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HomeMy WebLinkAboutOrd 425-2009 Finance Contract for the Acquisition of a Police Car.pdfAN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS, AUTHORIZING THE EXECUTION AND DELIVERY OF A FINANCE CONTRACT FOR THE ACQUISITION OF A POLICE CAR, LEVYING A TAX IN PAYMENT THEREOF, AND ENACTING OTHER PROVISIONS RELATED THERETO WHEREAS, the City is authorized, pursuant to the Public Property Finance Act, Chapter 271, Subchapter A, Local Government Code, as amended (the "Act"), to execute, perform and make payments under a contract for the acquisition of personal property for authorized municipal purposes, or the financing thereof; WHEREAS, this City Council has found and determined that it is necessary and in the best interests of the City to acquire equipment (the "Equipment") as described on Schedule I attached hereto; WHEREAS, Independent Bank, McKinney, Texas (the "Bank"), has offered to provide financing for the acquisition of the Equipment; and WHEREAS, this City Council has found and determined that it is in the best interests of the City to finance the acquisition of the Equipment through the execution and delivery of a finance contract with the Bank; Now, therefor UNKSIM Section 1.01. Definitions. (a) Unless otherwise expressly provided or unless the context clearly requires otherwise, in this Ordinance the following terms shall have the meanings specified below: "Acquisition Fund" means the hand established in Section 4.01(a)(ii). "Code" means the Internal Revenue Code of 1986, as amended, including applicable regulations, published rulings and court decisions relating thereto. "Contract Payments" means the payments to be made by the City in payment of the principal and interest due under the 2009E Finance Contract. "2009B Finance Contract" means the finance contract entitled "Finance Contract 20098", dated as of January 27, 2009, between the City and the Bank pursuant to which the Bank will provide funds to the City for the acquisition of the Equipment. "Interest and Sinking Fund" means the interest and sinking fund established by Section 4.01(a)(1). "Principal Amount" means the principal amount set forth in the 2009B Finance Contract. (b) The terms defined in the preamble to this Ordinance shall have the meanings assigned to such terms in the preamble. Section 1.02. Findings; Interpretation. (a) The declarations, determinations and findings declared, made and found in the preamble to this Ordinance are hereby adopted, restated and made a pan of the operative provisions hereof. (b) This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein to sustain the validity of this Ordinance. (c) Article and section references shall mean references to articles and sections of this Ordinance unless designated otherwise. ARTICLE 11 AUTHORIZATION AND GENERAL TERMS AND PROVISIONS OF THE 2009B FINANCE CONTRACT Section 2.01. Authorization. (a) The terms and provisions of the 2009B Finance Contract, substantially in the form presented at this meeting, are hereby approved and said 2009B Finance Contract is hereby authorized to be executed and delivered in accordance with the Constitution and laws of the State of Texas, including particularly the Act. The Mayor and City Secretary are hereby authorized and directed to execute and attest, respectively, the 2009B Finance Contract. (b) All officers of the City are authorized to take such actions and to execute such documents, certificates and receipts as they may deem necessary and appropriate in order to consummate the delivery of the 2009B Finance Contract. (c) McCall, Parkhurst & Horton L.L.P., is hereby engaged as bond counsel for the City in connection with the authorization and delivery of the 2009B Finance Contract. The execution and delivery of an engagement letter between the City and such firm, with respect to such services as bond counsel, is hereby approved with such changes as may be approved by the Mayor and the Mayor is hereby authorized to execute such engagement letter. ARTICLE III SECURITY FOR THE CONTRACT PAYMENTS Section3.01. Tax Lew for Payment of the Contract Payments. (a) The City Council hereby declares and covenants that it will provide and levy a tax legally and fully sufficient for payment of the Contract Payments, it having been determined that the existing and available taxing authority of the City for such purpose is adequate to permit a legally sufficient tax in consideration of all other outstanding obligations of the City. -2- (b) In order to provide for the payment of the Contract Payments, being (1) the interest on the outstanding Principal Amount and (ii) a sinking fund for payment of the installment amounts of the Principal Amount as they become due or a sinking fund of two percent per annuin (whichever amount is the greater), there is hereby levied for the current year and each succeeding year thereafter, while the Principal Amount or interest thereon remains outstanding and unpaid, a tax within legal limitations on each $100 valuation of taxable property in the City that is sufficient to pay such Contract Payments, full allowance being made for delinquencies and costs of collection. (c) The tax levied by this Section shall be assessed and collected each year and applied to the payment of the Contract Payments, and the tax shall not be diverted to any other purpose, (d) Said ad valorem tax, the collections therefrom, and all amounts on deposit in or required hereby to be deposited to the Interest and Sinking Fund are hereby pledged and committed irrevocably to the payment of the Contract Payments when and as due and payable in accordance with the 2009B Finance Contract and this Ordinance. (e) To the extent the City has available funds which may be lawfully used to pay the Contract Payments and such funds are on deposit in the Interest and Sinking Fund in advance of the time when ad valorem taxes are scheduled to