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HomeMy Public PortalAbout2020_10_27_R107 Financial Update and Strategic Debt Refunding/Restructuring The Town of Leesburg, Virginia PRESENTED: October 27, 2020 RESOLUTION NO. 2020-107 ADOPTED: October 27, 2020 A RESOLUTION : APPROVAL OF THE REFUNDING OF THE TOWN'S 2011A GENERAL OBLIGATION BOND ISSUANCE SERIES AND APPROVAL OF THE DEBT RESTRUCTURING OF GENERAL OBLIGATION BOND ISSUANCES FROM 2014, 2015 AND 2019 WHEREAS, the COVID-19 pandemic has impacted the Town's operations as well as the near term financial outlook and annual revenues; and WHEREAS, as of October 27, 2020, the projected revenue shortfall for the General Fund in Fiscal Year 2021 is approximately$5.55 million or 9%; and WHEREAS, the financial impacts surrounding the COVID-19 pandemic have the potential to continue over the next two or three fiscal years; and WHEREAS, Town staff has been consulting with the Town's Financial Advisor, Davenport & Company LLC ("Davenport"), to identify debt refinancing and restructuring options to assist with addressing the forecasted continued revenue shortfalls in Fiscal Year 2022 and potentially Fiscal Year 2023, including without limitation the refunding and/or restructuring of the Town's series 2011A general obligation bonds and the Town's general obligation bonds issued in 2014, 2015, and 2019 (the "Prior Bonds"); and WHEREAS, these proposed refinancing and restructuring of Town's debt would not extend the final repayment period of the debt but would reduce the speed of debt reduction somewhat; and WHEREAS, the refinancing and restructuring of the Prior Bonds would be achieved by the issuance of general obligation bonds of the Town(the "Bonds") that would pay the costs of refinancing and/or restructuring the Prior Bonds and pay the costs of issuing the Bonds; and WHEREAS, no public hearing is required regarding the issuance of the Bonds under Virginia law. -2- A RESOLUTION: APPROVAL OF THE REFUNDING OF THE TOWN'S 2011A GENERAL OBLIGATION BOND ISSUANCE SERIES AND APPROVAL OF THE DEBT RESTRUCTURING OF GENERAL OBLIGATION BOND ISSUANCES FROM 2014, 2015 AND 2019 THEREFORE, RESOLVED, by the Council of the Town of Leesburg in Virginia as follows: 1. The Town Council hereby determines that it is advisable and will benefit the inhabitants of the Town through the promotion of their safety, health, welfare and prosperity to contract a debt and to issue and sell the Bonds. Town Council hereby authorizes the issuance and sale of the Bonds on the terms and conditions set forth herein. The proceeds from the issuance and sale of the Bonds shall be used to refund, restructure, redeem and/or defease all or a portion of the Prior Bonds and to finance the costs of issuing the Bonds. 2. The full faith and credit of the Town are hereby irrevocably pledged for the payment of the principal of, premium, if any, and interest on the Bonds as the same become due and payable. The Town Council shall levy an annual ad valorem tax upon all property in the Town, subject to local taxation, sufficient to pay the principal of, premium, if any, and interest on the Bonds as the same shall become due for payment unless other funds are lawfully available and appropriated for the timely payment thereof. 3. The Town Manager and designees are hereby authorized to take all necessary actions to effect the refinancing and restructuring of the Prior Bonds, including without limitation, the principal amount of the Bonds to be issued, the number of series, the series designation of the Bonds, the maturity date of the Bonds, the redemption provisions of the Bonds, the sale price of the Bonds, the interest rates and interest rate provisions on the Bonds, the issuance date, and any elections under the federal tax code; provided that(i) the maximum principal amount of Refunding Bonds shall not exceed the amount determined by the Town Manager as provided in paragraph 4 -3- A RESOLUTION: APPROVAL OF THE REFUNDING OF THE TOWN'S 2011A GENERAL OBLIGATION BOND ISSUANCE SERIES AND APPROVAL OF THE DEBT RESTRUCTURING OF GENERAL OBLIGATION BOND ISSUANCES FROM 2014, 2015 AND 2019 below, (ii)the true interest cost of the Bonds shall not exceed 6.0%per annum(taking into account any original issue discount or premium); (iii) the final maturity of the Bonds shall occur not later than the last fiscal year in which a Prior Bond selected for refinancing or restructuring matures. 