
THEREOF, AND RELATED MATTERS
WHEREAS, the City of Dubuque, Iowa (the "Issuer") is a municipal corporation
organizing and existing under the laws of the State of Iowa; and
WHEREAS, the Bee Branch Watershed, which includes the Issuer's most
developed areas where over 50% of city residents either live or work, has experienced
flooding impacting thousands of properties and over seventy businesses; and
WHEREAS, the City Council has adopted a drainage basin master plan authored
by HDR Engineering that outlines improvements to mitigate flooding, collectively
referred to as the Bee Branch Watershed Flood Mitigation Project (defined herein as the
"Bee Branch Project"); and
WHEREAS, the Flood Mitigation Program (Iowa Code Chapter 418) was
established by the State of Iowa ("State") to support community projects for the
construction and reconstruction of levees, embankments, impounding reservoirs, or
conduits that are necessary for the protection of property from the effects of floodwaters
and may include the deepening, widening, alteration, change, diversion, or other
improvement of watercourses if necessary for the protection of such property from the
effects of floodwaters; and
WHEREAS, the Issuer submitted an application to the Iowa Flood Mitigation
Board requesting the use of $98,494,178 in sales tax increment funds for the Bee Branch
Watershed Flood Mitigation Project; and
WHEREAS, the Iowa Flood Mitigation Board, acting on December 4, 2013, voted
to approve the Issuer's application for construction of the Bee Branch Project, subject to
the requirements set forth in Iowa Code Chapter 418 and the administrative rules
promulgated under it; and
WHEREAS, the Iowa Flood Mitigation Board and the Issuer have entered into an
Award Agreement (defined herein) relating to the approved Bee Branch Project activities;
and
WHEREAS, under the Award Agreement a Flood Project Fund shall be created for
the Bee Branch Project consisting of state sales tax revenue and any other moneys
lawfully received by the Issuer to be used to fund the Bee Branch Project and to pay
principal and interest on bonds issued for the Bee Branch Project; and
WHEREAS, the notice of intention of the Issuer to take action for the issuance of
not to exceed $29,000,000 Sales Tax Increment Revenue Bonds has heretofore been duly
published and no objections to such proposed action have been filed; and
WHEREAS, pursuant to the provisions of Section 418.14 of the Code of Iowa, the
initial series of the above mentioned Bonds have heretofore been sold to Robert W. Baird
& Co., and action should now be taken to issue said Bonds conforming to the terms and
conditions of the Bond Purchase Agreement with such firm, dated as of May 19, 2014.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF DUBUQUE, AS FOLLOWS:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The following terms shall have the following meanings
in this Resolution unless the text expressly or by necessary implication requires
otherwise:
"Additional Projects Account" means the account by that name
established in Section 6.8 of this Resolution.
"Authorized Denominations" shall mean $5,000 or any integral multiple
thereof.
4
"Award Agreement" means the Agreement Between the Flood Mitigation
Board and the City of Dubuque, Iowa, Approving the Application of the City of
Dubuque For the Use of Sales Tax Revenues from the State of Iowa Flood
Mitigation Program for the Bee Branch Watershed Flood Mitigation Project,
Number 2013-0, signed by the Issuer on February 3, 2014 and by the Flood
Mitigation Board on Februaryl0, 2014, as the same may be amended from time to
time.
"Bee Branch Project" shall mean the Bee Branch Watershed Flood
Mitigation Project of the Issuer, described in the Award Agreement.
"Beneficial Owner" shall mean the person in whose name such Bond is
recorded as the beneficial owner of a Bond by a Participant on the records of such
Participant or such person's subrogee.
"Bond Principal and Interest Account" means the account by that name
established in Section 6.4 of this Resolution.
"Bond Register" means the books maintained by the Registrar for the
registration, transfer and exchange of Bonds.
"Bondholder" means the registered owner of one or more Bonds.
"Bonds" means any sales tax increment revenue bonds, notes or other
obligations authorized by and authenticated and delivered pursuant to this
Resolution and any Series Resolution, including the Series 2014 Bonds, any other
Senior Bonds, and any Second Lien Bonds.
"Capitalized Interest Subaccount" means the subaccount by that name
established within the Bond Principal and Interest Account.
"City Clerk" means the individual presently serving as the City Clerk of
the Issuer, and any successor who may hereafter serve as such officer or be
charged with substantially the same duties and responsibilities.
"Code" means the Internal Revenue Code of 1986, as amended, and the
applicable regulations of the Treasury Department proposed or promulgated
thereunder.
"Continuing Disclosure Certificate" shall mean that certain Continuing
Disclosure Certificate executed by the Issuer and dated the date of issuance and
delivery of the Series 2014 Bonds, as originally executed and as it may be
5
amended from time to time in accordance with the terms thereof.
"Costs of Issuance" means issuance costs with respect to any series of
Bonds, including but not limited to the following: underwriters' spread (whether
realized directly or derived through purchase of such Bonds at a discount below
the price at which they are expected to be sold to the public); Credit Facility fees
and Reserve Account Credit Facility fees; trustee's fees; counsel fees (including
bond counsel, underwriter's counsel, counsel to the Financial Advisor and any
other specialized counsel fees incurred in connection with the borrowing); fees of
any Financial Advisor to the Issuer incurred in connection with the issuance of the
Bonds; Rating Agency fees; escrow agent and paying agent fees; accountant and
escrow verification agent fees and other expenses related to issuance of the Bonds;
printing costs (for the Bonds and of the preliminary and final official statement
relating to the Bonds); and other fees and expenses of the Issuer incurred in
connection with the issuance of the Bonds.
"Credit Facility" means any letter of credit, insurance policy, guaranty,
surety bond, standby bond purchase agreement, line of credit, revolving credit
agreement, or similar obligation, arrangement, or instrument issued by a bank,
insurance company, or other financial institution which is used by the Issuer to
perform one or more of the following tasks: (i) enhancing the Issuer's credit by
assuring owners of any of the Bonds that Principal of and interest on such Bonds
will be paid promptly when due; or (ii) providing liquidity for the owners of Bonds
through undertaking to cause Bonds to be bought from the owners thereof when
submitted pursuant to an arrangement prescribed by the Series Resolution relating
to such Bonds. The term Credit Facility shall not include a Reserve Account
Credit Facility.
"Credit Facility Agreement" means an agreement between the Issuer and
a Credit Facility Provider pursuant to which the Credit Facility Provider issues a
Credit Facility and may include the promissory note or other instrument
evidencing the Issuer's obligations to a Credit Facility Provider pursuant to a Credit
Facility Agreement. The term Credit Facility Agreement shall not include a
Reserve Account Credit Facility Agreement.
"Credit Facility Provider" means any issuer of a Credit Facility then in
effect for all or part of the Bonds. The term Credit Facility Provider shall not
include any Reserve Account Credit Facility Provider. Whenever in the
Resolution the consent of the Credit Facility Provider is required, such consent
shall only be required from the Credit Facility Provider whose Credit Facility is
issued with respect to the series of Bonds for which the consent is required.
6
"Debt Service Requirement" shall mean the total Principal and interest
coming due on Senior Bonds, or all Bonds, as applicable, whether at maturity, on
any Interest Payment Date, or upon mandatory sinking fund redemption in any
specified period. In addition:
(a) With respect to any Bonds secured by a Credit Facility, Debt
Service Requirement shall include (i) any upfront or periodic commission or
commitment fee obligations with respect to such Credit Facility, (ii) the
outstanding amount of any Reimbursement Obligation owed to the
applicable Credit Facility Provider and interest thereon, and (iii) any
remarketing agent fees.
(b) The Principal of and interest on Bonds shall be excluded from
the determination of Debt Service Requirement to the extent that (1) the
same were or are expected to be paid with amounts on deposit on the date of
calculation (or Bond proceeds to be deposited on the date of issuance of
proposed Bonds) in the Debt Service Reserve Account, the Additional
Projects Account, or a similar fund for Second Lien Bonds or (2) cash or
non -callable Government Obligations are on deposit in an irrevocable
escrow or trust account in accordance with Section 9.1 hereof (or a similar
escrow or trust account for Second Lien Bonds) to pay such Bonds and such
amounts (including, where appropriate, the earnings or other increment to
accrue thereon) are required to be applied to pay Principal or interest and
are sufficient to pay such Principal or interest on such Bonds.
"Debt Service Reserve Account" means the account by that name
established in Section 6.5 of this Resolution.
"Debt Service Reserve Requirement" means the amount determined from
time to time by the Issuer to be a reasonable reserve for the payment of Principal of
and interest on Senior Bonds. Initially, there shall be no Debt Service Reserve
Requirement for the Series 2014 Bonds, and the Series 2014 Bonds shall not be
secured by any amounts held on deposit in the Debt Service Reserve Account. The
Debt Service Reserve Requirement, if any, in connection with any Senior Bonds or
other Second Lien Bonds shall be as provided in the Series Resolution authorizing
the issuance of such Senior Bonds or Second Lien Bonds.
"Debt Service Taxes" means the taxes which may be levied by the Issuer
against all taxable property located within the incorporated area of the Issuer and
thereafter transferred from the debt service fund of the Issuer established under
Section 384.4 of the Code of Iowa, as amended, to the Flood Project Fund to pay
the Issuer's costs related to the Bonds, as may be set forth in a Series Resolution.
7
"Depository Bonds" shall mean the Bonds as issued in the form of one
global certificate for each maturity, registered in the Bond Register maintained by
the Registrar in the name of DTC or its nominee.
"DTC" shall mean The Depository Trust Company, New York, New York,
a limited purpose trust company, or any successor book -entry securities depository
appointed for the Bonds.
"Economic Refunding" shall mean the sale and issuance of refunding
Bonds issued to discharge and satisfy all or any portion of the Senior Bonds in
accordance with Section 8.2 of this Resolution, and to pay related costs of
issuance. The refunding (i) must produce annual debt service on the refunding
Bonds that is not greater than the total (remaining) debt service on the refunded
Bonds, (ii) shall not have a payment in any Fiscal Year (through maturity of the
new refunding Bonds) that is greater than the payment due on the Bonds being
refunded, and (iii) shall not extend the final maturity of the refunded Bonds.
"Event of Default" shall have the meaning ascribed to it in Section 10.1
hereof.
"Financial Advisor" means a financial advisory firm appointed by the
Governing Body for the purpose of assisting the Issuer with the structuring and
offering of Bonds, Second Lien Bonds or other obligations.
"Fiscal Year" shall mean the twelve-month period beginning on July 1 of
each year and ending on the last day of June of the following year, or any other
consecutive twelve-month period adopted by the Governing Body or by law as the
official accounting period of the Issuer. Requirements of a Fiscal Year as
expressed in this Resolution shall exclude any payment of principal or interest
falling due on the first day of the Fiscal Year and include any payment of principal
or interest falling due on the first day of the succeeding Fiscal Year.
"Flood Project Fund" means the fund by that name established in Section
6.2 of this Resolution for the deposit of all Sales Tax Increment Revenues and
other Pledged Revenues.
"Governing Body" shall mean the City Council of the Issuer, or its
successor in function with respect to the operation and control of the Flood Project
Fund.
"Government Obligations" means (a) direct obligations of the United
8
States of America for the full and timely payment of which the full faith and credit
of the United States of America is pledged or (b) obligations issued by an agency
controlled or supervised by and acting as an instrumentality of the United States of
America, the full and timely payment of the principal of and the interest on which
is fully and unconditionally guaranteed as a full faith and credit obligation of the
United States of America (including any securities described in (a) or (b) issued or
held in book -entry form on the books of the Department of the Treasury of the
United States of America), which obligations, in either case, (i) are not subject to
redemption or prepayment prior to maturity except at the option of the holder of
such obligations and (ii) may include U.S. Treasury Trust Receipts.
"Independent Auditor" shall mean an independent firm of certified public
accountants or the Auditor of the State of Iowa.
"Interest Payment Date" means each date on which interest is to become
due on any Bonds, as established in the Series Resolution for such Bonds, and with
respect to the Series 2014 Bonds, shall be as specified in Section 2.2 hereof.
"Investment Earnings" means all interest received on and profits derived
from investments of moneys in all funds and accounts of the Issuer established
hereunder, other than investments derived from or with respect to those funds or
accounts established within or as part of the Project Construction Fund or the
Rebate Fund.
"Issuer" shall mean the City of Dubuque, Iowa.
"Maximum Annual Debt Service Requirement" means the maximum
Debt Service Requirement as computed for the then current or any future Fiscal
Year.
"Non -Appropriation" means a determination by the Governing Body not
to appropriate, levy, collect and transfer Debt Service Taxes to the Flood Project
Fund in the event of a Shortfall on a series of Bonds, as described in the related
Series Resolution.
"Original Purchaser" shall mean Robert W. Baird & Co., as the purchaser
of the Series 2014 Bonds from the Issuer at the time of their original issuance.
"Outstanding" shall mean, as of a particular date, all such Bonds
theretofore and thereupon delivered except: (a) any such Bond cancelled by or on
behalf of the Issuer on or before said date; (b) any such Bond defeased pursuant to
Section 9.1 of this Resolution or of the Series Resolution authorizing its issuance,
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or otherwise defeased as permitted by applicable law; (c) any such Bond then held
by or on behalf of the Issuer and (d) any such Bond in lieu of or in substitution for
which another bond shall have been delivered pursuant to the Series Resolution
authorizing the issuance of such Bond.
"Participants" shall mean those broker-dealers, banks and other financial
institutions for which DTC holds Bonds as securities depository.
"Paying Agent" shall mean Wells Fargo Bank, N.A., or such successor as
may be approved by the Issuer as provided herein and who shall carry out the
duties prescribed herein as the Issuer's agent to provide for the payment of
principal of and interest on the Bonds as the same shall become due.
"Permitted Investments" shall mean those obligations in which the Issuer
is permitted to invest moneys of the Issuer under applicable law and the Issuer's
then -prevailing Investment Policy.
"Pledged Revenues" means the Sales Tax Increment Revenues;
Investment Earnings; any Debt Service Taxes levied and collected as may be
provided in a Series Resolution (but which shall only be pledged to the related
series of Bonds), including any debt service taxes levied and collected in respect of
the Series 2014 Bonds under Section 2.2; any other lawfully available funds that
the Issuer appropriates to the Flood Project Fund and pledges to the payment of
one or more series of Bonds in a Series Resolution or a Supplemental Resolution;
and all other moneys paid into, and all moneys and securities on deposit from time
to time in, the funds and accounts specified in Section 6.2, but excluding any
amounts required to be set aside pending, or used for, rebate to the United States
government pursuant to Section 148(D of the Code, including, but not limited to,
amounts in the Rebate Fund.
"Principal" means the principal amount of such Bond.
"Principal Maturity Date" means each date on which Principal is to
become due on any Bonds, by maturity or mandatory sinking fund redemption, as
established in the Series Resolution for such Bonds.
"Project" shall mean the acquisition and construction of any phase, portion
or component of the Bee Branch Project.
"Project Construction Costs" with respect to any Project shall mean costs
including the following:
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(a) obligations of the Issuer for labor and materials in connection
with the construction, installation and equipping of the Project;
(b) the cost of contract bonds and insurance of all kinds that may
be required or necessary during the construction of the Project;
(c) all costs of architectural and engineering services, including
the costs of the Issuer for test borings, surveys, estimates, plans and
specifications and preliminary investigation therefor, and for supervising
construction, as well as for the performance of all other duties required by
or consequent upon the proper construction of the Project;
(d) all expenses incurred in connection with the issuance of
Bonds, including without limitation compensation and expenses of any
trustee, registrar and paying agent, expenses of the Issuer, legal and
accounting expenses and fees, costs of printing and engraving, recording
and filing fees, compensation of underwriters, Rating Agency fees, costs of
financial services, and accrued interest on the Bonds;
(e) all sums required to reimburse the Issuer for advances made
by it for any of the above items or for any other costs incurred and for work
done, whether before or after the adoption of the Series Resolution, which
are properly chargeable to the Project; and
(f) all other components of cost of labor, materials, machinery,
and equipment and financing charges attributable to the Project to the extent
permitted by law and the Award Agreement.
"Project Construction Fund" shall mean the fund by that name
established in Section 5.1 of this Resolution.
"Rating" means a rating in one of the categories by a Rating Agency,
disregarding pluses, minuses, and numerical gradations.
"Rating Agencies" or "Rating Agency" means Fitch, Inc., Moody's
Investors Service, Inc., and Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., or any successors thereto and any other nationally recognized
credit rating agency then maintaining a rating on any Bonds at the request of the
Issuer. If at any time, a particular Rating Agency does not have a rating
outstanding with respect to the relevant Bonds, then a reference to Rating Agency
or Rating Agencies shall not include such Rating Agency.
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"Rebate Fund" means the fund by that name established in Section 6.6 of
this Resolution.
"Registrar" shall mean Wells Fargo Bank, N.A., or such successor as may
be approved by the Issuer as provided herein and who shall carry out the duties
prescribed herein with respect to maintaining a register of the owners of the Bonds.
Unless otherwise specified, the Registrar shall also act as Transfer Agent for the
Bonds.
"Reimbursement Obligation" means the obligation of the Issuer to
directly reimburse any Credit Facility Provider for amounts paid by such Credit
Facility Provider under a Credit Facility, whether or not such obligation to so
reimburse is evidenced by a promissory note or other similar instrument.
"Representation Letter" shall mean the Blanket Issuer Letter of
Representations executed by the Issuer and previously delivered to DTC.
"Reserve Account Credit Facility" means any letter of credit, insurance
policy, line of credit, or surety bond, together with any substitute or replacement
therefor, if any, complying with the provisions of this Resolution or a Series
Resolution, thereby fulfilling all or a portion of the Debt Service Reserve
Requirement for the series of Bonds to which it relates.
"Reserve Account Credit Facility Agreement" means any agreement
between the Issuer and a Reserve Account Facility Provider relating to the issuance
of a Reserve Account Credit Facility, as such agreement may be amended from
time to time.
"Reserve Account Credit Facility Provider" means any provider of a
Reserve Account Credit Facility.
"Resolution" shall mean this Master Resolution of the Governing Body, as
it may from time to time be modified, supplemented or amended by Supplemental
Resolutions.
"Sales Tax Increment Revenues" shall mean the increased sales tax
revenues calculated and paid to the Issuer by the Iowa Department of Revenue in
accordance with Chapter 418 of the Code of Iowa, the regulations issued
thereunder, and the Award Agreement.
"Second Lien Bond Account" means the account by that name established
in Section 6.7 of this Resolution.
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"Second Lien Bonds" means the Series 2014 Bonds and any other Bonds
issued with a right to payment from the Pledged Revenues and secured by a lien on
the Pledged Revenues expressly junior and subordinate to the Senior Bonds
(except with respect to any Credit Facility or Debt Service Taxes which may be
available only to one or more series of Second Lien Bonds).
"Senior Bonds" means any Bonds issued with a right to payment and
secured by a lien on the Pledged Revenues pursuant to Section 8.3 of this
Resolution.
"Series 2014 Bonds" shall mean the $7,190,000 Sales Tax Increment
Revenue Bonds (Unlimited Property Tax Supported), Second Lien Series 2014,
dated the date of delivery, authorized to be issued under Section 2.2 of this
Resolution.
"Series 2014 Costs of Issuance Account" means the account by that name
within the Project Construction Fund established in Section 5.1 of this Resolution.
"Series 2014 Projects" means the acquisition, construction and installation
and equipping of the Projects being financed with the proceeds of the Series 2014
Bonds, consisting of the Lower Bee Branch Creek Restoration Project (Phases 4
and 7) and the Bee Branch Flood Control Pumping Station Gates Replacement
Project.