be levied for the payment of the Contract Payments, then the amount of ad valorem taxes which otherwise would be required to be levied pursuant to subsection (b) of this Section may be reduced to the extent and by the amount of such funds then on deposit in the Interest and Sinking Fund. (f) If the liens and provisions of this Ordinance shall be released in a manner permitted by Article VI of the 2009B Finance Contract, then the collection of such ad valorem tax may be suspended or appropriately reduced, as the facts may permit, and further deposits to the Interest and Sinking Fund may be suspended or appropriately reduced, as the facts may permit. In determining the outstanding Principal Amount, there shall be subtracted the amount thereof that has been prepaid in accordance with the 2009B Finance Contract. Q I • • I I U 0 •• 11991 M V WIMM 13410 NEW =11 105 1 M Section 4.01. Creation of Funds. (a) The City hereby establishes the following special funds or accounts: W the City of Anna, Texas, 2009B Finance Contract Interest and Sinking Fund (the "Interest and Sinking Fund"); and (11) the City of Anna, Texas, 2009B Finance Contract Acquisition Fund (the "Acquisition Fund") (b) The Interest and Sinking Fund and the Acquisition Fund shall be maintained at an official depository of the City. 10 Section 4.02. Interest and Sinking Fund. (a) The taxes levied under Section 3.01 shall be deposited to the credit of the Interest and Sinking Fund at such times and in such amounts as necessary for the timely payment of the Contract Payments. (b) Money on deposit in the Interest and Sinking Fund shall be used to pay the Contract Payments as such become due and payable. Section 4.03. Acquisition Fund. (a) Money on deposit in the Acquisition Fund, including investment earnings thereof, shall be used for the acquisition of the Equipment. (b) All amounts remaining in the Acquisition Fund after the acquisition of the Equipment, including investment earnings of the Acquisition Fund, shall be deposited into the Interest and Sinking Fund, unless applicable law permits or authorizes all or any part of such funds to be used for other purposes. Section 4.04. 'Security of Funds. All moneys on deposit in the funds referred to in this Ordinance shall be secured in the manner and to the fullest extent required by the laws of the State of Texas for the security of public funds, and moneys on deposit in such funds shall be used only for the purposes permitted by this Ordinance. Section 4.05. Deposit of Proceeds. All amounts received on the Closing Date by the City under the 2009B Finance Contract shall be deposited to the Acquisition Fund, such moneys to be dedicated and used for the acquisition of the Equipment and costs related thereto. Section 4,06. Investments. (a) Money in the Interest and Sinking Fund and the Acquisition Fund, at the option of the City, may be invested in such securities or obligations as permitted under applicable law. (b) Any securities or obligations in which money is so invested shall be kept and held in trust for the benefit of the persons entitled to receive Contract Payments and shall be sold and the proceeds of sale shall be timely applied to the making of all payments required to be made from the fund from which the investment was made. (c) Interest and 'income derived from investment of any fund created by this Ordinance shall be credited to such fund. -4- REPRESENTATIONS AND COVENANTS Section 5.01. -Eepresentations and Covenants. (a) The City will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance and in the 2009B Finance Contract; the City will promptly pay or cause to be paid the Contract Payments on the dates and at the places and manner prescribed in the 2009B Finance Contract; and the City will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of money specified by this Ordinance. (b) The City is duly authorized under the laws of the State of Texas to execute and deliver the 2009B Finance Contract; all action on its part for execution and delivery of the 2009B Finance Contract has been duly and effectively taken, and the 2009B Finance Contract is and will be a valid and enforceable obligation of the City in accordance with its terms. (c) The City Council may make any changes in the description of the property listed on Schedule I to this Ordinance or of any component thereof whenever the City Council deems such changes to be necessary and appropriate and provided that the nature `of the property after such changes will constitute qualified property eligible for financing under the Act and such changes shall not adversely affect the tax-exempt status of the Contract Payments. Section 5.02, Covenants Regarding Tax Exemption of Interest Paid Under the 2009B Finance Contract, (a) Covenants. The City covenants to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the 2009B Finance Contract as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the City covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the 2009B Finance Contract or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 14 1 (b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the City, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the 2009B Finance Contract, in contravention of section 141(b)(2) of the Code; (2) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the 2009B Finance Contract or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of section 14 1 (b)(3) of the Code, to the governmental use; M (3) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the 2009B Finance Contract (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 14 1 (c) of the Code; (4) to refrain from taking any action which would otherwise result in the 2009B Finance Contract being treated as a "Private activity bond" within the meaning of section 14 1 (b) of the Code; (5) to refrain from taking any action that would result in the 2009B Finance Contract being "federally guaranteed" within the meaning of section 149(b) of the Code; (6) to refrain from using any portion of the proceeds of the 2009E Finance Contract, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the 2009E Finance Contract, other than investment property acquired with -- (A) proceeds of the 2009B Finance Contract invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond, for a period of 90 days or less until such proceeds are needed for the purpose for which the 2009E Finance Contract is issued, (B) amounts invested in a bona fide debt service fund, within the meaning of section 1. 