"Series Resolution" means a resolution or resolutions of the Governing
Body (which may be supplemented by one or more resolutions) to be adopted prior
to and authorizing the issuance and delivery of any series of Bonds. This
Resolution shall constitute the Series Resolution for the Series 2014 Bonds. Such
a Series Resolution as supplemented shall establish the date or dates of the
pertinent series of Bonds, the schedule of maturities of such Bonds, the obligation,
if any, of the Issuer to levy Debt Service Taxes in respect of such Bonds in the
event of a Shortfall, the name of the purchaser(s) of such series of Bonds, the
purchase price thereof, the rate or rates of interest to be borne thereby, whether
fixed or variable, the interest payment dates for such Bonds, the terms and
conditions, if any, under which such Bonds may be made subject to redemption
(mandatory or optional) prior to maturity, the form of such Bonds, and such other
details as the Issuer may determine.
"Shortfall" shall have the meaning described in Section 2.2 of this
Resolution.
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"Sinking Fund" shall mean the Bond Principal and Interest Account
established in Section 6.4 of this Resolution.
"State" shall mean the State of Iowa.
"Supplemental Resolution" means any Series Resolution and any other
modification, amendment or supplement to this Resolution.
"Tax Exemption Certificate" shall mean the Tax Exemption Certificate
executed by the Treasurer and delivered at the time of issuance and delivery of the
Series 2014 Bonds.
"Term Bonds" means Bonds which mature on one Principal Maturity Date
with a portion of such Bond being required to be redeemed, prior to maturity,
under a schedule of mandatory redemptions set forth in a Series Resolution.
"Treasurer" shall mean the City Treasurer or such other officer of the
Issuer as shall succeed to the same duties and responsibilities.
"U.S. Treasury Trust Receipts" means receipts or certificates which
evidence an undivided ownership interest in the right to the payment of portions of
the principal of or interest on obligations described in clauses (a) or (b) of the term
Government Obligations, provided that such obligations are held by a bank or trust
company organized under the laws of the United States acting as custodian of such
obligations, in a special account separate from the general assets of such custodian.
ARTICLE II
THE BONDS
Section 2.1. Authority. The Bonds authorized by this Resolution shall be issued
pursuant to Chapter 418 of the Code of Iowa in order to construct the Bee Branch Project,
and in compliance with all applicable provisions of the Constitution and laws of the State
of Iowa. The Bonds may be issued and sold from time to time in one or more series, shall
be designated "City of Dubuque, Iowa, Sales Tax Increment Revenue Bonds," and shall
be in substantially the form set forth in the related Series Resolution, but such variations,
omissions, substitutions, and insertions may be made therein, and such particular series
designation, legends, or text may be endorsed thereon, as may be necessary or appropriate
to conform to and as required or permitted by this Resolution and any Series Resolution
or as may be necessary or appropriate to comply with applicable requirements of the
Code.
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The Series 2014 Bonds authorized pursuant to Section 2.2 shall constitute the
initial series of Bonds issued and delivered under, and secured by, this Resolution and
shall be in substantially the form attached hereto as Exhibit A. Senior Bonds may be
issued from time to time as provided in, and subject to the limitations set forth in Section
8.3. Second Lien Bonds may be issued from time to time as provided in, and subject to
the limitations set forth in, Section 8.4.
Unless otherwise provided in a Series Resolution, each authenticated Bond shall
bear interest from its dated date. Each Bond shall bear interest on overdue Principal at the
rate borne by such Bond until the Principal balance thereof is paid in full.
Unless otherwise provided in a Series Resolution, the Bonds shall be issued in
fully registered form in Authorized Denominations and shall be dated as provided in the
pertinent Series Resolution.
The Principal of, premium, if any, and interest on the Bonds shall be payable in
any coin or currency of the United States of America which, at the respective dates of
payment thereof, is legal tender for the payment of public and private debts.
The Bonds and the Registrar's Certificate of Authentication shall be in
substantially the form set forth as Exhibit A hereto or as otherwise set forth in the Series
Resolution pursuant to which such series of Bonds are issued.
Section 2.2. Details of Series 2014 Bonds; Stand-by Levy.
(a) Authorization, Purpose and Maturities. There are hereby authorized to be
issued, negotiable, serial, fully registered $7,190,000 Sales Tax Increment Revenue
Bonds (Unlimited Property Tax Supported), Second Lien Series 2014, dated the date of
delivery, for the purpose of paying costs of the Series 2014 Projects, and to pay related
Costs of Issuance. The Series 2014 Bonds shall be designated as "CITY OF DUBUQUE,
IOWA, SALES TAX INCREMENT REVENUE BONDS (UNLIMITED PROPERTY
TAX SUPPORTED), SECOND LIEN SERIES 2014", and bear interest from the date
thereof, until payment thereof, at the office of the Paying Agent, said interest payable on
December 1, 2014 and semiannually thereafter on the 1st day of June and December in
each year (each an "Interest Payment Date") until maturity at the rates hereinafter
provided.
The Series 2014 Bonds shall be issued as Second Lien Bonds for all purposes of
this Resolution, and shall be junior and subordinate in lien and right of payment to all
Senior Bonds Outstanding at any time, except with respect to any Debt Service Taxes that
may be levied and collected under the provisions of this Section 2.2.
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The Series 2014 Bonds and the Registrar's Certificate of Authentication shall be in
substantially the form set forth in Exhibit A attached hereto, with such variations,
omissions, substitutions and insertions as are required or permitted by this Resolution.
The Series 2014 Bonds shall be executed by the manual or facsimile signature of
the Mayor and attested by the manual or facsimile signature of the City Clerk, and shall
be fully registered as to both Principal and interest as provided in this Resolution;
Principal, interest and premium, if any shall be payable at the office of the Paying Agent
by mailing of a check, wire transfer or automated clearing house system transfer to the
registered owner of the Bond. The Series 2014 Bonds shall be issued as'Depository
Bonds and shall mature and bear interest as follows:
SERIAL BONDS
Interest Principal Maturity
Rate Amount June 1st
4.000% $115,000 2023
4.000% $1,075,000 2024
5.000% $1,125,000 2025
5.000% $1,125,000 2026
4.000% $1,200,000 2027
4.000% $1,250,000 2028
5.000% $1,300,000 2029
Some or all of the Bonds issued after the Series 2014 Bonds may be Term Bonds.
Any requirement for the mandatory redemption of Term Bonds prior to maturity may be
satisfied to the extent that any Bonds of the same series and maturity shall have been
acquired by the Issuer and presented for cancellation to the Registrar on or prior to the
mandatory redemption date.
(b) Back-up Levy of Debt Service Taxes . The Series 2014 Bonds shall be
payable from the Pledged Revenues, as described in Article VI hereof. For the purpose of
providing funds to pay the Principal of and interest on the Series 2014 Bonds (but not
other Bonds) in the event that the Sales Tax Increment Revenues and amounts on deposit
in the Flood Project Fund are otherwise insufficient to do so, there is hereby appropriated
to the Second Lien Bond Account and levied for each future year the following direct
annual tax on all of the taxable property in Dubuque, Iowa, to -wit:
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FISCAL YEAR (JULY 1 TO JUNE 30)
AMOUNT YEAR OF COLLECTION
$309,638 2014/2015
$323,100 2015/2016
$323,100 2016/2017
$323,100 2017/2018
$323,100 2018/2019
$323,100 2019/2020
$323,100 2020/2021
$323,100 2021/2022
$438,100 2022/2023
$1,393,500 2023/2024
$1,400,500 2024/2025
$1,344,250 2025/2026
$1,363,000 2026/2027
$1,365,000 2027/2028
$1,365,000 2028/2029
Notwithstanding the foregoing, the above levies of Debt Service Taxes shall be abated
until such time as the Issuer includes all or a portion of such levy amounts in its annual
budget under subsection (c) of this Section 2.2.
(c) Determination and Funding of Shortfall. In the event that the amounts on
deposit in the Second Lien Bond Account on March 15 of any year are not sufficient to
make the payments of the Principal of and interest due on the Series 2014 Bonds on the
following June 1 and during the following Fiscal Year (the difference between such
available amounts and the amounts due on the Series 2014 Bonds on such dates being
referred to herein as a "Shortfall"), the Issuer agrees to and covenants to include within its
budget for that Fiscal Year a levy of Debt Service Taxes in such amount as may be
necessary to make up the Shortfall and timely pay the full amount of the Principal of and
interest due on the Series 2014 Bonds on the following June 1 and during such Fiscal
Year, and for that purpose has authorized the stand-by levy set forth in subsection (b)
above. If the Issuer, is required under this subsection to budget for such a levy and
appropriate Debt Service Taxes for the foregoing purposes for such Fiscal Year, the Issuer
shall collect such amounts into the debt service fund of the Issuer and thereafter transfer
the same to the Second Lien Bond Account for application to the payment of Principal of
and interest on the Series 2014 Bonds during such Fiscal Year.
(d) Prior to the issuance and delivery of the Series 2014 Bonds a certified copy
of this Resolution shall be filed in the office of the County Auditor of Dubuque County to
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evidence the Issuer's pledge of the Debt Service Taxes described herein.
Section 2.3. Issuance of Bonds in Book -Entry Form; Replacement Bonds.
(a) Notwithstanding the other provisions of this Resolution regarding
registration, ownership, transfer, payment and exchange of the Bonds, unless the Issuer
determines in a Series Resolution to permit the exchange of Depository Bonds for Bonds
in Authorized Denominations, the Bonds shall be issued as Depository Bonds in
denominations of the entire principal amount of each maturity of Bonds (or, if a portion of
said principal amount is prepaid, said principal amount less the prepaid amount); and such
Depository Bonds shall be registered in the name of Cede & Co., as nominee of DTC.
Payment of semi-annual interest for any Depository Bond shall be made by wire transfer
or New York Clearing House or equivalent next day funds to the account of Cede & Co.
on the interest payment date for the Bonds at the address indicated in or pursuant to the
Representation Letter.
(b) With respect to Depository Bonds, neither the Issuer nor the Paying Agent
shall have any responsibility or obligation to any Participant or to any Beneficial Owner.
Without limiting the immediately preceding sentence, neither the Issuer nor the Paying
Agent shall have any responsibility or obligation with respect to (i) the accuracy of the
records of DTC or its nominee or of any Participant with respect to any ownership interest
in the Bonds, (ii) the delivery to any Participant, any Beneficial Owner or any other
person, other than DTC or its nominee, of any notice with respect to the Bonds, (iii) the
payment to any Participant, any Beneficial Owner or any other person, other than DTC or
its nominee, of any amount with respect to the principal of, premium, if any, or interest on
the Bonds, or (iv) the failure of DTC to provide any information or notification on behalf
of any Participant or Beneficial Owner.
The Issuer and the Paying Agent may treat DTC or its nominee as, and deem DTC
or its nominee to be, the absolute owner of each Bond for the purpose of payment of the
principal of, premium, if any, and interest on such Bond, for the purpose of all other
matters with respect to such Bond, for the purpose of registering transfers with respect to
such Bonds, and for all other purposes whatsoever (except for the giving of certain
Bondholder consents, in accordance with the practices and procedures of DTC as may be
applicable thereto). The Paying Agent shall pay all principal of, premium, if any, and
interest on the Bonds only to or upon the order of the Bondholders as shown on the Bond
Register, and all such payments shall be valid and effective to fully satisfy and discharge
the Issuer's obligations with respect to the principal of, premium, if any, and interest on
the Bonds to the extent so paid. Notwithstanding the provisions of this Resolution to the
contrary (including without limitation those provisions relating to the surrender of Bonds,
registration thereof, and issuance in Authorized Denominations), as long as the Bonds are
Depository Bonds, full effect shall be given to the Representation Letter and the
18
procedures and practices of DTC thereunder, and the Paying Agent shall comply
therewith.
(c) Upon (i) a determination by the Issuer that DTC is no longer able to carry
out its functions or is otherwise determined unsatisfactory, or (ii) a determination by DTC
that the Bonds are no longer eligible for its depository services or (iii) a determination by
the Paying Agent that DTC has resigned or discontinued its services for the Bonds, if such
substitution is authorized by law, the Issuer shall (A) designate a satisfactory substitute
depository as set forth below or, if a satisfactory substitute is not found, (B) provide for
the exchange of Depository Bonds for replacement Bonds in Authorized Denominations.
(d) To the extent authorized by law, if the Issuer determines to provide for the
exchange of Depository Bonds for Bonds in Authorized Denominations, the Issuer shall
so notify the Paying Agent and shall provide the Registrar with a supply of executed
unauthenticated Bonds to be so exchanged. The Registrar shall thereupon notify the
owners of the Bonds and provide for such exchange, and to the extent that the Beneficial
Owners are designated as the transferee by the owners, the Bonds will be delivered in
appropriate form, content and Authorized Denominations to the Beneficial Owners, as
their interests appear.
(e) Any substitute depository shall be designated in writing by the Issuer to the
Paying Agent. Any such substitute depository shall be a qualified and registered
"clearing agency" as provided in Section 17A of the Securities Exchange Act of 1934, as
amended. The substitute depository shall provide for (i) immobilization of the Depository
Bonds, (ii) registration and transfer of interests in Depository Bonds by book entries made
on records of the depository or its nominee and (iii) payment of principal of, premium, if
any, and interest on the Bonds in accordance with and as such interests may appear with
respect to such book entries.
Section 2.4. Registration of Bonds; Appointment of Registrar; Transfer;
Ownership; and Cancellation.
(a) Registration. The ownership of Bonds may be transferred only by the
making of an entry upon the books kept for the registration and transfer of ownership of
the Bonds, and in no other way. Wells Fargo Bank, N.A. is hereby appointed as Bond
Registrar for the Series 2014 Bonds under the terms of this Resolution. Registrar shall
maintain the books of the Issuer for the registration of ownership of the Bonds for the
payment of principal of and interest on the Bonds as provided in this Resolution or the
applicable Series Resolution. All Bonds shall be negotiable as provided in Article 8 of
the Uniform Commercial Code, subject to the provisions for registration and transfer
contained in the Bonds and in this Resolution or the applicable Series Resolution.
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(b) Transfer. The ownership of any Bond may be transferred only upon the
Bond Register kept for the registration and transfer of Bonds and only upon surrender
thereof at the office of the Registrar together with an assignment duly executed by the
holder or his duly authorized attorney in fact in such form as shall be satisfactory to the
Registrar, along with the address and social security number or federal employer
identification number of such transferee (or, if registration is to be made in the name of
multiple individuals, of all such transferees). In the event that the address of the
registered owner of a Bond (other than a registered owner which is the nominee of the
broker or dealer in question) is that of a broker or dealer, there must be disclosed on the
Bond Register the information pertaining to the registered owner required above. Upon
the transfer of any such Bond, a new fully registered Bond, of any denomination or
denominations permitted by this Resolution or the applicable Series Resolution in
aggregate principal amount equal to the unmatured and unredeemed principal amount of
such transferred fully registered Bond, and bearing interest at the same rate and maturing
on the same date or dates shall be delivered by the Registrar.
(c) Registration of Transferred Bonds. In all cases of the transfer of the Bonds,
the Registrar shall register the Bonds, at the earliest practicable time, on the Bond
Register in accordance with the provisions of this Resolution or the applicable Series
Resolution.
(d) Ownership. As to any Bond, the person in whose name the ownership of
the same shall be registered on the Bond Register of the Registrar shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on account of
the principal of any such Bonds and the premium, if any, and interest thereon 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, including the interest thereon, to the extent of the sum or sums so paid.
(e) Cancellation. All Bonds which have been redeemed shall not be reissued
but shall be cancelled by the Registrar. All Bonds which are cancelled by the Registrar
shall be destroyed and a certificate of the destruction thereof shall be furnished promptly
to the Issuer; provided that if the Issuer shall so direct, the Registrar shall forward the
cancelled Bonds to the Issuer.
(f) Non -Presentment of Bonds. In the event any payment check representing
payment of principal of or interest on the Bonds is returned to the Paying Agent or is not
presented for payment of principal at the maturity or redemption date, if funds sufficient
to pay such principal of or interest on Bonds shall have been made available to the Paying
Agent for the benefit of the owner thereof, all liability of the Issuer to the owner thereof
for such interest or payment of such Bonds shall forthwith cease, terminate and be
completely discharged, and thereupon it shall be the duty of the Paying Agent to hold
20
such funds, without liability for interest thereon, for the benefit of the owner of such
Bonds who shall thereafter be restricted exclusively to such funds for any claim of
whatever nature on his part under this Resolution or the applicable Series Resolution or
on, or with respect to, such interest or Bonds. The Paying Agent's obligation to hold such
funds shall continue for a period equal to two years and six months following the date on
which such interest or principal became due, whether at maturity, or at the date fixed for
redemption thereof, or otherwise, at which time the Paying Agent, shall surrender any
remaining funds so held to the Issuer, whereupon any claim under this Resolution or the
applicable Series Resolution by the owners of such interest or Bonds of whatever nature
shall be made upon the Issuer.
Section 2.5. Reissuance of Mutilated, Destroyed, Stolen or Lost Bonds. In
case any outstanding Bond shall become mutilated or be destroyed, stolen or lost, the
Issuer shall at the request of Registrar authenticate and deliver a new Bond of like tenor
and amount as the Bond so mutilated, destroyed, stolen or lost, in exchange and
substitution for such mutilated Bond to Registrar, upon surrender of such mutilated Bond,
or in lieu of and substitution for the Bond destroyed, stolen or lost, upon filing with the
Registrar evidence satisfactory to the Registrar and Issuer that such Bond has been
destroyed, stolen or lost and proof of ownership thereof, and upon furnishing the
Registrar and Issuer with satisfactory indemnity and complying with such other
reasonable regulations as the Issuer or its agent may prescribe and paying such expenses
as the Issuer may incur in connection therewith.
Section 2.6. Record Date. Payments of principal and interest, otherwise than
upon full redemption, made in respect of any Bond, shall be made to the registered holder
thereof or to their designated agent as the same appear on the books of the Registrar on
the 15th day preceding the payment date. All such payments shall fully discharge the
obligations of the Issuer in respect of such Bonds to the extent of the payments so made.
Payment of principal shall only be made upon surrender of the Bond to the Paying Agent.
Section 2.7. Execution, Authentication and Delivery of the Series 2014 Bonds.
Upon the adoption of this Resolution, the Mayor and City Clerk shall execute and deliver
the Series 2014 Bonds to the Registrar, who shall authenticate the same and deliver the
same to or upon order of the Original Purchaser. No such Bond shall be valid or
obligatory for any purpose or shall be entitled to any right or benefit hereunder unless the
Registrar shall duly endorse and execute on such Bond a Certificate of Authentication
substantially in the form of the Certificate herein set forth. Such Certificate upon any
such Bond executed on behalf of the Issuer shall be conclusive evidence that the Bond so
authenticated has been duly issued under this Resolution and that the holder thereof is
entitled to the benefits of this Resolution.
Section 2.8. Right to Name Substitute Paying Agent or Registrar. Issuer
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reserves the right to name a substitute, successor Registrar or Paying Agent for any Bonds
upon giving prompt written notice to each registered Bondholder.
ARTICLE III
REDEMPTION OF BONDS
Section 3.1. Optional and Mandatory Redemption.
(a) Redemption Generally. The Bonds shall be subject to optional and
mandatory redemption as provided in the Series Resolution pursuant to which such series
of Bonds are issued.
(b) Optional Redemption of Series 2014 Bonds. The Series 2014 Bonds
maturing on or after June 1, 2025 may be called for redemption by the Issuer and paid
before maturity on June 1, 2024 or any date thereafter, from any funds regardless of
source, in whole or in part, in any order of maturity and within an annual maturity by lot.
The terms of any redemption shall be par, plus accrued interest to date of call.
Section 3.2. Notice of Redemption. Unless waived by any registered owner of
Bonds to be redeemed and except as may be otherwise provided in a Series Resolution,
official notice of any such redemption shall be given by the Registrar of the Bonds to be
redeemed on behalf of the Issuer by mailing a copy of an official redemption notice by
first class mail, at least 30 days prior to the date fixed for redemption to the 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 Registrar.
All official notices of redemption shall be dated, shall contain the complete official
name of the Bond issue, and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the interest rate, maturity date and CUSIP numbers of the Bonds being
redeemed;
(4) if less than all the Outstanding Bonds are to be redeemed, the Bond
numbers, and, where part of the Bonds evidenced by one Bond certificate are being
redeemed, the respective Principal amounts of such Bonds to be redeemed;
(5) that on the redemption date the redemption price will become due and
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payable upon each such Bond or portion thereof called for redemption and that interest
thereon shall cease to accrue from and after such date; and
(6) the place where such Bonds are to be surrendered for payment of the
redemption price (which place of payment shall be the principal payment office of the
Paying Agent or at such other office designated by the Paying Agent for such purpose)
and the name, address, and telephone number of a person or persons at the Paying Agent
who may be contacted with respect to the redemption.
Any notice of an optional redemption of any Bonds (pursuant to Section 3.1(b) of
this resolution or any other Series Resolution) may specify that the redemption is
contingent upon the deposit of moneys with the Paying Agent in an amount sufficient to
pay the redemption price (which price shall include the redemption premium, if any) of
all the Bonds or portions of Bonds which are to be redeemed on that date.
Prior to any redemption date, the Issuer 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.
For so long as DTC is effecting book.entry transfers of the Bonds, the Registrar
shall provide the notices specified in this Section to DTC. It is expected that DTC shall,
in turn, notify its Participants and that the Participants, in turn, will notify or cause to be
notified the Beneficial Owners. Any failure on the part of DTC or a Participant, or failure
on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice
from the Registrar, a Participant or otherwise) to notify the Beneficial Owner of the Bond
so affected, shall not affect the validity of the redemption of such Bond.
Any defect in any notice of redemption shall not affect the validity of proceedings
for redemption of the Bonds.
Section 3.3. Effect of Notice of Redemption. Official notice of redemption
having been given in the manner and under the conditions provided in this Article and
moneys for payment of the redemption price being held by the Paying Agent as provided
in the Series Resolution, the Bonds or portions of Bonds called for redemption shall, on
the redemption date designated in such notice, become and be due and payable at the
redemption price provided for redemption of such Bonds or portions of Bonds on such
date, and from and after such date interest on the Bonds or portions of Bonds called for
redemption shall cease to accrue, such Bonds or portions of Bonds shall cease to be
entitled to any lien, benefit, or security under the Series Resolution, and the owners of
such Bonds or portions of Bonds shall have no rights in respect thereof except to receive
payment of the redemption price thereof. Upon surrender for partial redemption of any
Bond, there shall be prepared for and delivered to the registered owner a new Bond or
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Bonds of the same series, maturity, and interest rate in the amount of the unpaid Principal.
Section 3.4. Redemption Among Series. Subject to the redemption provisions of
any Series Resolution, the Issuer in its discretion may redeem the Bonds of any series, or
a portion of the Bonds of any such series, before it redeems the Bonds of any other series.
Within any particular series, any redemption of Bonds shall be effected in the manner
provided in this Resolution and in any Series Resolution.
Section 3.5. Selection of Bonds to be Redeemed. If less than all of the Bonds of
like maturity of any series shall be called for redemption, the particular Bonds, or portions
of Bonds, to be redeemed shall be selected by the Paying Agent in such equitable manner
as the Paying Agent may determine. The portion of any Bond of a denomination of more
than $5,000 to be redeemed shall be in the Principal amount of $5,000 or an integral
multiple thereof, and, in selecting portions of such Bonds for redemption, the Issuer shall
treat each such Bond as representing that number of Bonds which is obtained by dividing
the Principal of such Bond to be redeemed in part by $5,000.
Section 3.6. Purchase in Open Market. Nothing herein contained shall be
construed to limit the right of the Issuer to purchase with any excess moneys in the
Sinking Fund (i.e., moneys not needed in the then current Fiscal Year to pay Principal of
and interest on any Senior Bonds) and for Sinking Fund purposes, any Senior Bonds in
the open market. Any such Senior Bonds so purchased shall not be reissued and shall be
cancelled.
ARTICLE IV
APPLICATION OF PROCEEDS
Section 4.1. Application of Series 2014 Bond Proceeds. The proceeds of the
Series 2014 Bonds shall be applied as follows:
(i) An amount sufficient to pay Costs of Issuance of the Series 2014 Bonds
shall be deposited into the Series 2014 Costs of Issuance Account.
(ii) The amount of $632,737.50 shall be deposited into the Capitalized Interest
Subaccount of the Bond Principal and Interest Account and used to pay
interest on the Series 2014 Bonds through June 1, 2016.
(iii) The balance of proceeds shall be deposited into the Project Construction
Fund and applied thereafter to pay Project Costs of the Series 2014 Projects.
ARTICLE V
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PROJECT CONSTRUCTION FUND
Section 5.1. Project Construction Fund. There is hereby established a Project
Construction Fund and within the Project Construction Fund, there shall be established a
separate account for each Project and a separate Costs of Issuance Account for each series
of Bonds issued under a Series Resolution. Moneys in the Project Construction Fund
shall be held as may from time to time be designated by the Issuer, and applied to the
payment of the Project Costs, or for the repayment of advances made for that purpose in
accordance with and subject to the provisions and restrictions set forth in this Article.
The Issuer covenants that it will not cause or permit to be paid from the Project
Construction Fund any sums except in accordance with such provisions and restrictions;
provided, however, that any moneys in the Project Construction Fund not presently
needed for the payment of current obligations during the course of construction may be
invested in Permitted Investments maturing not later than (i) the date upon which such
moneys will be needed or (ii) 36 months from the date of purchase, in either case upon
direction of the Treasurer. Any such investments shall be held in trust for the account of
the Project Construction Fund until maturity or until sold, and at maturity or upon such
sale the proceeds received therefrom including accrued interest and premium, if any, shall
be immediately deposited in the Project Construction Fund and shall be disposed of in the
manner and for the purposes provided in the applicable Series Resolution. At such time
as all Costs of Issuance have been paid, and in any case not later than 6 months after the
date of issuance of the applicable series of Bonds, any money in a Costs of Issuance
Account shall be transferred to the Flood Project Fund.
Section 5.2. Funds Remaining on Completion of Projects. For each series of
Bonds, the Issuer shall, when a Project has been completed, and may, when a Project has
been substantially completed, estimate what portion of the funds remaining in the separate
account relating to such Project will be required by the Issuer for the payment or
reimbursement of the Project Costs of such Project, and thereafter such funds that will not
be used shall be, at the direction of the Governing Body, either (1) applied to pay the
costs of other Projects, (2) transferred to the Sinking Fund and used to redeem Bonds of
the related series on the next redemption date or to pay Principal of such Bonds on the
next Principal Maturity Date, or (3) transferred to the Sinking Fund and used to pay
interest on Bonds of the related series, provided that the Issuer shall first obtain an
opinion of bond counsel to the effect that, under existing law, the application of such
moneys to pay interest on such Bonds (a) is allowed under State law, and (b) if such
Bonds are tax-exempt Bonds, will not, by itself and without more, adversely affect the
exclusion from gross income for federal income tax purposes of interest payable on such
Bonds. When all moneys have been withdrawn or transferred from any separate account
within the Project Construction Fund in accordance with the provisions of this Section,
such separate account shall terminate and cease to exist.
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ARTICLE VI
PLEDGED REVENUES AND FLOW OF FUNDS
Section 6.1. Pledge of Revenues; Limited Obligations. Subject only to the
rights of the Issuer to apply amounts as provided in this Article VI, all Pledged Revenues
shall be and are hereby pledged to the prompt payment of the Principal of, premium, if
any, and interest on the Bonds; provided, however, that a pledge of Debt Service Taxes
made in respect of a particular series of Bonds shall be limited to such Bonds, and shall
not extend to or secure any other Bonds; and provided further that, except with respect to
any Debt Service Taxes that may be pledged to one or more series of Second Lien Bonds,
the pledge of the Pledged Revenues to any Second Lien Bonds shall be junior and
subordinate in lien and right of payment to all Senior Bonds Outstanding at any time.
Such moneys and securities shall immediately be subject to the lien of this pledge for the
benefit of the Bondholders without any physical delivery thereof or further act, and the
lien of this pledge shall be valid and binding against the Issuer and against all other
persons having claims against the Issuer, whether such claims shall have arisen in tort,
contract, or otherwise, and regardless of whether such persons have notice of the lien of
this pledge. This pledge shall rank superior to all other pledges which may hereafter be
made of any of the Pledged Revenues. The lien of the pledge made in this Section does
not secure any obligation of the Issuer other than the Bonds.
Except to the extent as may otherwise be set forth in the applicable Series
Resolution, (i) the Bonds shall be limited obligations of the Issuer as provided therein
payable solely from the Pledged Revenues, (ii) the Bonds and the interest thereon shall
not constitute a general obligation of the Issuer nor a debt, indebtedness, or obligation of
the Issuer or the State or any political subdivision thereof within the meaning of any
constitutional, statutory or charter provision whatsoever, and (iii) no taxing power of the
Issuer is pledged to the payment of the Principal of, premium, if any, or interest on the
Bonds or other costs incident thereto. Neither the members of the Governing Body nor
any person executing the Bonds shall be liable personally on the Bonds by reason of the
issuance thereof.
Section 6.2. Special Funds and Accounts. The following special funds and
accounts shall be established, maintained and accounted for as hereinafter provided so
long as any of the Bonds remain Outstanding:
(a) Flood Project Fund;
(b) Bond Principal and Interest Account;
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Debt Service Reserve Account;
Rebate Fund;
Second Lien Bond Account (while Second Lien Bonds are Outstanding);
Additional Projects Account; and
Project Construction Fund.
The Bond Principal and Interest Account, Debt Service Reserve Account, Second
Lien Bond Account and Additional Projects Account shall be held within the Flood
Project Fund, and along with the Rebate Fund are further described in this Article VI.
The Project Construction Fund is described in Article V. The Issuer shall have the right
to create special accounts or sub -accounts, from time to time, in each of the foregoing
funds and accounts as the Governing Body determines to be desirable.
Section 6.3. Flow of Funds. All Pledged Revenues shall be deposited as received
into the Flood Project Fund. Moneys from time to time credited to the Flood Project
Fund shall be applied on the first day of each fiscal quarter to the funds and accounts
hereby established in the following order of priority:
(a) First, to transfer all amounts to the Bond Principal and Interest Account as
required by Section 6.4 of this Resolution.
(b) Second, to transfer all amounts to the Debt Service Reserve Account as
required by Section 6.5 of this Resolution.
(c) Third, to transfer all amounts to the Rebate Fund as required by Section 6.6
of this Resolution.
(d) Fourth, to transfer all amounts to the Second Lien Bond Account as
required by Section 6.7 of this Resolution.
(e) Fifth, to make deposits to the Additional Projects Account as required in
Section 6.8 of this Resolution.
Section 6.4. Bond Principal and Interest Account.
(a) General. Sufficient moneys shall be paid in periodic installments from the
Flood Project Fund into the Sinking Fund for the purpose of paying the Principal of and
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interest on the Senior Bonds as they become due and payable; provided, however, that if
the Issuer has levied and collected any Debt Service Taxes to pay a portion of the
Principal of or interest on any series of Bonds, such Debt Service Taxes shall be allocated
only to (i) the Sinking Fund accounts related to such series of Senior Bonds or (ii) the
Second Lien Bond Account for such series of Second Lien Bonds, as applicable.
Amounts held in the Sinking Fund shall be used solely to pay interest and Principal of the
Senior Bonds as the same become due and payable (whether at maturity or upon
redemption).
(b) Interest. On or before the 30th day preceding each Interest Payment Date
for Senior Bonds, the Issuer shall deposit in the Sinking Fund an amount which, together
with any other moneys already on deposit therein and available to make such payment, is
not less than the interest coming due on such Senior Bonds on such Interest Payment
Date.
(c) Capitalized Interest. A separate subaccount shall be established for each
series of Bonds that are to be paid in part with capitalized interest. In the case of the
Series 2014 Bonds, the Issuer shall, not less than 5 business days prior to each Interest
Payment Date in the period through June 1, 2016 (the "Capitalized Interest Period"),
transfer to the interest subaccount of the Second Lien Bond Account from the Capitalized
Interest Subaccount an amount sufficient to pay interest on the Series 2014 Bonds on such
Interest Payment Date. Any amounts remaining in the Capitalized Interest Subaccount
after the Capitalized Interest Period shall be transferred to the Project Construction Fund,
and the Capitalized Interest Subaccount for the Series 2014 Bonds shall be closed.
(d) Principal. On or before the 30th day preceding each Principal Maturity
Date for Senior Bonds, the Issuer shall deposit in the Sinking Fund an amount which,
together with any other moneys already on deposit therein and available to make such
payment, is not less than the Principal coming due on such Senior Bonds on such
Principal Maturity Date.
(e) Deficiencies. If at any time the amounts in any account of the Sinking Fund
are less than the amounts required by this Resolution, and there are not on deposit in the
Additional Projects Account available moneys sufficient to cure any such deficiency, then
the Issuer shall withdraw from the funds and accounts relating to Second Lien Bonds and
deposit in such account of the Sinking Fund, as the case may be, the amount necessary (or
all the moneys in such funds and accounts, if less than the amount required) to make up
such deficiency; provided, however, that no amounts representing Debt Service Taxes
that may be on deposit in the Second Lien Bond Account shall be withdrawn from the
Second Lien Bond Account to cure any such deficiencies, but shall instead be applied
solely to the payment of the Second Lien Bonds for which the Debt Service Taxes were
levied.
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(f) Application of Money in Sinking Fund. No further payments need be made
into the Sinking Fund for a series of Senior Bonds whenever the amount available in the
Sinking Fund, if added to the amount then in the Debt Service Reserve Account for such
series of Senior Bonds (without taking into account any amount available to be drawn on
any Reserve Account Credit Facility), is sufficient to retire all such Senior Bonds then
Outstanding and to pay all unpaid interest accrued and to accrue prior to such retirement.
No moneys in the Sinking Fund shall be used or applied to the optional purchase or
redemption of Senior Bonds prior to maturity unless: (i) provision shall have been made
for the payment of all of the Senior Bonds; or (ii) such moneys are applied to the purchase
and cancellation of Senior Bonds which are subject to mandatory redemption on the next
mandatory redemption date, which falls due within 12 months, such Senior Bonds are
purchased at a price not more than would be required for mandatory redemption, and such
Senior Bonds are cancelled upon purchase; or (iii) such moneys are in excess of the then
required balance of the Sinking Fund and are applied to redeem a part of the Senior Bonds
Outstanding on the next succeeding redemption date for which the required notice of
redemption may be given.
(g) Application of Excess in Sinking Fund. Whenever at the end of each Fiscal
Year the amount of moneys in any account of the Sinking Fund exceeds the amount then
currently required to be held therein, the excess shall be transferred to the Flood Project
Fund.
Section 6.5. Debt Service Reserve Account. (a) There shall be no deposit made
into the Debt Service Reserve Account upon the issuance of the Series 2014 Bonds, and
the Series 2014 Bonds shall not be secured by any amounts held in the Debt Service
Reserve Account. There shall be deposited into the Debt Service Reserve Account any
amounts specified in Series Resolutions with respect to any Senior Bonds, and the Issuer
shall establish a separate subaccount within the Debt Service Reserve Account for each
series of Senior Bonds to be secured thereby. After the issuance of any Senior Bonds, the
increase in the amount of the Debt Service Reserve Requirement, if any, resulting from
the issuance of such Senior Bonds shall be accumulated, to the extent not covered by
deposits from Bond proceeds or funds on hand, over a period not exceeding 5 calendar
years from the date of delivery of such Senior Bonds in quarterly deposits
("Accumulation Payments"), none of which is less than 1/20 of the amount to be
accumulated. The balance of the Debt Service Reserve Account shall be maintained at an
amount equal to the Debt Service Reserve Requirement (or such lesser amount that is
required to be accumulated in the Debt Service Reserve Account in connection with the
periodic accumulation to the Debt Service Reserve Requirement after the issuance of
Senior Bonds or upon the failure of the Issuer to provide a substitute Reserve Account
Credit Facility in certain events).
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(b) There shall be transferred from the Flood Project Fund on a pro rata basis
(1) to the Debt Service Reserve Account the amount necessary to restore, as further
described below, the amount of cash and securities in the Debt Service Reserve Account
to an amount equal to the difference between (a) the Debt Service Reserve Requirement
(or such lesser quarterly amount that is required to be deposited into the Debt Service
Reserve Account after the issuance of Senior Bonds or upon the failure of the Issuer to
provide a substitute Reserve Account Credit Facility in certain events) and (b) the portion
of the required balance of the Debt Service Reserve Account satisfied by means of a
Reserve Account Credit Facility, and (2) to any Reserve Account Credit Facility Provider
the amount necessary to reinstate any Reserve Account Credit Facility which has been
drawn down. Whenever for any reason the amount in the Sinking Fund is insufficient to
pay all interest or Principal becoming due on the Senior Bonds within the next seven
days, the Issuer shall make up any deficiency by transfers from the following funds and
accounts, in the following order of priority: first, from the Additional Projects Account;
and second, from the funds and accounts of the Issuer relating to Second Lien Bonds.
Whenever, on the date that such interest or Principal is due, there are insufficient moneys
in the Sinking Fund available to make such payment, the Issuer shall, without further
instructions, apply so much as may be needed of the moneys in the Debt Service Reserve
Account to prevent default in the payment of such interest or Principal, with priority to
interest payments, but only on Senior Bonds that are secured by amounts on deposit in the
Debt Service Reserve Account. Whenever by reason of any such application or otherwise
(other than required Accumulation Payments), the amount remaining to the credit of the
Debt Service Reserve Account is less than the amount then required to be in the Debt
Service Reserve Account, such deficiency shall be remedied by quarterly deposits from
the Flood Project Fund over a period not exceeding 5 calendar years, none of which
deposits shall be less than 1/20 of the amount to be so replenished, as provided in Section
6.3 of this Resolution.