148- 1 (b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the 2009B Finance Contract; (7) to otherwise restrict the use of the proceeds of the 2009E Finance Contract or amounts treated as proceeds of the 2009B Finance Contract, as may be necessary, so that the 2009E Finance Contract does not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the 2009B Finance Contract) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the 2009B Finance Contract has been paid in fall, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code. (b) Rebate Fund. In order to facilitate compliance with the above covenant (8), a "Rebate Fund" is hereby established by the City for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including without limitation the bondholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (c) Proceeds. The City understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and Ell proceeds of the refunded bonds expended prior to the date of issuance of the 2009E Finance Contract. It is the understanding of the City that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the 2009E Finance Contract, the City will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the 2009B Finance Contract under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the 2009E Finance Contract, the City agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the 2009E Finance Contract under section 103 of the Code. In furtherance of such intention, the City hereby authorizes and directs the City Manager to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the City, which may be permitted by the Code as are consistent with the purpose for the issuance of the 2009E Finance Contract. (d) Allocation Of. and Limitation On. Expenditures for the Project. The City covenants to account for the expenditure of sale proceeds and investment earnings to be used for the Equipment described in Schedule I of this Ordinance (the "Project") on its books and records in accordance with the requirements of the Internal Revenue Code. The City recognizes that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed; but in no event later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding, the City recognizes that in order for proceeds to be expended under the Internal Revenue Code, the sale proceeds or investment earnings must be expended no more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the 2009E Finance Contract, or (2) the date the 2009E Finance Contract is retired. The City agrees to obtain the advice of nationally -recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the 2009E Finance Contract. For purposes hereof, the City shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (e) Disposition of Project. The City covenants that the property constituting the Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the City of cash or other compensation, unless the City obtains an opinion ofnationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the 2009E Finance Contract. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the City shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (f) Desigggtjon as a Qualified Tax -Exempt Obligation. The City hereby designates the 2009E Finance Contract as a "qualified tax-exempt obligation" as defined in section 265(b)(3) of the Code. In furtherance of such designation, the City represents, covenants and warrants the following: (a) that during the calendar year in which the 2009E Finance Contract is delivered, the City (including any subordinate entities) has not designated nor will designate obligations that when aggregated with the 2009E Finance Contract, will result in more than $ 10,000,000 of "qualified tax-exempt obligations" being issued; (b) that the City reasonably anticipates that the amount of tax-exempt obligations issued, during the calendar year in which the 2009E M Finance Contract is delivered, by the City (or any subordinate entities) will not exceed $ 10,000,000; and, (c) that the City will take such action or refrain from such action as necessary, and as more particularly set forth in this Section, hereof, in order that the 2009B Finance Contract will not be considered a "private activity bond" within the meaning of section 141 of the Code. (g) Reimbursement for Cost of Equipment. The City expects to pay for the acquisition of the Equipment prior to the delivery of the 2009E Finance Contract and hereby finds and declares that the reimbursement of the City for the payment of such cost will be appropriate and consistent with the lawful objectives ofthe City and, as such, chooses to declare its intention, in accordance with the provisions of Section 1. 150-2 of the Treasury Regulations, to reimburse itself for such payment at such time as it delivers the 2009B Finance Contract, Delivery of the 2009E Finance Contract shall occur no later than 18 months after the later of (1) the date the expenditures are paid or (2) the date on which the property, with respect to which such expenditures were made, is placed in service, but in any event no more than three years after the date the payment which is to be reimbursed was paid, [Execution Page Follows] -8- PASSED, APPROVED AND EFFECTIVE this City of Anna, Texas WHAM City ecretary, City of Anna, Texas %jkkW4j#lj/j 0Fj [CITY SEAL] UNTOWWW Equipment To Be Acquired