(c) The Issuer may elect to satisfy in whole or in part the Debt Service Reserve
Requirement by means of a Reserve Account Credit Facility, subject to the following
requirements: (A) the Reserve Account Credit Facility Provider must have a credit rating
issued by a Rating Agency not less than the then current Rating on the related series of
Senior Bonds (or, in the case of a series of Senior Bonds supported by a Credit Facility,
the underlying rating on such Senior Bonds); (B) the Issuer shall not secure any obligation
to the Reserve Account Credit Facility Provider by a lien equal to or superior to the lien
granted to the related series of Senior Bonds; (C) each Reserve Account Credit Facility
shall have a term of at least one (1) year (or, if less, the remaining term of the related
series of Senior Bonds) and shall entitle the Issuer to draw upon or demand payment and
receive the amount so requested in immediately available funds on the date of such draw
or demand; (D) the Reserve Account Credit Facility shall permit a drawing by the Issuer
for the full stated amount in the event (i) the Reserve Account Credit Facility expires or
terminates for any reason prior to the final maturity of the related series of Senior Bonds,
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and (ii) the Issuer fails to satisfy the Debt Service Reserve Requirement by the deposit to
the Debt Service Reserve Account of cash, obligations, a substitute Reserve Account
Credit Facility, or any combination thereof, on or before the date of such expiration or
termination; (E) if the Rating issued by the Rating Agency to the Reserve Account Credit
Facility Provider is withdrawn or reduced below the Rating assigned to the related series
of Senior Bonds immediately prior to such action by the Rating Agency, the Issuer shall
provide a substitute Reserve Account Credit Facility within sixty (60) days after; such
rating change, and, if no substitute Reserve Account Credit Facility is obtained by such
date, shall fund the Debt Service Reserve Requirement in not more than twelve (12) equal
quarterly deposits commencing not later than the first day of the fiscal quarter
immediately succeeding the date representing the end of such sixty (60) day period; (F) if
the Reserve Account Credit Facility Provider commences any insolvency proceedings or
is determined to be insolvent or fails to make payments when due on its obligations, the
Issuer shall provide a substitute Reserve Account Credit Facility within sixty (60) days
thereafter, and, if no substitute Reserve Account Credit Facility is obtained by such date,
shall fund the Debt Service Reserve Requirement in not more than twelve (12) equal
quarterly deposits commencing not later than the first day of the fiscal quarter
immediately succeeding the date representing the end of such sixty (60) day period; and
(G) the prior written consent of the Credit Facility Provider, as to the provider and the
structure of the Reserve Account Credit Facility, shall be obtained by the Issuer. If the
events described in either clauses (E) or (F) above occur, the Issuer shall not relinquish
the Reserve Account Credit Facility at issue until after the Debt Service Reserve
Requirement is fully satisfied by the provision of cash, obligations, or a substitute
Reserve Account Credit Facility or any combination thereof. Any amount received from
the Reserve Account Credit Facility shall be deposited directly into the Sinking Fund, and
such deposit shall constitute the application of amounts in the Debt Service Reserve
Account. Repayment of any draw -down on the Reserve Account Credit Facility (other
than repayments which reinstate the Reserve Account Credit Facility) and any interest or
fees due the Reserve Account Credit Facility Provider under such Reserve Account Credit
Facility shall be secured by a lien on the Pledged Revenues subordinate to payments into
the Sinking Fund and the Rebate Fund and payments to any Credit Facility Provider
securing Senior Bonds.
(d) Any such Reserve Account Credit Facility shall be pledged to the benefit of
the owners of all or one or more designated series of the Senior Bonds. The Issuer
reserves the right, if it deems it necessary in order to acquire such a Reserve Account
Credit Facility, to amend the Series Resolution without the consent of any of the owners
of the Bonds in order to grant to the Reserve Account Credit Facility Provider such
additional rights as it may demand, provided that such amendment shall not, in the written
opinion of bond counsel filed with the Issuer, impair or reduce the security granted to the
owners of Senior Bonds or any of them.
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Section 6.6. Rebate Fund. The Issuer shall calculate, from time to time, as
required in order to comply with the provisions of Section 148(0 of the Internal Revenue
Code of 1986, as amended, the amounts required to be rebated (including penalties) to the
United States and shall deposit or cause to be deposited into the Rebate Fund any and all
of such amounts promptly following a determination of any such amount. To the extent
amounts on deposit in the Additional Projects Account are not available for such
purposes, the Issuer shall budget for, levy and collect Debt Service Taxes sufficient in
amount to make any required rebate payments to the United States.
The Issuer shall direct any depository of the Rebate Fund to keep all moneys held
therein invested in Permitted Investments. To the extent and at the times required in order
to comply with Section 148(0 of the Code, the Issuer may withdraw funds from the
Rebate Fund for the purpose of making rebate payments (including penalties) to the
United States as required by Section 148(0 of the Code. Except as otherwise specifically
provided in this Section, moneys in the Rebate Fund may not be withdrawn from the
Rebate Fund for any other purpose.
All Investments Earnings held in the Rebate Fund shall be retained in the Rebate
Fund and shall become part of the Rebate Fund. Moneys held in the Rebate Fund,
including the Investment Earnings thereon, if any, shall not be subject to a pledge in favor
of the owners of the Bonds under the Series Resolution and may not be used to pay
amounts due on the Bonds or other Project Costs.
Whenever the Issuer has filed all reports required to be filed with the United States
pursuant to Section 148(0 of the Code with respect to any series of Bonds and has made
all payments required to be made to the United States pursuant to Section 148(0 of the
Code relating thereto, all moneys or investments remaining in the Rebate Fund may be
transferred to the Additional Projects Account, and such moneys and investments may be
used by the Issuer for any lawful purpose.
Section 6.7. Second Lien Bond Account. (a) So long as any Second Lien Bonds
remain Outstanding, there shall next be transferred into the Second Lien Bond Account
from the Flood Project Fund such amounts as may be required to be deposited into the
funds and accounts created by any Series Resolution authorizing the issuance of Second
Lien Bonds, for the purpose of paying Principal of and interest on Second Lien Bonds,
and accumulating reserves for such payments. Except as provided in Section 6.5 of this
Resolution, moneys credited to the Second Lien Bond Account shall be used solely for
the purpose provided in the Series Resolutions authorizing the Second Lien Bonds.
(b) On or before the 30th day preceding each Interest Payment Date for the Series
2014 Bonds, the Issuer shall deposit in the interest subaccount of the Second Lien Bond
Account an amount which, together with any other moneys already on deposit therein and
32
available to make such payment and any amounts available in the Capitalized Interest
Subaccount for the Series 2014 Bonds, is not less than the amount coming due on the
Series 2014 Bonds on such Interest Payment Date.
(c) On or before the 3061 day preceding each Principal Maturity Date for the Series
2014 Bonds, the Issuer shall deposit in the Principal subaccount of the Second Lien Bond
Account an amount which, together with any other moneys already on deposit therein and
available to make such payment, is not less than the Principal coming due on the Series
2014 Bonds on such Principal Maturity Date.
(d) All Debt Service Taxes levied and collected under the provisions of Section
2.2 of this Resolution shall be deposited in the Second Lien Bond Account for the Series
2014 Bonds and used exclusively for the payment of the Principal of and interest on the
Series 2014 Bonds.
Section 6.8. Additional Projects Account. There is hereby established an
Additional Projects Account for the purpose of paying Project Costs of the Bee Branch
Project beyond those being financed with the Series 2014 Bonds. All sums accumulated
and retained in the Additional Projects Account shall be used first to prevent default in the
payment of interest on or Principal of the Senior Bonds when due and then shall be
applied by the Issuer from time to time, as and when the Issuer shall determine, to the
following purposes and, in the order of priority determined by the Issuer in its sole
discretion: (a) for the purposes for which moneys held in the Flood Project Fund may be
applied under Section 6.3, (b) to pay the Project Costs of any other phases of the Bee
Branch Project deemed necessary by the Issuer (including payments under contracts with
vendors, suppliers, and contractors for the foregoing purposes), (c) to acquire any Bonds
by redemption or by purchase in the open market at a price not exceeding the callable
price as provided and in accordance with the terms and conditions of this Resolution,
prior to their respective maturities, and when so used for such purposes the moneys shall
be withdrawn from the Additional Projects Account and deposited into the Sinking Fund
or Second Lien Bond Account, as applicable, for the Bonds to be so redeemed or
purchased and (d) for any other purpose of the Issuer allowed under the Award
Agreement, including but not limited to the payment of debt service on other obligations
of the Issuer, not secured by the Pledged Revenues, that have been issued to pay Project
Costs of the Bee Branch Project.
Section 6.9. Deficiencies in Funds. If in any quarter there shall not be transferred
into any fund maintained pursuant to this Article, the full amounts required herein,
amounts equivalent to such deficiency shall be set apart and transferred to such fund or
funds from the first available and unallocated moneys in the Flood Project Fund, and such
transfer shall be in addition to the amounts otherwise required to be transferred to such
funds during any succeeding quarter or quarters.
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Section 6.10. Investment of Funds; Transfer of Investment Earnings. (a)
Monies in all funds shall, at the option and direction of the Treasurer, be invested and
secured in the manner required by law for public funds, in any Permitted Investments;
provided that all such deposits and investments shall be made in such manner that the
money required to be expended from any fund will be available at the proper time or
times. All such investments shall be valued no less frequently than the last business day
of the Issuer's fiscal year at cost (taking into account normal amortization and accretions
of premiums and discounts) or, in the case of investments having a maturity greater than
five years from the date of valuation, at market value, except that any direct obligations of
the United States of America - State and Local Government Series shall be continuously
valued at their par value or principal face amount. For purposes of maximizing
investment returns, money in such funds may be invested, together with money in other
funds or with other money of the Issuer, in common investments of the kind described
above, or in a common pool of such investments maintained by the Issuer which shall be
kept and held at an official depository of the Issuer, which shall not be deemed to be a
loss of the segregation of such money or funds. Safekeeping receipts, certificates of
participation or other documents clearly evidencing the investment or investment pool in
which such money is invested and the share thereof purchased with such money or owned
by such fund shall be held by or on behalf of each such fund. If and to the extent
necessary, such investments shall be promptly sold to prevent any default.
(b) To the extent it is not otherwise provided for in a Series Resolution or is
needed to eliminate a deficiency, all Investment Earnings derived from deposits and
investments credited to the funds established in this Article are Pledged Revenues and
shall be transferred or credited to the Flood Project Fund.
(c) Notwithstanding anything to the contrary contained herein, any interest and
income derived from deposits and investment of any amounts credited to any fund or
account may be paid to the federal government if in the written opinion of bond counsel
such payment is required in order to prevent interest on any Bonds from being includable
within the gross income of the owners thereof for federal income tax purposes.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Project -Related Covenants. The Issuer hereby covenants and
agrees with each and every holder of the Bonds:
(a) The Issuer will construct the Bee Branch Project in accordance with the
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Award Agreement and all applicable state and federal laws, and will timely request
the Sales Tax Increment Revenues from the Iowa Department of Revenue in an
amount not less than the Principal and interest on the Bonds falling due within
each Fiscal Year, and apply the same to the funds and accounts as provided in
Section 6.3 of this Resolution, unless the Bonds are paid or sufficient provision for
their payment is made.
(b) The Issuer will punctually pay or cause to be paid from the Flood
Project Fund, the Principal of and interest on the Bonds in strict conformity with
the terms of the Bonds and this Resolution, and it will faithfully observe and
perform all of the conditions, covenants and requirements thereof and hereof.
(c) The Issuer will pay and discharge, or cause to be paid and discharged,
from the Flood Project Fund, any and all lawful claims which, if unpaid, might
become a lien or a charge upon the Pledged Revenues, or any part thereof, or
which might impair the security of the Bonds. Nothing herein contained shall
require the Issuer to make any such payments so long as the Issuer in good faith
shall contest the validity of said claims.
(d) The Issuer will keep, or cause to be kept, proper books of record and
accounts, separate from all other records and accounts of the Issuer, in which
complete and correct entries shall be made of all transactions relating to the
Pledged Revenues. Such books of record and accounts shall at all times during
regular business hours be subject to inspection by the holders of not less than 10%
of the principal amount of the Bonds then outstanding, or their representatives
authorized in writing.
(e) The Issuer will prepare or cause the preparation of within 240 days after
the close of each Fiscal Year of the Issuer so long as any of the Bonds remain
outstanding, complete financial statements with respect to the preceding Fiscal
Year showing the Sales Tax Increment Revenues received, and all disbursements
from the funds and accounts created by this Resolution, including the balances in
all funds and accounts relating to the Bonds as of the end of such Fiscal Year,
which statements shall be accompanied by a certificate or written opinion of an
Independent Auditor; provided, however, that no separate financial statements
shall be required to be prepared by the Issuer if the foregoing information is
included in the Issuer's comprehensive annual financial report for that Fiscal Year.
The Issuer shall furnish a copy of such statements to any Bondholder upon written
request thereof.
(f) The Issuer will preserve and protect the security of the Bonds and the
rights of the holders of the Bonds, and will warrant and defend their rights against
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all claims and demands of all persons. From and after the sale and delivery of the
Bonds by the Issuer, the Bonds shall be incontestable by the Issuer.
(g) The Issuer will adopt, make, execute and deliver any and all such
further resolutions, instruments and assurance as may be reasonably necessary to
carry out the intention of, or to facilitate the performance of, this Resolution, and
for the better assuring and confirming unto the holders of the Bonds the rights and
benefits provided in this Resolution.
(h) As long as any portion of the Bonds remain outstanding, the Issuer will
continue to collect, deposit and apply the Pledged Revenues as provided herein.
The Issuer covenants and agrees with the holders of the Bonds so long as any
portion of the Bonds remain outstanding, the Issuer will take no action or fail to
take any action which in any way would adversely affect the ability of the Issuer to
allocate or collect the Sales Tax Increment Revenues. The Issuer and its officers
will comply with all present and future applicable laws in order to assure that the
Sales Tax Increment Revenues may be collected and deposited into the Flood
Project Fund for the credit of the respective funds and accounts thereof, as
provided herein.
(i) The Issuer will faithfully and punctually perform all duties with
reference to the Bee Branch Project required by the laws of the State of Iowa and
the Award Agreement, including the submission of the reports required by Section
418.12(6) of the Code of Iowa, and will segregate the Pledged Revenues and apply
the same to the funds as specified in this Resolution.
(j) The Issuer reserves the right to amend the Award Agreement for the Bee
Branch Project in its lawful discretion; provided, that in no event shall obligations
resulting from an amendment thereof have any priority over the Bonds or
adversely affect the ability of the Issuer to pay Principal of and interest on the
Bonds as they become due or to comply with its other obligations under this
Resolution.
Section 7.2. Reserved.
Section 7.3. Disposition of Bond Proceeds; Arbitrage Not Permitted. The
Issuer reasonably expects and covenants that no use will be made of the proceeds from
the issuance and sale of the Series 2014 Bonds issued hereunder which will cause any of
the Series 2014 Bonds to be classified as arbitrage bonds within the meaning of Section
148(a) and (b) of the Code, and that throughout the term of said Series 2014 Bonds it will
comply with the requirements of said statute and regulations issued thereunder.
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To the best knowledge and belief of the Issuer, there are no facts or circumstances
that would materially change the foregoing statements or the conclusion that it is not
expected that the proceeds of the Series 2014 Bonds will be used in a manner that would
cause such Bonds to be arbitrage bonds. Without limiting the generality of the foregoing,
the Issuer hereby agrees to comply with the provisions of the Tax Exemption Certificate
and the provisions of the Tax Exemption Certificate are hereby incorporated by reference
as part of this Resolution. The Treasurer is hereby directed to make and insert all
calculations and determinations necessary to complete the Tax Exemption Certificate in
all respects and to execute and deliver the Tax Exemption Certificate at issuance of the
Series 2014 Bonds to certify as to the reasonable expectations and covenants of the Issuer
at that date.
The Issuer covenants that it will treat as yield restricted any proceeds of the Series
2014 Bonds remaining unexpended after three years from the issuance and any other
funds required by the Tax Exemption Certificate to be so treated. If any investments are
held with respect to the Series 2014 Bonds, the Issuer shall treat the same for the purpose
of restricted yield as held in proportion to the original principal amounts of each issue.
The Issuer covenants that it will exceed any investment yield restriction provided
in this Resolution only in the event that it shall first obtain an opinion of bond counsel
that the proposed investment action will not cause the Series 2014 Bonds to be classified
as arbitrage bonds under Section 148(a) and (b) of the Code.
The Issuer covenants that it will proceed with due diligence to spend the proceeds
of the Series 2014 Bonds for the purpose set forth in this Resolution. The Issuer further
covenants that it will make no change in the use of the proceeds available for the
construction of facilities or change in the use of any portion of the facilities constructed
therefrom by persons other than the Issuer or the general public unless it has obtained an
opinion of bond counsel or a revenue ruling that the proposed project or use will not be of
such character as to cause interest on any of the Series 2014 Bonds not to be exempt from
federal income taxes in the hands of holders under the provisions of the Code.
Section 7.4. Additional Covenants, Representations and Warranties of the
Issuer. The Issuer certifies and covenants with the purchasers and holders of the Series
2014 Bonds from time to time outstanding that the Issuer through its officers, (a) will
make such further specific covenants, representations and assurances as may be necessary
or advisable; (b) comply with all representations, covenants and assurances contained in
the Tax Exemption Certificate, which Tax Exemption Certificate shall constitute a part of
the contract between the Issuer and the owners of the Series 2014 Bonds; (c) consult with
bond counsel (as defined in the Tax Exemption Certificate); (d) pay to the United States,
as necessary, such sums of money representing required rebates of excess arbitrage profits
relating to the Series 2014 Bonds; (e) file such forms, statements and supporting
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documents as may be required and in a timely manner; and (f) if deemed necessary or
advisable by its officers, to employ and pay fiscal agents, financial advisors, attorneys and
other persons to assist the Issuer in such compliance.
ARTICLE VIII
SENIOR BONDS AND SUBORDINATE BONDS
Section 8.1. No Prior Lien Bonds nor Senior Bonds Except as Permitted in
the Resolution. All Senior Bonds shall have complete parity of lien on the Pledged
Revenues despite the fact that any of the Senior Bonds may be delivered at an earlier date
than any other of the Senior Bonds; provided, however, that a pledge of Debt Service
Taxes made in respect of a particular series of Bonds shall be limited to such Bonds and
shall not extend to or secure any other series of Bonds. The Issuer may issue Senior
Bonds in accordance with this Resolution, but the Issuer shall issue no other obligations
of any kind or nature payable from or enjoying a lien on the Pledged Revenues or any part
thereof having priority over or, except as permitted in this Resolution, on a parity with
other Senior Bonds.
Section 8.2. Refunding Bonds. Any or all of the Senior Bonds may be refunded
prior to maturity, upon redemption in accordance with their terms, or with the consent of
the owners of such Senior Bonds, and the refunding Bonds so issued shall constitute
Senior Bonds, if:
(a) The Issuer shall have obtained a report from an Independent Auditor
or a Financial Advisor, at or before issuance of the refunding Bonds,
demonstrating that the refunding will constitute an Economic
Refunding.
(b) The requirement of Section 8.3(e) is met with respect to such
refunding Bonds.
Section 8.3. Senior Bonds. Additional Bonds (including refunding Bonds which
do not meet the requirements of Section 8.2) may be issued pursuant to a Series
Resolution, and the Bonds so issued shall constitute Senior Bonds, if all of the following
conditions are satisfied:
(a) The Principal amount of the proposed Senior Bonds, when added to
the Principal amount of any other Senior Bonds then Outstanding (but excluding
any refunding Bonds issued under Section 8.2), does not exceed the aggregate
amount of Fifty Eight Million Four Hundred Thousand Dollars ($58,400,000).
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(b) If the proposed Senior Bonds will not be secured by a stand-by levy
of Debt Service Taxes, (i) the Sales Tax Increment Revenues collected by the
Issuer during the most recently completed Fiscal Year prior to the issuance of the
proposed Senior Bonds were at least equal to 100% of the annual Debt Service
Requirement for such Fiscal Year on all Bonds then Outstanding, subject,
however, to adjustment as described in clause (d), and (ii) the Issuer shall have
received a projection meeting the requirements in clause ( c) below, which projects
that the future collections of Sales Tax Increment Revenues will be at least equal to
100% of the projected Debt Service Requirements on all Bonds, taking into
account all Outstanding Bonds and the Senior Bonds proposed to be issued.
(c) The projection of Sales Tax Increment Revenues required by clause
(b) above must be prepared by a Financial Advisor selected by the Issuer. In
projecting Sales Tax Increment Revenues, the Financial Advisor shall assume that
the amounts collected by the Issuer under the Award Agreement during the most
recent quarter for which Sales Tax Increment Revenues were distributed to the
Issuer will continue to be collected during each succeeding quarter for the
remainder of that Fiscal Year, and that the annual amount so determined would
thereafter increase at an annual rate of not more than one and one-half percent
(1.5%).
(d) For purposes of sub -clause (i) of clause (b) above, if the Issuer has
not received collections of Sales Tax Increment Revenues for a full Fiscal Year
prior to the issuance of the proposed Senior Bonds, it shall be presumed that the
amounts collected by the Issuer under the Award Agreement during the most
recent quarter for which Sales Tax Increment Revenues were distributed to the
Issuer will continue to be collected during each succeeding quarter for the
remainder of that Fiscal Year, and such calculation shall be included in the
projection required by clause (b).
(e) The Issuer shall have received, at or before issuance of the Senior
Bonds, a report from an Independent Auditor to the effect that the payments
required to be made into each account of the Sinking Fund, the Debt Service
Reserve Account and the Second Lien Bond Account have been made and the
balance in each account of each such Fund is not less than the balance required by
this Resolution as of the last day of the month preceding the date of issuance of the
proposed Senior Bonds.
(f) If the proposed Senior Bonds will be secured by amounts held in the
Debt Service Reserve Account, the Series Resolution authorizing the proposed
Senior Bonds must require (i) that the amount to be accumulated and maintained in
the Debt Service Reserve Account be increased to not less than 100% of the Debt
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Service Reserve Requirement computed on a basis which includes all Senior
Bonds secured by amounts held in the Debt Service Reserve Account which will
be Outstanding immediately after issuance of the proposed Senior Bonds and (ii)
that the amount of such increase be deposited in the Debt Service Reserve Account
on or before the date and at least as fast as specified in Section 6.5 of this
Resolution.
(g) The Series Resolution authorizing the proposed Senior Bonds must
require the proceeds of such proposed Senior Bonds to be used solely to pay
Project Costs of the Bee Branch Project, to fundi interest on the proposed Senior
Bonds, to refund other obligations issued for such purposes (whether or not such
refunding Bonds satisfy the requirements of Section 8.2), and to pay expenses
incidental thereto and to the issuance of the proposed Senior Bonds.
(h) The Issuer shall have received an opinion of bond counsel, dated as
of the date of issuance of the Senior Bonds, to the effect that the Series Resolution
authorizing issuance of the Senior Bonds has been duly adopted by the Issuer and
is in compliance with the terms of this Resolution.
Section 8.4. Second Lien Bonds.
(a) Additional Bonds may also be issued on a second lien basis on a parity with
the Series 2014 Bonds and any other Second Lien Bonds pursuant to a Series Resolution,
and the Bonds so issued shall constitute Second Lien Bonds, if all of the following
conditions are satisfied:
(1) The Series Resolution authorizing the Second Lien Bonds shall
provide that such Second Lien Bonds shall be junior and subordinate in lien and
right of payment to all Senior Bonds Outstanding at any time (except with respect
to any Debt Service Taxes that may be levied and collected under the provisions of
the related Series Resolution).
(2) The Series Resolution authorizing the Second Lien Bonds shall
establish funds and accounts for the moneys to be used to pay debt service on the
Second Lien Bonds, and to provide reserves therefor.
(3) The requirements of Sections 8.3(b), (c), (d), (e), (g) and (h) are met
with respect to such Second Lien Bonds (as if such Bonds constituted Senior
Bonds).
(b) In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization, or other similar proceedings in connection
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therewith, relative to the Issuer or to its creditors, as such, or to its property, and in the
event of any proceedings for voluntary liquidation, dissolution, or other winding up of the
Issuer, whether or not involving insolvency or bankruptcy, the owners of all Senior Bonds
then Outstanding shall be entitled to receive payment in full of all Principal and interest
due on all such Senior Bonds in accordance with the provisions of the Series Resolution
before the owners of the Second Lien Bonds are entitled to receive any payment from the
Pledged Revenues or the amounts held in the funds and accounts created under the Series
Resolution on account of Principal of, premium, if any, or interest on the Second Lien
Bonds.
(c) If any Event of Default shall have occurred and be continuing (under
circumstances when the provisions of paragraph (b) are not applicable), the owners of all
Senior Bonds then Outstanding shall be entitled to receive payment in full of all Principal
and interest then due on all such Senior Bonds before the owners of the Second Lien
Bonds are entitled to receive any Payment from the Pledged Revenues or the amounts
held in the funds and accounts created under the Series Resolution of Principal of,
premium, if any, or interest on the Second Lien Bonds.
(d) The obligations of the Issuer to pay to the owners of the Second Lien Bonds
the Principal of, premium, if any, and interest thereon in accordance with their terms shall
be unconditional and absolute. Nothing in this Resolution shall prevent the owners of the
Second Lien Bonds from exercising all remedies otherwise permitted by applicable law or
under the Resolution upon default thereunder, subject to the rights of the owners of Senior
Bonds contained in the Resolution.
(e) Any series of Second Lien Bonds may have such rank or priority with
respect to any other series of Second Lien Bonds as may be provided in the Series
Resolution authorizing such series of Second Lien Bonds and may contain such other
provisions as are not in conflict with the provisions of the Series Resolution.
Section 8.5. Accession of Subordinate Bonds to Senior Status. By proceedings
authorizing all or any Second Lien Bonds, the Issuer may provide for the accession of
such Second Lien Bonds to the status of complete parity with the Senior Bonds if, as of
the date of accession, the conditions of Section 8.3 are satisfied, on a basis which includes
all Outstanding Senior Bonds and such Second Lien Bonds, and if on the date of
accession:
(a) the Debt Service Reserve Account contains an amount equal to the
Debt Service Reserve Requirement computed on a basis which includes all
Outstanding Senior Bonds and such Second Lien Bonds; and
(b) the Sinking Fund contains the amount which would have been
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required to be accumulated therein on the date of accession if the Second Lien
Bonds had originally been issued as Senior Bonds.
Section 8.6. Adoption of Proceedings. The Governing Body shall adopt a Series
Resolution authorizing the issuance of any additional Bonds and reciting that the
requirements of this Article have been satisfied, and shall set forth in such proceedings,
among other things, the date or dates such additional Bonds shall bear and the rate or rates
of interest, interest payment date or dates, maturity date or dates, and redemption
provisions with respect to such additional Bonds and any other matters applicable to such
additional Bonds as the Governing Body may deem advisable.
Any such Series Resolution shall restate and reaffirm, by reference, all of the
applicable terms, conditions and provisions of this Resolution not modified by the Series
Resolution.
Section 8.7. Proceedings Authorizing Additional Bonds. No Series Resolution
authorizing the issuance of additional Bonds as permitted under this Article shall conflict
with the terms and conditions of this Resolution, except to the extent that the Series
Resolution is adopted for one of the purposes set forth in Section 11.1 and complies with
the provisions of Section 11.1 for the adoption of Supplemental Resolutions without the
consent of Bondholders.
Section 8.8. Applicability to Additional Bonds. The provisions of this
Resolution shall be construed as including and being applicable to any future series of
Bonds, and any such Bonds shall be treated, unless otherwise specifically stated, as if they
had been issued together with the Series 2014 Bonds and pursuant to the terms of this
Resolution.
Section 8.9. Credit Facilities. In connection with the issuance of any Bonds
under the Series Resolution, the Issuer may obtain or cause to be obtained one or more
Credit Facilities providing for payment of all or a portion of the Principal of, premium, if
any, or interest due or to become due on such Bonds, providing for the purchase of such
Bonds by the Credit Facility Provider, or providing funds for the purchase of such Bonds
by the Issuer. In connection therewith the Issuer shall enter into Credit Facility
Agreements with such Credit Facility Providers providing for, among other things, (i) the
payment of fees and expenses to such Credit Facility Providers for the issuance of such
Credit Facilities; (ii) the terms and conditions of such Credit Facilities and the Bonds
affected thereby; and (iii) the security, if any, to be provided for the issuance of such
Credit Facilities. The Issuer may secure any Credit Facility by an agreement providing
for the purchase of the Bonds secured thereby with such adjustments to the rate of
interest, method of determining interest, maturity, or redemption provisions as are
specified by the Issuer in the applicable Series Resolution. The Issuer may in a Credit
42
Facility Agreement agree to directly reimburse such Credit Facility Provider for amounts
paid under the terms of such Credit Facility, together with interest thereon; provided,
however, that no Reimbursement Obligation shall be created for purposes of the Series
Resolution until amounts are paid under such Credit Facility. Any such Reimbursement
Obligation shall be deemed to be a part of the Bonds to which the Credit Facility relates
which gave rise to such Reimbursement Obligation, and references to Principal and
interest payments with respect to such Bonds shall include Principal and interest due on
the Reimbursement Obligation incurred as a result of payment of such Bonds with the
Credit Facility. All other amounts payable under the Credit Facility Agreement
(including any additional interest and Principal amortization requirements with respect to
the Reimbursement Obligation that are more accelerated than the amortization
requirements for the related Bonds, without acceleration) shall be fully subordinate to the
payment of debt service on the related series of Bonds. Any such Credit Facility shall be
for the benefit of and secure such Bonds or portion thereof as specified in the applicable
Series Resolution.
Section 8.10. Other Obligations. The Issuer expressly reserves the right, at any
time, to adopt one or more other bond resolutions and to issue any other obligations,
including general obligation bonds and/or revenue bonds, which are not secured by the
Pledged Revenues under this Resolution.
ARTICLE IX
DISCHARGE AND SATISFACTION
Section 9.1. Discharge and Satisfaction of Bonds. The covenants, liens and
pledges entered into, created or imposed pursuant to this Resolution or any Series
Resolution may be fully discharged and satisfied with respect to the Bonds authorized
thereunder, or any of them, in any one or more of the following ways:
(a) By paying the said Bonds when the same shall become due and payable;
and
(b) By irrevocably depositing in trust with a corporate trustee designated by
the Governing Body for the payment of said Bonds and irrevocably appropriated
exclusively to that purpose an amount in cash or Government Obligations the
maturities and income of which shall be sufficient (as evidenced in the case of an
advance refunding of any Bonds by a report of an Independent Auditor) to retire at
maturity, or by redemption prior to maturity on a designated date upon which said
Bonds may be redeemed, all of such Bonds Outstanding at the time, together with
the interest thereon to maturity or to the designated redemption date, premiums
thereon, if any that may be payable on the redemption of the same; provided that
43
proper notice of redemption of all such obligations to be redeemed shall have been
previously published or provisions shall have been made for such publication.
Upon such payment or deposit of money or securities, or both, in the amount and
manner provided by this Section, all liability of the Issuer with respect to such Bonds
shall cease, determine and be completely discharged, and the holders thereof shall be
entitled only to payment out of the money or securities so deposited.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default. An Event of Default is one or more of the
following:
(a) A default, other than as a result of a Non -Appropriation, shall be
made in the due and punctual payment of the principal or redemption price of any
Bond when and as the same shall become due and payable, whether at maturity or
by call or proceedings for redemption, or otherwise;
(b) A default, other than as a result of a Non -Appropriation, shall be
made in the due and punctual payment of any installment of interest on any Bond
when and as such interest installment shall become due and payable; or
(c) A default shall be made by the Issuer in the performance or
observance of any other of the covenants, agreements or conditions on its part in
the Series Resolution or in the Bonds contained, and such default shall have
continued for a period of 90 days after written notice specifying such default and
requiring that it shall have been remedied is given to the Issuer by the owners of
not less than 25% in principal amount of the Bonds Outstanding; provided that, if
such failure cannot be corrected within such 90 day period, it shall not constitute
an Event of Default if corrective action is instituted within such period and such
corrective action is diligently pursued until the failure is corrected, provided that if
such corrective action includes legal action such legal action shall be diligently
pursued until either the failure is corrected or such failure shall be determined by a
court of final and competent jurisdiction as not correctable as a matter of law.
Section 10.2. Default and Remedies. In the event of (a) a default, other than as a
result of a Non -Appropriation, on the part of the Issuer in the prompt and full payment of
principal of or interest on any Bond, or (b) a default in the keeping of any other covenant
herein contained (if such default shall continue for a period of ninety days after written
notice specifying the nature of the default and requiring it to be remedied is received by
the Issuer), the holders of the Bonds shall have the right to proceed at law or in equity by
suit, action or mandamus to enforce and compel performance of the duties required by the
terms of the Series Resolution authorizing the issuance of the Bonds, or to obtain the
appointment of a receiver to take control of the Flood Project Fund, and to perform the
duties required by the terms of the Resolution. The holders of the Bonds shall have no
right to accelerate any payment obligation of the Issuer with respect to the Bonds.
No holder of any Bond shall have the right to institute any proceeding, judicial or
otherwise, for the enforcement of the covenants herein contained, except as provided in
this Section. The holders of not less than 25% in principal amount of the Outstanding
Bonds shall have the right, either at law or in equity, through suit, action or other
proceedings, to protest and enforce the rights of all holders of such Bonds and to compel
the performance of any and all of the covenants required herein to be performed by the
Issuer, and its officers and employees. The holders of a majority in principal amount of
Outstanding Bonds shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Bondholders or the exercise of any power
conferred on them and the right to waive a default in the performance of any such
covenant, and its consequences, except a default in the payment of the Principal of or
interest on any Bond when due. Nothing herein, however, shall impair the absolute and
unconditional right of the holder of each Bond to receive payment of the Principal of,
premium, if any, and interest on such Bond as such Principal, premium and interest
respectively become due, and to institute suit for any such payment.
Section 10.3. Resolution a Contract. The provisions of this Resolution shall
constitute a contract between the Issuer and the holder or holders of the Bonds, and after
the issuance of any of the Bonds no change, variation or alteration of any kind in the
provisions of this Resolution shall be made in any manner, except as provided in Article
XI, until such time as all of the Bonds, and interest due thereon, shall have been satisfied
and discharged as provided in this Resolution.
ARTICLE XI
SUPPLEMENTAL RESOLUTIONS
Section 11.1. Amendment of Resolution Without Consent. The Issuer may,
without the consent of or notice to any of the holders of the Bonds, approve one or more
Supplemental Resolutions, which thereafter shall form a part of this Resolution, for any
one or more of the following purposes:
(a) to cure any ambiguity, defect, omission or inconsistent provision in this
Resolution or in the Bonds; or to comply with any applicable provision of law or
45
regulation of federal or state agencies; provided, however, that such action shall
not materially adversely affect the interests of the holders of the Bonds;
(b) to change the terms or provisions of this Resolution to the extent
necessary to prevent the interest on any Bonds issued on a tax-exempt basis from
being includable within the gross income of the holders thereof for federal income
tax purposes;
(c) to grant to or confer upon the holders of the Bonds any additional rights,
remedies, powers or authority that may lawfully be granted to or conferred upon
the holders of the Bonds;
(d) to add to the covenants and agreements of the Issuer contained in this
Resolution other covenants and agreements of, or conditions or restrictions upon,
the Issuer or to surrender or eliminate any right or power reserved to or conferred
upon the Issuer in this Resolution;
(e) To subject to the lien and pledge of this Resolution additional Pledged
Revenues as may be permitted by law;
(f) To modify any of the provisions of the Resolution in any respect if such
modification shall not become effective until after the Bonds Outstanding
immediately prior to the effective date of such Supplemental Resolution shall
cease to be Outstanding and if any Bonds issued contemporaneously with or after
the effective date of such Supplemental Resolution shall contain a specific
reference to the modifications contained in such subsequent proceedings;
(g) To modify the Resolution to provide for the issuance of Senior Bonds
or Second Lien Bonds as provided in Article VIII; or
(h) To modify any of the provisions of the Resolution in any respect (other
than a modification of the type described in Section 11.2 requiring the consent of
the Bondholders); provided that for (i) any Outstanding Bonds which are assigned
a Rating and which are not secured by a Credit Facility providing for the payment
of the full amount of Principal and interest to be paid thereon, each Rating Agency
shall have given written notification to the Issuer that such modification will not
cause the then applicable Rating on any Bonds to be reduced or withdrawn, and (ii)
any Outstanding Bonds which are secured by Credit Facilities providing for the
payment of the full amount of the Principal and interest to be paid thereon, each
Credit Facility Provider shall have consented in writing to such modification.
Section 11.2. Amendment of Resolution Requiring Consent. The Issuer also
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may approve one or more Supplemental Resolutions, which thereafter shall form a part of
this Resolution, if such Supplement Resolution shall have been consented to by holders of
not less than two-thirds (2/3) in principal amount of the Senior Bonds at any time
Outstanding (not including in any case any Senior Bonds which may then be held or
owned by or for the account of the Issuer, but including such refunding Senior Bonds as
may have been issued for the purpose of refunding any of such Senior Bonds if such
refunding Senior Bonds shall not then be owned by the Issuer); but this Resolution may
not be so amended in such manner as to:
(a) Make any change in the maturity or interest rate of the Bonds, or
modify the terms of payment of Principal of or interest on the Bonds or any of
them or impose any conditions with respect to such payment;
(b) Materially affect the rights of the holders of less than all of the Bonds
then Outstanding; and
(c) Reduce the percentage of the Principal amount of Bonds, the consent of
the holders of which is required to effect a further amendment;
in each case without the consent of the owners of all of the affected Bonds then
Outstanding.
Whenever the Issuer shall propose to amend this Resolution under the provisions
of this Section, it shall cause notice of the Supplemental Resolution to be filed with the
Original Purchaser and to be mailed by certified mail to each registered owner of any
Senior Bond as shown by the records of the Registrar. Such notice shall set forth the
nature of the proposed amendment and shall state that a copy of the proposed
Supplemental Resolution is on file in the office of the City Clerk.
Whenever at any time within one year from the date of the mailing of said notice
there shall be filed with the City Clerk an instrument or instruments executed by the
holders of at least two-thirds in aggregate principal amount of the Senior Bonds then
outstanding as in this Section defined, which instrument or instruments shall refer to the
proposed Supplemental Resolution described in said notice and shall specifically consent
to and approve the adoption thereof, thereupon, but not otherwise, the Governing Body of
the Issuer may adopt such Supplemental Resolution and such Supplemental Resolution
shall become effective and binding upon the holders of all of the Senior Bonds.
Any consent given by the holder of a Senior Bond pursuant to the provisions of
this Section shall be irrevocable for a period of six months from the date of the instrument
evidencing such consent and shall be conclusive and binding upon all future holders of
the same Senior Bond during such period. Such consent may be revoked at any time after
47
six months from the date of such instrument by the holder who gave such consent or by a
successor in title by filing notice of such revocation with the City Clerk.
The fact and date of the execution of any instrument under the provisions of this
Section may be proved by the certificate of any officer in any jurisdiction who by the laws
thereof is authorized to take acknowledgments of deeds within such jurisdiction that the
person signing such instrument acknowledged before him the execution thereof, or may
be proved by an affidavit of a witness to such execution sworn to before such officer.
The amount and numbers of the Senior Bonds held by any person executing such
instrument and the date of his holding the same may be proved by an affidavit by such
person or by a certificate executed by an officer of a bank or trust company showing that
on the date therein mentioned such person had on deposit with such bank or trust
company the Senior Bonds described in such certificate.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1. Continuing Disclosure. The Issuer hereby covenants and agrees
that it will comply with and carry out all of the provisions of the Continuing Disclosure
Certificate, and the provisions of the Continuing Disclosure Certificate are hereby
approved and incorporated by reference as part of this Resolution and made a part hereof
and the Mayor and City Clerk are hereby authorized to execute and deliver the same at
issuance of the Series 2014 Bonds. Notwithstanding any other provision of this
Resolution, failure of the Issuer to comply with the Continuing Disclosure Certificate
shall not be considered an event of default under this Resolution; however, any holder of
the Series 2014 Bonds or Beneficial Owner may take such actions as may be necessary
and appropriate, including seeking specific performance by court order, to cause the
Issuer to comply with its obligations under the Continuing Disclosure Certificate. For
purposes of this Section, "Beneficial Owner" means any person which (a) has the power,
directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any
Series 2014 Bonds (including persons holding Series 2014 Bonds through nominees,
depositories or other intermediaries), or (b) is treated as the owner of any such Bonds for
federal income tax purposes.
Section 12.2. Official Statement. The use and distribution of the Preliminary
Official Statement is hereby authorized and approved, and the execution and delivery of
the Official Statement in final form shall be andis hereby authorized, ratified, confirmed,
and approved. The Budget Director is hereby authorized and directed to ratify, confirm,
approve, execute, and deliver the Official Statement on behalf of the Issuer, and the
execution of the Official Statement by the Budget Director shall constitute conclusive
48
evidence of each such officer's ratification, confirmation, approval, and delivery thereof
on behalf of the Issuer.
Section 12.3. Registrar and Paving Agreement. The Registrar and Paying
Agreement between the Issuer and Wells Fargo Bank, N.A. with respect to the Series
2014 Bonds is hereby approved, and the Mayor and City Clerk are hereby authorized and
directed to execute and deliver the same on behalf of the Issuer.
Section 12.4. Severability. If any section, paragraph, or provision of this
Resolution shall be held to be invalid or unenforceable for any reason, the invalidity or
unenforceability of such section, paragraph or provision shall not affect any of the
remaining provisions.
Section 12.5. Repeal of Conflicting Ordinances or Resolutions and Effective
Date. All other ordinances, resolutions and orders, or parts thereof, in conflict with the
provisions of this Resolution are, to the extent of such conflict, hereby repealed; and this
Resolution shall be in effect from and after its adoption.
PAS SED AND APPROVED this 19 t h day of
ATTEST:
May
, 2014.
49
EXHIBIT A
FORM OF SERIES 2014 BONDS
REGISTERED STATE OF IOWA REGISTERED
CERTIFICATE NO. 1 COUNTY OF DUBUQUE $
CITY OF DUBUQUE
SALES TAX INCREMENT REVENUE BOND
(UNLIMITED PROPERTY TAX SUPPORTED)
SECOND LIEN SERIES 2014
Rate Maturity Bond Date Cusip No. -
The City of Dubuque, Iowa, a municipal corporation organized and existing under
and by virtue of the Constitution and laws of the State of Iowa (the "Issuer"), for value
received, promises to pay from the source and as hereinafter provided, on the maturity
date indicated above, to
CEDE & CO.
or registered assigns, the principal sum of (principal amount written out) THOUSAND
DOLLARS in lawful money of the United States of America, on the maturity date shown
above, only upon presentation and surrender hereof at the office of Wells Fargo Bank,
N.A., Paying Agent of this issue, or its successor, with interest on said sum from the date
hereof until paid at the rate per annum specified above, payable on December 1, 2014, and
semiannually thereafter on the 1st day of June and December in each year.
Interest and principal shall be paid to the registered holder of the Bond as shown on
the records of ownership maintained by the Registrar as of the 15th day preceding such
interest payment date. Interest shall be computed on the basis of a 360 -day year of twelve
30 -day months.
This Bond is issued pursuant to the provisions of Section 418.14 of the Code of
Iowa, as amended, for the purpose of paying costs of the acquisition, construction and
installation and equipping of the Bee Branch Watershed Flood Mitigation Project,
including those costs associated with the Lower Bee Branch Creek Restoration Project
(Phases 4 and 7) and the Bee Branch Flood Control Pumping Station Gates Replacement
Project, in conformity to a Master Resolution of the City Council of said City duly passed
and approved. Capitalized terms not defined herein shall have the meanings given to
A-1
them in the Master Resolution.
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a limited purpose trust company ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other entity as
is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
Bonds maturing on or after June 1, 2025 may be called for redemption by the
Issuer and paid before maturity on June 1, 2024 or any date thereafter, from any funds
regardless of source, in whole or from time to time in part, in any order of maturity and
within an annual maturity by lot. The terms of redemption shall be par, plus accrued
interest to date of call.
Thirty days' notice of redemption shall be given by first class mail to the registered
owner of the Bond. Failure to give such notice by mail to any registered owner of the
Bonds or any defect therein shall not affect the validity of any proceedings for the
redemption of the Bonds. All Bonds or portions thereof called for redemption will cease
to bear interest after the specified redemption date, provided funds for their redemption
are on deposit at the place of payment.
Ownership of this Bond may be transferred only by transfer upon the books kept
for such purpose by Wells Fargo Bank, N.A., the Registrar. Such transfer on the books
shall occur only upon presentation and surrender of this Bond at the office of the
Registrar as designated below, together with an assignment duly executed by the owner
hereof or his duly authorized attorney in the form as shall be satisfactory to the Registrar.
Issuer reserves the right to substitute the Registrar and Paying Agent but shall, however,
promptly give notice to registered bondholders of such change. All Bonds shall be
negotiable as provided in Article 8 of the Uniform Commercial Code and Section
384.83(5) of the Code of Iowa, subject to the provisions for registration and transfer
contained in the Series Resolution.
This Bond and the series of which it forms a part, other bonds ranking on a parity
therewith, and any additional bonds or notes which may be hereafter issued and
outstanding from time to time on a parity with said Bonds, as provided in the Master
Resolution of which notice is hereby given and is hereby made a part hereof, are payable
from and secured by a pledge of certain Pledged Revenues, as defined and provided in
said Master Resolution, to be deposited and held in a Flood Project Fund of the Issuer.
A-2
The Pledged Revenues include Sales Tax Increment Revenues and the levy of Debt
Service Taxes that are to be levied and deposited from time to time into the Flood Project
Fund of the Issuer, referred to and authorized in Section 418.14 of the Code of Iowa, in
the event of a Shortfall (as defined in the Master Resolution). Under the Master
Resolution, in the event of a Shortfall (as so defined), the City Council of the Issuer
covenants to budget for, levy and transfer from the debt service fund of the Issuer funds
sufficient to make up the Shortfall and make the payments of interest and principal due
under the Series 2014 Bonds during such fiscal year.
THE SERIES 2014 BONDS ARE SECOND LIEN BONDS FOR ALL
PURPOSES OF THE MASTER RESOLUTION AND ARE JUNIOR AND
SUBORDINATE IN LIEN AND RIGHT OF PAYMENT TO ALL SENIOR BONDS
OUTSTANDING AT ANY TIME, EXCEPT WITH RESPECT TO ANY DEBT
SERVICE TAXES THAT MAY BE LEVIED AND COLLECTED UNDER THE
PROVISIONS OF THE MASTER RESOLUTION.
The Master Resolution contains a more particular statement of the covenants and
provisions securing the Series 2014 Bonds, the conditions under which the owner of this
Series 2014 Bond may enforce covenants (other than the covenant to pay Principal of this
Series 2014 Bond when due from the sources provided, the right to enforce which is
unconditional), the conditions under which additional Bonds may be issued under the
Master Resolution, and the conditions upon which the Master Resolution may be
amended with the consent of the owners of not less than two-thirds in aggregate Principal
amount of the Senior Bonds Outstanding. Upon the occurrence of an Event of Default
under the Master Resolution, the owner of this Series 2014 Bond shall be entitled to the
remedies provided in the Master Resolution.
And it is hereby represented and certified that all acts, conditions and things
requisite, according to the laws and Constitution of the State of Iowa, to exist, to be had,
to be done, or to be performed precedent to the lawful issue of this Bond, have been
existent, had, done and performed as required by law.
IN TESTIMONY WHEREOF, said City by its City Council has caused this Bond
to be signed by the manual signature of its Mayor and attested by the manual signature of
its City Clerk, with the seal of said City impressed hereon, and authenticated by the
manual signature of an authorized representative of the Registrar, Wells Fargo Bank,
N.A., Minneapolis, Minnesota.
Item 11, figure 1 = Date of authentication:
Item 12, figure 1 = This is one of the Bonds described in the within mentioned
Series Resolution, as registered by Wells Fargo Bank, N.A.
A-3
WELLS FARGO BANK, N.A., Registrar
By:
Authorized Signature
Item 13, figure 1 = Registrar and Transfer Agent: Wells Fargo Bank, N.A.
Paying Agent: Wells Fargo Bank, N.A.
SEE REVERSE FOR CERTAIN DEFINITIONS
Item 14, figure 1 = (Seal)
Item 15, figure 1 = [Signature Block]
CITY OF DUBUQUE, IOWA
By: Mayor's manual signature
Mayor
ATTEST:
By: City Clerk's manual signature
City Clerk
Item 16, figure 2 = [Assignment Block]
[Information Required for Registration]
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
(Social Security or Tax Identification No.
the within Bond and does hereby irrevocably constitute and appoint
attorney in fact to transfer the said Bond on the books kept for registration of the within
Bond, with full power of substitution in the premises.
Dated
A-4
(Person(s) executing this Assignment sign(s) here)
SIGNATURE )
GUARANTEED )
IMPORTANT - READ CAREFULLY
The signature(s) to this Power must correspond with the name(s) as written
upon the face of the certificate(s) or bond(s) in every particular without
alteration or enlargement or any change whatever. Signature guarantee
must be provided in accordance with the prevailing standards and
procedures of the Registrar and Transfer Agent. Such standards and
procedures may require signature to be guaranteed by certain eligible
guarantor institutions that participate in a recognized signature guarantee
program.
INFORMATION REQUIRED FOR REGISTRATION OF TRANSFER
Name of Transferee(s)
Address of Transferee(s)
Social Security or Tax Identification
Number of Transferee(s)
Transferee is a(n):
Individual* Corporation
Partnership Trust
*If the Bond is to be registered in the names of multiple individual owners, the names of
all such owners and one address and social security number must be provided.
The following abbreviations, when used in the inscription on the face of this Bond,
shall be construed as though written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
A-5
IA UNIF TRANS MIN ACT - Custodian
(Cust) (Minor)
under Iowa Uniform Transfers
to Minors Act
(State)
01003463-1\10422-148
STATE OF IOWA
COUNTY OF DUBUQUE
CERTIFICATE
) SS
I, the undersigned City Clerk of the City of Dubuque, Iowa, do hereby certify that
attached is a true and complete copy of the portion of the corporate records of the City
showing proceedings of the City Council, and the same is a true and complete copy of the
action taken by the Council with respect to the matter at the meeting held on the date
indicated in the attachment, which proceedings remain in full force and effect, and have
not been amended or rescinded in any way; that meeting and all action thereat was duly
and publicly held in accordance with a notice of meeting and tentative agenda, a copy of
which was timely served on each member of the Council and posted on a bulletin board or
other prominent place easily accessible to the public and clearly designated for that
purpose at the principal office of the Council (a copy of the face sheet of the agenda being
attached hereto) pursuant to the local rules of the Council and the provisions of Chapter
21, Code of Iowa, upon reasonable advance notice to the public and media at least
twenty-four hours prior to the commencement of the meeting as required by law and with
members of the public present in attendance; I further certify that the individuals named
therein were on the date thereof duly and lawfully possessed of their respective City
offices as indicated therein, that no Council vacancy existed except as may be stated in
the proceedings, and that no controversy or litigation is pending, prayed or threatened
involving the incorporation, organization, existence or boundaries of the City or the right
of the individuals named therein as officers to their respective positions.
WITNESS my hand and the seal of the City hereto affixed this 20th day of May,
2014.
(SEAL)
City Cler
ubuque, Iowa
ROLL CALL ORDER FOR MEETING OF 5/19/2014
Braig, Buol, Connors, Jones, Lynch, Resnick, Sutton
CITY OF DUBUQUE, IOWA
CITY COUNCIL MEETING
Historic Federal Building
350 W. 6th Street
May 19, 2014
Council meetings are video streamed live and archived at
www.citvofdubuque.orq/media and on Dubuque's CityChannel on the
Mediacom cable system at Channel 8 (analog) and 85.2 (digital).
WORK SESSION
5:15 PM
PAYDAY LENDERS
Work Session on Payday Lenders -MVM Memo Staff Memo Staff Materials Map 1 Map 2 Mao 3 Map 4 Citizen Input 1 Citizen Input 2 Citizen Input
3,
REGULAR SESSION
6:30 PM
PLEDGE OF ALLEGIANCE
CONSENT ITEMS
The consent agenda items are considered to be routine and non -controversial and all consent items will be normally voted upon in a single
motion without any separate discussion on a particular item. If you would like to discuss one of the Consent Items, please go to the microphone
and be recognized by the Mayor and state the item you would like removed from the Consent Agenda for separate discussion and
consideration.
1. Minutes and Reports Submitted
Cable TV Commission of 4/2, City Council proceedings of 5/5, Five Flags Civic Center Advisory Commission of 4/28, Human Rights
Commission of 4/14, Library Board of Trustees of 2/27, Zoning Advisory Commission of 5/7, Proof of Publication for City Council
proceedings of 4/21, Proof of Publication for List of Claims and Summary of Revenues for Month Ended 3/31
Suggested Disposition: Receive and File
Cable TV 4/2 City Council Proceedings 5/5 FF Civic Center 4/28 Human Rights 4/14 Library Board of Trustees 2/27 Zoning Advisory 5/7
Proof - Council Proceedings 4/21 Proof - List of Claims/Revenues
2. Humanities Iowa Grant - Sister City Commission
City Clerk Kevin Firnstahl recommending approval of the submission of a Humanities Iowa mini grant application in the amount of
$3,000 for the Handan, China, Sister City photo display.
Suggested Disposition: Receive and File; Approve
Humanities Iowa Grant for Sister City Exhibit -MVM Memo Staff Memo Grant Application, Proiect Narrative
3. Community Development Block Grant (CDBG) Request to Release Funds
City Manager recommending approval of the Request for Release of Funds for the proposed projects approved in the Fiscal Year 2015
(Program Year 2014) Annual Action Plan for Community Development Block Grant activities.
RESOLUTION Authorizing request for release of Community Development Block Grant funds for Fiscal Year 2015 (Program Year
2014)
Suggested Disposition: Receive and File; Adopt Resolution(s)
CDBG Request to Release Funds -MVM Memo Staff Memo Resolution Request to Release Funds
4. Iowa Department of Transportation
Correspondence from the Iowa Department of Transportation advising the City that it proposes to let a bridge rehabilitation project on
US 52 at Grandview Avenue on October 21, 2014.
Suggested Disposition: Receive and File
Pg. 1
BOND PURCHASE AGREEMENT
CITY OF DUBUQUE, IOWA
$7,190,000
SALES TAX INCREMENT REVENUE BONDS
(UNLIMITED PROPERTY TAX SUPPORTED)
SECOND LIEN SERIES 2014
May 19, 2014
City of Dubuque, Iowa
City Hall
50 West 13th Street,
Dubuque, Iowa 52201
Ladies and Gentlemen:
The undersigned Robert W. Baird & Co. Incorporated (the "Underwriter") offers to enter
into this Bond Purchase Agreement (the "Agreement") relating to the $7,190,000 Sales Tax
Increment Revenue Bonds (Unlimited Property Tax Supported), Second Lien Series 2014 (the
"Bonds") of the City of Dubuque, Iowa (the "Issuer"). The Issuer desires to appoint the
Underwriter and the Underwriter desires to accept its appointment. It is understood that such
appointment is subject to the applicable terms and conditions of this Agreement.
This offer is made subject to the Issuer's acceptance of this Agreement on or before 11:00
p.m., prevailing Central Time, on the date hereof, and if not so accepted will be subject to
withdrawal by the Underwriter upon notice delivered to the Issuer at any time prior to acceptance
hereof by the Issuer.
The Bonds are issued pursuant to Chapter 418 of the Code of Iowa, as amended (the
"Act") and a Master Resolution adopted by the Issuer on the date hereof (the "Master
Resolution"). The Bonds are being issued to pay costs of the acquisition, construction and
installation and equipping of a flood mitigation project.
A Preliminary Official Statement dated May 7, 2014 (the "Preliminary Official
Statement"), describing the Issuer, the, Bonds and security for the Bonds, has been prepared for
use in connection with the public offering, sale and distribution of the Bonds. There will be
prepared within seven (7) business days of the date hereof a final Official Statement expected to
be dated May 19, 2014 (the "Official Statement"), which shall be in substantially the form of the
Preliminary Official Statement, with such changes as the Underwriter has approved, setting forth
definitive information relating to the terms of offering of the Bonds. Any and all appendices,
exhibits, reports and summaries included in the Preliminary Official Statement or the Official
Statement or attached thereto shall be for all purposes hereof deemed to be a part of the
Preliminary Official Statement and the Official Statement, as applicable. The Issuer deems the
information contained in the Preliminary Official Statement to be final as of its date for the
Dubuque 2014 BPA 3585597.01.04 Bond Purchase Agreement
2216588/BTJ/ City of Dubuque Sales Tax Increment Revenue Bonds Series 2014
purpose of enabling the Underwriter to comply with the requirements of Rule 15c2 -12(b)(1) of
the Securities and Exchange Commission, except for the omission of such information as is
permitted by Rule 15c2 -12(b)(1). The Issuer deems the Official Statement to be final as of its
date. The Issuer hereby confirms the authority of the Underwriter to use, and consents to the use
of, the Preliminary Official Statement and the Official Statement and any amendments or
supplements thereto in connection with the offer, sale and distribution of the Bonds. The Issuer
agrees to provide or cause to be provided to the Underwriter within seven (7) business days after
the date hereof sufficient copies of the Official Statement to enable the Underwriter to comply
with the requirements of Rule 15c2 -12(b)(4) of the Securities and Exchange Commission and
with any applicable requirements of the Municipal Securities Rulemaking Board (the "MSRB").
The Bonds shall have the maturities, bear interest at the fixed rates per annum, be sold
with original issue discounts or premiums, and be subject to redemption as set forth in Exhibit A
attached hereto.
All capitalized terms used in this Agreement and not defined herein shall have the
meanings specified in the Master Resolution.
1. Purchase, Sale and Closing. Upon the basis of the representations and covenants
contained herein, but subject to the conditions hereinafter set forth, the Issuer hereby agrees to
sell to the Underwriter, and the Underwriter agrees to purchase from the Issuer on the Closing
Date (defined herein), all (but not less than all) of the Bonds at a purchase price equal to
$8,120,911.91 (representing the principal amount of the Bonds of $7,190,000.00, plus a
reoffering premium of $971,310.40, less Underwriter's discount of $40,398.49).
The closing for the payment for the Bonds shall take place via telephone with Ahlers &
Cooney, P.C. ("Bond Counsel"), at 10:00 a.m., prevailing Central Time, on June 16, 2014 or at
such other date, place, or time as may be designated by the Underwriter, with the approval of the
Issuer (the "Closing Date"). The Bonds shall be delivered in registered form for registration
through a book -entry -only system of registration as described in the Official Statement. The
Bonds shall be registered in a book -entry -only system in the name of Cede & Co., as nominee for
The Depository Trust Company ("DTC"). The Bonds will be made available to the Underwriter
or their designee at the place of delivery for inspection and packaging at least one business day
prior to the Closing Date.
2. Issuer's Representations and Covenants. The Issuer represents and covenants as
follows:
(a) The Issuer has all requisite legal power, right and authority (i) to adopt the Master
Resolution, (ii) to execute, deliver and perform its obligations under this
Agreement, the Master Resolution and the Bonds, (iii) to issue, sell, execute and
deliver the Bonds to the Underwriter as provided herein and (iv) to carry out and
consummate all actions required to be taken by it in connection with the
transactions contemplated by the aforesaid documents.
(b) The Issuer has duly authorized (i) the execution and delivery of, and the due
performance of its obligations under this Agreement, the Master Resolution, and
2
the Bonds and (ii) the taking of any and all actions as may be required on the part
of the Issuer to carry out, give effect to and consummate the transactions
contemplated by such documents.
(c) The Master Resolution has been duly adopted by the City Council of the Issuer,
has not been amended, modified, supplemented or repealed, and is in full force
and effect. This Agreement has been duly authorized, executed and delivered by
the Issuer. This Agreement, the Master Resolution, and the Bonds are or will be,
when duly executed and delivered by the Issuer, legal, valid and binding
obligations of the Issuer enforceable in accordance with their respective terms,
except that the binding effect and enforceability thereof are subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws in effect
from time to time affecting the rights of creditors generally and except to the
extent that the enforceability thereof may be limited by application of general
principles of equity including equitable subordination.
(d) Upon advice of counsel and to the best of the Issuer's knowledge, (i) the
enactment of the Master Resolution, the authorization, execution and delivery by
the Issuer of this Agreement, and the Bonds, and compliance with the provisions
of each of such instruments will not conflict with or result in a violation of the
Constitution of the State of Iowa or the laws of the State of Iowa (including any
debt limitations or other restrictions or conditions on the debt -issuing power of the
Issuer) and (ii) the adoption of the Master Resolution, the authorization, execution
and delivery by the Issuer of this Agreement and the Bonds, and compliance with
the provisions of each of such instruments will not conflict with or constitute a
breach of, or default under, any indenture, commitment, agreement or other
instrument to which the Issuer is a party or by which it is bound or under any
constitutional or statutory provisions, or rule, regulation, ordinance, judgment,
order or decree to which the Issuer or any of its property is subject. The Issuer has
not received any written notice, not subsequently withdrawn, given in accordance
with the remedy provisions of any bond ordinance, trust indenture or agreement or
state law pertaining to bonds or notes, of any default or event of default which has
not been cured, remedied or waived.
(e) There is no action, suit, proceeding, inquiry or investigation at law or in equity, or
before or by any judicial or administrative court, public board or body, pending or
threatened against the Issuer (nor, to the best of the Issuer's knowledge, is there
any basis therefor), in any way (i) affecting the existence of the Issuer or the title
of any official of the Issuer to that person's office, (ii) seeking to restrain or enjoin
the issuance, sale or delivery of the Bonds as contemplated herein, the levy and
collection of revenues anticipated to pay the principal of, premium, if any, and
interest on the Bonds or the payment of the moneys, property, or revenues pledged
or to be pledged for the payment of principal of, premium, if any, or interest on
the Bonds, (iii) contesting or affecting the validity or enforceability of this
Agreement, the Master Resolution, or the Bonds, (iv) contesting the completeness
or accuracy of the Official Statement or the powers or authority of the Issuer to
3
(f)
(g)
engage in the transactions contemplated by this Agreement, the Master Resolution
or the Bonds or (v) questioning the exclusion of interest on the Bonds from gross
income for purposes of Federal income taxation as described under "TAx
EXEMPTION AND RELATED MATTERS" in the Official Statement.
There is no election or referendum of or by any person, organization or public
body pending, proposed or concluded (nor, to the best of the Issuer's knowledge,
is there any basis therefor) and there are no provisions of Iowa Law which would
allow, as of the date hereof or any date subsequent hereto, such election or
referendum, the results of which could in any way adversely affect the
transactions contemplated by this Agreement, the Master Resolution, or the
Bonds, the validity or enforceability of such instruments, or the exemption of
interest on the Bonds from taxation as described under "TAx EXEMPTION AND
RELATED MATTERS" in the Official Statement, or invalidate, limit or condition the
obligations of the Issuer thereunder.
Except as may be required under the securities laws of any state, there is no
consent, approval, authorization or other order of, or any filing with, registration
with, or certification by, any governmental or regulatory authority having
jurisdiction over the Issuer or required for the issuance of the Bonds other than
such as has already been provided or obtained.
(h) Any certificates or other instrument signed by the Mayor, City Clerk, City
Manager, Finance Director or Budget Director or by a duly appointed and acting
deputy of any of said officials on his or her behalf, and delivered to the
Underwriter shall be deemed a representation by the Issuer to the Underwriter as
to the truth of the statements made therein.
(i)
Prior to the Closing Date, the Issuer shall have taken all actions necessary to be
taken by it for: (i) the issuance, sale, execution and delivery of the Bonds upon the
terms set forth herein and in the Master Resolution, and (ii) the execution and
delivery by the Issuer of this Agreement and all such other instruments and the
taking of all actions on the part of the Issuer as may be necessary or appropriate
for the effectuation and consummation of the transactions on the part of the Issuer
contemplated thereby. Between the date of this Agreement and the Closing Date,
the Issuer will take no action which will cause any representation contained in this
Agreement to be untrue as of the Closing Date.
(j) The Issuer will furnish such information, execute such instruments and take such
other action in cooperation with the Underwriter as the Underwriter may deem
necessary in order to qualify the Bonds for offer and sale under the "blue sky" or
securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriter may designate; provided, however, that the Issuer will
not be required to consent to service of process in any state or jurisdiction outside
the State of Iowa.
4
(k) The Issuer will not take or omit to take any action, which action or omission will
in any way adversely affect the exclusion from gross income for federal income
tax purposes of the interest on the Bonds as described under "TAx EXEMPTION
AND RELATED MATTERS" in the Official Statement or result in the proceeds from
the sale of the Bonds being applied in a manner other than as provided in the
Master Resolution.
(1) No default by the Issuer has occurred in the payment of the principal of or
premium, if any, or interest on any bond, note or other evidence of indebtedness
issued by the Issuer. No bankruptcy, insolvency or other similar proceedings
pertaining to the Issuer are pending or, to the best of the knowledge of the Issuer,
contemplated.
(m)
The Official Statement (other than the sections entitled "TAx EXEMPTION AND
RELATED MATTERS", "UNDERWRITING", "FINANCIAL CONSULTANT" and "THE
SERIES 2014 BoNDs—Book Entry Only System"), including any amendments or
supplements thereto, will not, as of the date thereof, as of the Closing Date or as
of the date of any such amendment or supplement, include any untrue statement of
a material fact or omit to state any material fact necessary to make the statements
made therein, in light of the circumstances under which they are or were made,
not misleading.
(n) The Issuer will not amend or supplement the Official Statement without the
consent of the Underwriter. The parties hereto will advise each other promptly of
the institution of any proceedings by any governmental agency or any other
material occurrence affecting the use of the Official Statement in connection with
the issuance of the Bonds.
(o) If at any time, during the period from the date hereof to the Closing Date, any
event occurs as a result of which the Official Statement, as then amended or
supplemented, would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading, the parties
hereto will cooperate with each other in the prompt preparation of an amendment
or supplement which will correct such statement or omission, and the costs of
any such amendment or supplement shall be borne by the Issuer.
(p)
(q)
The financial statements of the Issuer included in the Official Statement present
the financial position of the Issuer at June 30, 2013, and the results of its
operations and the changes in its financial position for the year then ended. For
the period July 1, 2013 to the date hereof, there has been no material adverse
change in the financial condition of the Issuer, except as otherwise disclosed in
the Official Statement.
Should the Issuer's annual audited financial statements not be available from the
MSRB on the Electronic Municipal Market Access System for Municipal
5
Securities ("EMMA"), the Issuer will provide the annual audited financial
statements to the Underwriter upon request.
(r) The Issuer will provide the Underwriter with information pertaining to the Issuer
concerning developments that affect the accuracy and completeness of key
representations contained in the Official Statement until the earlier of (a) 90 days
from the end of the underwriting period, as defined below, or (b) the time when
the Official Statement is available to any person from the MSRB on EMMA, but
in no case less than 25 days following the end of the underwriting period, as
defined below. The Issuer further agrees that it will cooperate with the
Underwriter in amending the Official Statement if any of such information, in the
judgment of the Underwriter, requires that the Official Statement be amended in
fulfillment of the Underwriter's responsibilities pursuant to Rule 15c2-12 of the
Securities and Exchange Commission. The "end of the underwriting period" as
referred to in the preceding sentence shall be the later of the delivery of the Bonds
by the Issuer to the Underwriter or when the Underwriter no longer retains an
unsold balance of the Bonds for sale to the public, and shall be deemed to be the
Closing Date, unless the Underwriter notifies the Issuer in writing prior to such
date that there exists an unsold balance of the Bonds, in which case the end of the
underwriting period shall be deemed to be extended for 30 days from the date of
such notice, subject to extension for additional periods of 30 days each upon
receipt of prior written notice from the Underwriter that there exists an unsold
balance of the Bonds. The Underwriter agrees to file the Official Statement with
the MSRB through EMMA on or before the Closing Date.
It is further understood and agreed that the members of the Issuer, the agents, attorneys, or
employees of the Issuer, their respective heirs, personal representatives or successors shall not be
severally or personally liable in connection with any matter, cause or thing pertaining to the
Bonds or the issuance thereof, this Agreement, or any instruments and documents executed and
delivered by the Issuer in connection with issuance of the Bonds. No covenant or agreement
contained in this Agreement shall be deemed to be the covenant or agreement of any member,
officer, attorney, agent or employee of the Issuer in an individual capacity. No recourse shall be
had for the payment of the principal of, premium, if any, or interest on, the Bonds, or for any
claim based hereon or on any instruments and documents executed and delivered by the Issuer in
connection with the Bonds, against any officer, member, agent, attorney or employee, past,
present or future, of the Issuer or any successor body, or their respective heirs, personal
representatives, successors as such, either directly or through the Issuer or any successor body,
whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of
any assessment or penalty, or otherwise, all of such liability being hereby released as a condition
of and as a consideration for the execution and delivery of this Agreement.
3. Conditions of Underwriter's Obligations. The obligations of the Underwriter
hereunder with respect to the Bonds shall be subject to (a) the compliance with and performance
by the Issuer of its obligations and agreements to be complied with and performed hereunder and
under the Master Resolution on or prior to the Closing Date, (b) the truth, accuracy and
completeness as of the date hereof of the representations and covenants of the Issuer contained
6
herein; and (c) the truth, accuracy and completeness of the representations and covenants of the
Issuer contained herein on the Closing Date.
The obligations of the Underwriter hereunder with respect to the Bonds are also subject to
the following further conditions:
(a) This Agreement, the Bonds and the Official Statement shall have been duly
authorized and executed by the Issuer; the Master Resolution shall have been duly
adopted by the Issuer; the Master Resolution shall be in full force and effect and
shall not have been amended, modified or supplemented; all necessary actions of
the Issuer relating to the foregoing shall be in full force and effect without recision
or modification; and there shall have been taken in connection with the issuance
of the Bonds and with the transactions contemplated hereby and thereby all such
actions as, in the opinion of Bond Counsel, are necessary and appropriate.
(b) On or prior to the Closing Date, the Underwriter shall have received:
(i) an opinion, dated the Closing Date, of Bond Counsel, substantially in the
form attached to the Official Statement as Appendix B;
(ii) an opinion of counsel to the Issuer in form and substance satisfactory to
Bond Counsel and the Underwriter;
(iii) such additional certificates (including but not limited to appropriate
arbitrage certificates), instruments or other documents as the Underwriter
may reasonably request to evidence (A) the truth, accuracy and
completeness, as of the Closing Date, of the representations of the Issuer at
such time, and (B) the performance of all agreements then to be performed
and all conditions then to be satisfied by the Issuer in connection with this
Agreement, the Master Resolution, and the Bonds;
(iv) the Master Resolution certified by the City Clerk of the Issuer as having
been duly adopted;
(v) counterpart original or CD-ROM of the transcript of all proceedings
relating to the authorization and issuance of the Bonds as assembled by
Bond Counsel (within a reasonable timeframe after the Closing Date);
(vi) the Official Statement, executed on behalf of the Issuer by the Budget
Director;
(vii) notice that the Bonds have received a rating of "Aa2" from Moody's
Investors Service;
(viii) such additional certificates as the Underwriter may reasonably request to
evidence performance of or compliance with the provisions hereof and the
7
transactions contemplated hereby and by the Official Statement, all such
certificates to be satisfactory in form and substance to the Underwriter.
If any of the conditions specified in this Section shall not have been fulfilled when and as
required by this Agreement, or if any of the opinions, instruments, documents, proceedings or
certificates mentioned above or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Underwriter, this Agreement and all
obligations of the Underwriter hereunder may be canceled by the Underwriter at, or at any time
prior to, the Closing Date, notice of such cancellation shall be given to the Issuer in writing, or by
facsimile confirmed in writing.
4. Conditions of the Issuer's Obligations. The Issuer's obligations to sell and deliver
the Bonds shall be subject to the following conditions on or before the Closing Date:
(a) The Issuer shall have received the opinions described in Section 3(b) hereof; and
(b) The Underwriter shall have tendered the purchase price set forth in Section 1
hereof and delivered its Purchaser's Certificate.
5. Termination. This Agreement may be terminated by the Underwriter, and the
Issuer shall not be obligated to sell and deliver, and the Underwriter shall not be obligated to
purchase and pay for, the Bonds on the Closing Date if the Underwriter shall deliver to the Issuer
a certificate to the effect that in its reasonable judgment any of the following events has occurred
after the date hereof and on or prior to the Closing Date:
(a) The marketability of the Bonds or the contemplated offering price thereof, in the
opinion of the Underwriter, has been materially adversely affected by an
amendment to the Constitution of either the United States of America or the State
of Iowa, or by any Federal or Iowa legislation that has been approved by at least
one chamber of the U.S. Congress or Iowa General Assembly, respectively, or by
any decision of any Federal or Iowa court or by any announcement, order, ruling
or regulation (final, temporary or proposed) of the Treasury Department of the
United States of America, the Internal Revenue Service or other Federal or Iowa
authority or regulatory body, affecting the status of the Issuer, its property, income
or securities (including the Bonds), or any tax exemption with respect to the
Issuer's securities (including the Bonds), or the interest thereon granted or
authorized by the Internal Revenue Code of 1986, as amended.
(b) A stop order, ruling, regulation or official statement by, or on behalf of, any
governmental agency having jurisdiction shall have been issued or made to the
effect that the issuance, offering or sale of obligations of the general character of
the Bonds, or the issuance, offering or sale of the Bonds as contemplated hereby
and by the Official Statement, is in violation or would be in violation of any
provisions of Federal or Iowa securities laws.
(c) Legislation shall have been enacted by the Congress of the United States of
America, or a decision by a court of the United States of America shall have been
8
rendered, to the effect that obligations of the general character of the Bonds are
not exempt from registration or qualification under, or other similar requirements
of, the Federal securities laws.
An order, ruling, regulation, official statement or decision by any governmental
agency or court having jurisdiction shall have been issued or made which calls
into question the legality, validity or enforceability of the Bond issuance.
Additional material restrictions not in force as of the date hereof shall have been
imposed upon the trading in securities generally by any governmental authority or
by any national securities exchange.
Any of the following events shall have occurred: (i) the engagement by the United
States of America in hostilities which have resulted in a declaration of war or
national emergency, or the occurrence of any other outbreak of hostilities or
national or international calamity or crisis, financial or otherwise, the effect of
such outbreak, calamity or crisis on the financial markets of the United States of
America being such as, in the reasonable opinion of the Underwriter, would
adversely affect the ability of the Underwriter to market the Bonds at the intended
offering prices (it being agreed by the Underwriter that there is no outbreak,
calamity or crisis of such a character as of the date hereof); (ii) a general
suspension of trading on the New York Stock Exchange or the American Stock
Exchange or other national securities exchange; (iii) the establishment of limited
or minimum prices on such Exchanges; (iv) the declaration of a banking
moratorium either by Federal, New York State, or Iowa authorities; (v) the New
York Stock Exchange or other national securities exchange, or any governmental
authority, shall impose, as to the Bonds or similar obligations, any material
restrictions not now in force, or increase materially those now in force, with
respect to the extension of credit by, or the charge to the net capital requirements
of, the Underwriter; or (vi) an event which, in the opinion of the Underwriter,
requires an amendment or supplement to the Official Statement and, in the
opinion of the Underwriter, adversely affects the marketability of the Bonds or the
contemplated offering price thereof.
Any event shall have occurred, or information become known, which in the
Underwriter's sole, reasonable opinion, makes untrue in any material respect any
statement or information contained in the Official Statement as originally
circulated, or has the effect that the Official Statement as originally circulated
contains an untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading; provided, however, that the
Underwriter shall, if requested by the Issuer, circulate to purchasers a supplement
or amendment to the Official Statement reflecting such event, and if such
supplement or amendment is so circulated the Underwriter shall only be entitled
to terminate this Agreement pursuant to this clause (g) if, as a result of such
amendment or supplement, the marketability of the Bonds or the market price
thereof, in the reasonable opinion of the Underwriter, has been materially
adversely affected.
(h) Any rating or ratings with respect to the Bonds shall have been revoked or
downgraded.
6. Costs and Expenses.
(a) Except as set forth herein, the Underwriter shall be under no obligation to pay,
and the Issuer shall pay, all expenses incident to the performance of the Issuer's
obligations hereunder, including but not limited to: (i) fees and disbursements of
Bond Counsel, Financial Advisor, and Registrar; (ii) the costs of printing and
distributing the Bonds, the Preliminary Official Statement and the Official
Statement and (iii) the cost of obtaining a rating on the Bonds.
(b) The Underwriter shall pay: (i) all advertising expenses in connection with the
public offering of the Bonds; (ii) the fees of Chapman and Cutler LLP, as counsel
of the Underwriter; and (iii) all other expenses incurred by them in connection
with their public offering and distribution of the Bonds.
7. Arms -Length Transaction, Disclosures Regarding Underwriter's Role. The Issuer
acknowledges and agrees that the purchase and sale of the Bonds pursuant to this Agreement is
an arm's-length commercial transaction between the Issuer and the Underwriter, acting solely as
a principal and not as a municipal advisor, financial advisor or agent of the Issuer. The
Underwriter has not assumed a financial advisory responsibility in favor of the Issuer with
respect to the offering of the Bonds or the process leading thereto (whether or not the
Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Issuer on
other matters) or any other obligation to the Issuer except the obligations expressly set forth in
this Agreement, it being the Issuer's understanding that a financial advisory relationship shall not
be deemed to exist when, in the course of acting as an underwriter, a broker, dealer or municipal
securities dealer, a person renders advice to an issuer, including advice with respect to the
structure, timing, terms and other similar matters concerning a new issue of municipal securities.
Unlike a municipal advisor, the Underwriter does not have a fiduciary duty to the Issuer
under the federal securities law and is, therefore, not required by federal law to act in the best
interests of the Issuer without regard to its own financial or other interests. Although MSRB Rule
G-17 requires an underwriter to deal fairly at all times with both municipal issuers and investors,
the Underwriter's primary role is to purchase the Bonds with a view to distribution and it has
financial and other interests that differ from those of the Issuer. The Underwriter has a duty to
purchase the Bonds from the Issuer at a fair and reasonable price, but must balance that duty to
sell the Bonds to investors at prices that are fair and reasonable. The Underwriter has reviewed
the Official Statement for the Bonds in accordance with, and as part of, its responsibilities to
investors under the federal securities laws, as applied to the facts and circumstances of the
transaction.
10
The Underwriter's compensation in the form of a discount from the public offering price
is contingent on the closing of the Bonds. Such compensation that is contingent on the closing of
a transaction or the size of a transaction presents a conflict of interest because it may cause the
Underwriter to recommend a transaction that is unnecessary or to recommend that the transaction
be larger than is necessary.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Iowa, including, without limitation, those laws
applicable to contracts made and to be performed in that State.
9. Survival of Representations and Covenants. All representations and covenants of
the Issuer and agreements of the Underwriter set forth in this Agreement shall remain in full
force and effect regardless of any investigation, or statement as to the results thereof, made by or
on behalf of any purchaser of the Bonds or any person controlling any such purchaser, and shall
survive delivery of and payment for the Bonds.
10. Execution in Counterparts. This Agreement may be executed and accepted in any
number of counterparts, all of which taken together shall constitute one and the same instrument,
and any of the parties hereto may execute or accept this Agreement by signing any such
counterpart.
11. Notices and Other Actions. All notices, requests, demands and formal actions
hereunder shall be in writing, mailed, telegraphed or delivered to the following addresses:
The Issuer:
CITY OF DUBUQUE
City Hall
50 West 13th Street
Dubuque, Iowa 52201
Attention: City Clerk
The Underwriter:
ROBERT W. BAIRD & CO. INCORPORATED
300 East Fifth Avenue, Suite 200
Naperville, Illinois 60563-3181
12. Parties in Interest. This agreement is made solely for the benefit of the
Underwriter, persons controlling the Underwriter, the Issuer, and their respective successors and
assigns, and no other person, partnership, association or corporation shall acquire or have any
right under or by virtue of this Agreement. The terms "successors" and "assigns" shall not
include any purchaser of Bonds from or through the Underwriter merely because of such
purchase.
11
If the foregoing is in accordance with your understanding of the agreement by and
between the Issuer and the Underwriter, kindly sign and return to Robert W. Baird & Co.
Incorporated one of the enclosed copies hereof, whereupon it will constitute a binding agreement
between the Issuer and the Underwriter in accordance with its terms.
Very truly yours,
ROBERT W. BAIRD & CO. INCORPORATED
By
Accepted as of the date first above written:
CITY OF DUBUQUE, WA
By
Its: Ma or
Managing Direc
12
EXHIBIT A
CITY OF DUBUQUE
$7,190,000
SALES TAX INCREMENT REVENUE BONDS
(UNLIMITED PROPERTY TAX SUPPORTED)
SECOND LIEN SERIES 2014
Dated Date: June 16, 2014
First Coupon: December 1, 2014
Maturity Schedule:
$7,190,000 Serial Bonds
June 1 Principal
Maturity Amount Coupon Yield
2023 $ 115,000 4.00% 2.50%
2024 1,075,000 4.00 2.61
2025 1,125,000 5.00 2.70
2026 1,125,000 5.00 2.80
2027 1,200,000 4.00 3.07
2028 1,250,000 4.00 3.21
2029 1,300,000 5.00 3.10
Optional Redemption:The Bonds maturing on or after June 1, 2025, may be called for
redemption by the Issuer and paid before maturity on June 1, 2024 or any date thereafter, from
any funds regardless of source, in whole or in part, in any order of maturity and within an annual
maturity by lot. The terms of any redemption shall be par, plus accrued interest to date of call.
Final Schedule
City of Dubuque; Iowa
Dated: 6/16/2014
Closing 6/16/2014
3)
(4)
(5)
(6)
(7)
(8)
(9)
(13)
(14)
(15)
(16)
(17
18
Date
Final Schedule
Principal Interest
Payments Payment
Less
Cpaitalized
Interest
Original Schedule
Principal Interest
Payments Payment
Less
Cpaitalized
Interest
Sale if GO
Principal Interest
Payments Payment
Less
Cpaitalized
Interest
Final Schedule
Interest Yield
Rate Rate
Original Schedule
Interest Yield
Rate Rate
Sale if GO
Interest Yield
Rate Rate
6/1/2014
12/1/2014
148,088
-148,088
136,308
-136,308
133,925
-133,925
6/1/2015
161,550
-161,550
148,700
-148,700
146,100
-146,100
12/1/2015
161,550
-161,550
148,700
-148,700
146,100
-146,100
6/1/2016
161,550
-161,550
148,700
-148,700
146,100
-146,100
12/1/2016
161,550
148,700
146,100
6/1/2017
161,550
148,700
146,100
12/1/2017
161,550
148,700
146,100
6/1/2018
161,550
148,700
146,100
12/1/2018
161,550
148,700
146,100
6/1/2019
161,550
148,700
146,100
12/1/2019
161,550
148,700
146,100
6/1/2020
161,550
148,700
146,100
12/1/2020
161,550
148,700
146,100
6/1/2021
161,550
148,700
146,100
12/1/2021
161,550
148,700
146,100
6/1/2022
161,550
148,700
146,100
12/1/2022
161,550
148,700
146,100
6/1/2023
115,000 161,550
135,000 148,700
140,000 146,100
4.000%
2.500%
4.000%
2.450%
4.000%
2.400%
12/1/2023
159,250
146,000
143,300
6/1/2024
1,075,000 159,250
1,100,000 146,000
1,100,000 143,300
4.000%
2.610%
4.000%
2.560%
4.000%
2.510%
12/1/2024
137,750
124,000
121,300
6/1/2025
1,125,000 137,750
1,150,000 124,000
1,150,000 121,300
5.000%
2.700%
4.000%
2.720%
4.000%
2.670%
12/1/2025
109,625
101,000
98,300
6/1/2026
1,125,000 109,625
1,200,000 101,000
1,200,000 98,300
5.000%
2.800%
4.000%
2.880%
4.000%
2.780%
12/1/2026
81,500
77,000
74,300
6/1/2027
1,200,000 81,500
1,200,000 77,000
1,165,000 74,300
4.000%
3.070%
4.000%
3.020%
4.000%
2.920%
12/1/2027
57,500
53,000
51,000
6/1/2028
1,250,000 57,500
1,300,000 53,000
1,250,000 51,000
4.000%
3.210%
4.000%
3.160%
4.000%
3.060%
12/1/2028
32,500
27,000
26,000
6/1/2029
1,300,000 32,500
1,350,000 27,000
1,300,000 26,000
5.000%
3.100%
4.000%
3.250%
4.000%
3.150%
12/1/2029
0
0
0
6/1/2030
0
0
0
12/1/2030
0
0
0
6/1/2031
0
0
0
12/1/2031
0
0
0
6/1/2032
0
0
0
12/1/2032
0
0
0
6/1/2033
0
0
0
12/1/2033
0
0
0
6/1/2034
0
0
0
Totals:
7,190,000 4,050,688
-632,738
7,435,000 3,720,208
-582,408
7,305,000 3,646,025
-572,225
Total Cost of Financing
10,607,95d
Total Cost of Financing
10,572,800
Total Cost of Financing
10,378,800
Increase Cost vs GO Option
229,150
Increase Cost vs GO Option
194,000
Council presentation file.xlsm P&I
5/19/2014 5:08 PM
Piperjaffray:
Sources & Uses of Funds
City of Dubuque, Iowa
Uses of Funds
Dated: 6/16/2014
Closing 6/16/2014
Sources of Funds
Bond Proceeds:
Final
Prelim
As GO
Project Uses
3.4230%
-
3.2067%
Project Construction Budget
7,373,809.00
7,373,809.00
7,373,809.00
Capitalized Interest
632,737.50
582,408.33
572,225.00
Other -
3.1799%
3.1128%
3.0380%
Total
8,006,546.50
7,956,217.33
7,946,034.00
Bond Issuance Costs
3.3753%
3.3059%
3.1397%
Issuance Expenses
113,030.50
113,336.75
40,674.25
Underwriting Costs
40,398.55
40,154.85
39,739.12
Original Issue Discount
0.00
0.00
0.00
Total Bond Issuance Costs
153,429.05
153,491.60
80,413.37
Debt Reserve Fund:
Deposit to Sinking (Accrued):
Rounding
1,347.35
2,382.36
1,656.88
Total Uses of Funds:
8,161,322.90
8,112,091.30
8,028,104.25
Sources of Funds
Bond Proceeds:
7,190,000.00
7,435,000.00
7,305,000.00
Accrued Interest:
3.4230%
-
3.2067%
Original Issue Premium:
971,322.90
677,091.30
723,104.25
Total Sources of Funds:
8,161,322.90
8,112,091.30
8,028,104.25
Summary of Financing
Council presentation file.xlsm Sources
Average Maturity of Bonds:
12.51
12.51
12.48
Average Interest Rate:
3.4230%
3.2720%
3.2067%
Net Interest Cost:
3.4679%
3.3152%
3.2503%
Net Interest Cost ($)
3,119,763.15
3,083,271.89
2,962,659.87
Bond Yield:
3.1799%
3.1128%
3.0380%
True Interest Cost (TIC):
3.2309%
3.1629%
3.0881%
All -In True Interest Cost:
3.3753%
3.3059%
3.1397%
5/19/2014 5:08 PM
Piperja Efra
Final Schedule- Interst Comparison Only
City of Dubuque, Iowa
Dated: --6/16/2014
Closing 6/16/2014
(1) (2)
(3) (4) (5)
(6) (7) (8)
(9) (13)
(14) (15)
(16) (17)
(18)
Date
Final Schedule
Principal Interest
Payments Payment
Less
Cpaitalized
Interest
Original Schedule
Principal Interest
Payments Payment
Less
Cpaitalized
Interest
Sale if GO
Principal Interest
Payments Payment
Less
Cpaitalized
Interest
Final Schedule
Interest Yield
Rate Rate
Original Schedule
Interest Yield
Rate Rate
Sale if GO
Interest Yield
Rate Rate
6/1/2014
12/1/2014
146,713
-146,713
134,933
-134,933
133,925
-133,925
6/1/2015
160,050
-160,050
147,200
-147,200
146,100
-146,100
12/1/2015
160,050
-160,050
147,200
-147,200
146,100
-146,100
6/1/2016
160,050
-160,050
147,200
-147,200
146,100
-146,100
12/1/2016
160,050
147,200
146,100
6/1/2017
160,050
147,200
146,100
12/1/2017
160,050
147,200
146,100
6/1/2018
160,050
147,200
146,100
12/1/2018
160,050
147,200
146,100
6/1/2019
160,050
147,200
146,100
12/1/2019
160,050
147,200
146,100
6/1/2020
160,050
147,200
146,100
12/1/2020
160,050
147,200
146,100
6/1/2021
160,050
147,200
146,100
12/1/2021
160,050
147,200
146,100
6/1/2022
160,050
147,200
146,100
12/1/2022
160,050
147,200
146,100
6/1/2023
115,000 160,050
135,000 147,200
140,000 146,100
4.000%
2.500%
4.000%
2.450%
4.000%
2.400%
12/1/2023
157,750
144,500
143,300
6/1/2024
1,075,000 157,750
1,100,000 144,500
1,100,000 143,300
4.000%
2.610%
4.000%
2.560%
4.000%
2.510%
12/1/2024
136,250
122,500
121,300
6/1/2025
1,125,000 136,250
1,150,000 122,500
1,150,000 121,300
5.000%
2.700%
4.000%
2.720%
4.000%
2.670%
12/1/2025
108,125
99,500
98,300
6/1/2026
1,125,000 108,125
1,200,000 99,500
1,200,000 98,300
5.000%
2.800%
4.000%
2.880%
4.000%
2.780%
12/1/2026
80,000
75,500
74,300
6/1/2027
1,175,000 80,000
1,175,000 75,500
1,165,000 74,300
4:000%
3.070%
4.000%
3.020%
4.000%
2.920%
12/1/2027
56,500
52,000
51,000
6/1/2028
1,200,000 56,500
1,250,000 52,000
1,250,000 51,000
4.000%
3.210%
4.000%
3.160%
4.000%
3.060%
12/1/2028
32,500
27,000
26,000
6/1/2029
1,300,000 32,500
1,350,000 27,000
1,300,000 26,000
5.000%
3.100%
4.000%
3.250%
4.000%
3.150%
12/1/2029
0
0
0
6/1/2030
0
0
0
12/1/2030
0
0
0
6/1/2031
0
0
0
12/1/2031
0
0
0
6/1/2032
0
0
0
12/1/2032
0
0
0
6/1/2033
0
0
0
12/1/2033
0
0
0
6/1/2034
0
0
0
Totals:
7,115,000 4,009,813
-626,863
7,360,000 3,679,333
-576,533
7,305,000 3,646,025
-572,225
Total Cost of Financing
10,497,950
Total Cost of Financing
10,462,800
Total Cost of Financing
10,378,800
Increase Cost vs GO Option
119,150
Increase Cost vs GO Option
84,000
Council presentation file- Interest Only.xlsm P&I
5/19/2014 5:06 PM
Piperjaffray
Sources & Uses of Funds
City of Dubuque, Iowa
Uses of Funds
Dated: 6/16/2014
Closing 6/16/2014
Sources of Funds
Bond Proceeds:
Final
Prelim
As GO
Project Uses
3.4224%
3.2700%
3.2067%
Project Construction Budget
7,373,809.00
7,373,809.00
7,373,809.00
Capitalized Interest
626,862.50
576,533.33
572,225.00
Other
3.1781%
3.1107%
3.0380%
Total
8,000,671.50
7,950,342.33
7,946,034.00
Bond Issuance Costs
3.2814%
3.2124%
3.1397%
Issuance Expenses
40,674.25
40,674.25
40,674.25
Underwriting Costs
40,000.94
39,755.60
39,739.12
Original Issue Discount
0.00
0.00
0.00
Total Bond Issuance Costs
80,675.19
80,429.85
80,413.37
Debt Reserve Fund:
Deposit to Sinking (Accrued):
Rounding
-348.79
662.37
1,656.88
Total Uses of Funds:
8,080,997.90
8,031,434.55
8,028,104.25
Sources of Funds
Bond Proceeds:
7,115,000.00
7,360,000.00
7,305,000.00
Accrued Interest:
3.4224%
3.2700%
3.2067%
Original Issue Premium:
965,997.90
671,434.55
723,104.25
Total Sources of Funds:
8,080,997.90
8,031,434.55
8,028,104.25
Summary of Financing
Average Maturity of Bonds:
12.50
12.50
12.48
Average Interest Rate:
3.4224%
3.2700%
3.2067%
Net Interest Cost:
3.4674%
3.3133%
3.2503%
Net Interest Cost ($)
3,083,815.54
3,047,654.38
2,962,659.87
Bond Yield:
3.1781%
3.1107%
3.0380%
True Interest Cost (TIC):
3.2291%
3.1608%
3.0881%
All -In True Interest Cost:
3.2814%
3.2124%
3.1397%
Council presentation file- Interest Only.xlsm Sources
5/19/2014 5:06 PM
Piperjaffray
Pipedaffray
3900 Ingersoll Avenue, Suite 110 Des Moines, Iowa 50312
Tel: 515-247-2340 I Tel: 800-333-6008 1 Fax: 515-247-2352
Piper Jaffray & Co. Since 1895. Member SIPC and FINRA.
May 19, 2014
Honorable Mayor and Members of the City Council
City of Dubuque
City Hall
50 W. 13th St.
Dubuque, IA 52001-4805
Ladies and Gentlemen:
You have engaged Robert W. Baird & Co. Inc. to underwrite the issuance of
approximately $7,190,000 Sales Tax Increment Revenue Bonds (General Obligation
backup). We understand that your issue is the first issuance in the State of this type of
bond.
BACKGROUND
The City retained Robert W. Baird & Co. in a competitive selection process in 2013, to act
as underwriter of this issue of bonds. The City modified the structure of the Bonds, since
the time of selection, and removed the annual appropriation nature of the backup pledge,
inserting in its place a straight -forward General Obligation pledge.
Logic would suggest that this bond ought to trade at the same level as a normal GO bond.
We think this logic may be slightly flawed in so far as a normal GO of the rating level that
the City maintains is a known commodity, with a high degree of liquidity. We believe that
this issue is likely to have a different base CUSIP number than the City's GO bonds and
notes. With a different base CUSIP number, the investor public will likely conclude that
there is a reason that the bond is different than the normal GO bond. Secondly, the bond is
noted on the Bloomberg system as a sales tax revenue bond. The City's regular GO bonds
are noted on the Bloomberg system as GO bonds. Finally, we believe that one must put
oneself in the shoes of a typical investor. Assume that an investors is presented with two
bonds of identical credit rating; one is a regular GO bond, to which there has been
frequent, regular issuances by the issuer, ongoing disclosure has been provided, the issuer
has s a long history of issuance of this type of bond. Assume that the other bond being
offered is a new credit, first time issued. Assume that the second bond retains the issuer's
high rating and GO backup of the issuer.
Most investors, if presented with this set of facts and an identical interest rate, would
choose the GO bond each and every time. It is a known commodity whose pricing can be
easily established and one doesn't have to read a very lengthy official statement to conclude
that the bond is a GO.
Given the above, we believe that logic requires modification to reflect the reality of
liquidity in the marketplace. In other words, there is an additional amount of interest that
needs to be offered to compel an investor to read the official statement and purchase the
second bond in the above example. That is the position in which the City finds itself with
this issue.
Honorable Mayor and Members of the City Council
Page Two
May 19, 2014
INTEREST RATES - ACTUAL
Baird proposes interest rates that look as follows:
Maturity Rate Yield to Call Yield to Maturity
2023 4.00% 2.50% 2.50%
2024 4.00 2.61 2.61
2025 5.00 2.70 2.864
2026 5.00 2.80 3.087
2027 4.00 3.07 3.246
2028 4.00 3.21 3.395
2029 5.00 3.10 3.593
Yield to call indicates the rate that an investor would earn, net of their initial purchase price, between
closing and the first call date, which is June 1, 2024. Yield to maturity indicates the rate that an
investor would earn, net of their initial purchase price, between closing and the maturity of the bond
purchased. It is customary that the purchase price would reflect the price that is the higher of the yield
to call or yield to maturity (bond prices move opposite of bond yields, so the higher the price, the lower
the yield that an investor earns net of their purchase price). Purchasers will sometimes purchase a bond
that has a lower yield to call than its yield to maturity. In doing so, a purchaser is being rewarded for
the risk if the Issuer (the City, in this case) chooses not to call the bond at its first call date. A
purchaser using this strategy is employing a defensive strategy against the concern that rates may be
higher in the future than they are at the time of purchase. But when comparing from one issue to
another, it is necessary to pay attention to which yield one is comparing.
INTEREST RATES - SPREAD OVER MMD
While there are issues sold across the country, and in Iowa, on a regular basis, finding an issue that is a
comparable is a bit more difficult than it might seem. Variables that are relevant in any comparison
include: rating, bank qualification, size of maturities, state of issuance, amount, final maturity and
reputation of the issuer. We.have narrowed the list of issuers for purposes of comparing interest rates
to isolate those that have the same or higher rating, are selling non bank qualified bonds with similar
maturities and in amounts that are similar to yours.
As rates change from time to time, the market typically tracks issues on a "spread to MMD" basis. In
other words, the spread versus a national market index (MMD), published daily, that.a particular bond
traded at from one day to the next. Recent issues sold on a spread to MMD basis as follows:
Date . 5/19/14 5/6/14 4/9/14 4/9/14 4/21/14 4/1/14
Rating: Aa2 Aaa Aa2 Aa2 Aa2 Aa2
Maturity Dubuque Ia City Ankeny A Ankeny B Kirkwood A Bettendorf
2023 0.45% 0.090% 0.385% 0.284% 0.739% 0.270%
2024 0.45 0.147% 0.502% 0.351% 0.280%
2025 0.50 0.387% 0.387% 0.290%
2026 0.55 0.373% 0.381% 0.300%
2027 0.60 0.437% 0.410% 0.290%
2028 0.65 0.406% 0.400% 0.280%
2029 . 0.65 0.730% 0.410% 0.300%
Honorable Mayor and Members of the City Council
Page Two
May 19,2014
FEES
As with the discussion about interest rates, the establishment of comps must be narrowed to reflect
those that have similar credit, rating, structure, amount and tax status as your issues.
You have a negotiated fee with Baird spelled out in their proposal. Recent comparable sales of non
bank qualified GO bonds for issuers in Iowa reflect the following fees:
Final Fee
Issuer Date Amount Rating . Maturity Paid
Dubuque 5/19/14 7,190,000 Aa2 2029 0.485%
Iowa City 5/6/14 11,980,000 Aaa 2024 0.546%
Ankeny A 4/9/14 12,345,000 Aa2 2029 0.721%
Ankeny B 4/9/14 14,885,000 Aa2 2029 1.013%
Kirkwood A 4/21/14 26,500,000 Aa2 2023 0.452%
Kirkwood B 4/21/14 16,080,000 Aa2 2021 0.337%
Bettendorf 4/1/14 20,170,000 Aa2 2033 1.997%
As you can see, the fee quoted by Baird to the City compares favorably to recent issues of high quality
Iowa GO bonds, especially when adjusted for the final maturity of the bond in question.
OUR RECOMMENDATION
Our recommendation is that the City accept the proposal from Robert W. Baird & Co. on the terms
outlined herein.
Very truly yours,
Sent Via Email
Timothy J. Oswald
Managing Director
TJ O:
C: Jenny Larson