4. The refunding of the Prior Bonds shall be executed as follows: (a) the Town Manager and the Director of Finance and Administrative Services are hereby authorized and directed to select the particular Prior Bonds to be refunded and/or restructured provided that the issuance of Bonds to refund or restructure such Prior Bonds shall result in reducing debt service costs in fiscal year 2021 (such Prior Bonds, the "Refunded Bonds"); (b) the Town Manager and the Director of Finance and Administrative Services are hereby authorized and directed to cause each of the Refunded Bonds to be redeemed on its earliest redemption date under applicable federal tax law and to cause redemption notices to be given to the holders of the Refunded Bonds pursuant to the terms of the Refunded Bonds; and (c) the Town Manager and the Director of Finance and Administrative Services are hereby authorized and directed to cause to be prepared and to execute and deliver an escrow agreement or agreements between the Town and an escrow agent or escrow agents to be selected by the Town Manager and the Director of Finance and Administrative Services providing for the irrevocable deposit of the proceeds of the Refunding Bonds in amounts sufficient, when invested as set forth in the escrow agreement, to provide for the payment of the principal of and premium, if any, and interest on the Refunded Bonds. -4- A RESOLUTION: APPROVAL OF THE REFUNDING OF THE TOWN'S 2011A GENERAL OBLIGATION BOND ISSUANCE SERIES AND APPROVAL OF THE DEBT RESTRUCTURING OF GENERAL OBLIGATION BOND ISSUANCES FROM 2014, 2015 AND 2019 5. The Bonds shall be issued, in one or more series upon the terms established pursuant to this Resolution and upon such other terms as may be determined in the manner set forth in this Resolution. The Bonds shall be issued in fully registered form, shall be dated such date as the Town Manager or the Director of Finance and Administrative Services may approve, shall be in the denominations of $5,000 each or whole multiples thereof(if sold to the public), maybe issued at one time or from time to time in one or more series (with appropriate series designations), and the Bonds of any series shall be numbered from R-1 upwards consecutively. 6. The Bonds shall be offered for sale in such manner as the Town Manager or the Director of Finance and Administrative Services may determine to be in the best interests of the Town. If it is determined that it is in the best interest of the Town to sell all or a portion of the Bonds in a competitive sale,whether in a public sale or direct placement, then the Town Manager and the Director of Finance and Administrative Services, are hereby authorized and directed to accept the bid or proposal for the purchase of all or a portion of the Bonds, provided such bid results in the lowest true interest cost to the Town. The Town Manager and the Director of Finance and Administrative Services are entitled to reject any or all bids. If it is determined that it is in the best interest of the Town to sell all or a portion of the Bonds in a negotiated sale, whether in a public sale or direct placement, then the Town Manager and the Director of Finance and Administrative Services are hereby authorized to enter into a bond purchase agreement with an underwriter or a group of underwriters with demonstrated experience in underwriting municipal securities to be selected by the Town Manager or the Director of Finance and Administrative Services,provided that the true interest cost oithe Bonds does not exceed the maximum true interest cost set -5- A RESOLUTION: APPROVAL OF THE REFUNDING OF THE TOWN'S 2011A GENERAL OBLIGATION BOND ISSUANCE SERIES AND APPROVAL OF THE DEBT RESTRUCTURING OF GENERAL OBLIGATION BOND ISSUANCES FROM 2014, 2015 AND 2019 forth above. If the Town Manager determines that it is in the best interest of the Town to issue any Bonds in a direct placement,then the Town Manager is hereby authorized to enter into any and all placement documents related to the direct placement and to select the holder after consultation with the Town's financial advisor. If any Bonds are issued by direct placement, such Bonds shall be registered in the name of the holders thereof, or, if the Town Manager approves of such designee, a designee selected by the holder, and such Bond may be delivered to the registered owner. 7. The Bonds shall be in substantially in a form consistent with past issuance of general obligation bonds of the Town, with such appropriate variations, omissions and insertions as are permitted or required by this Resolution. There may be endorsed on the Bonds such legend or text as may be necessary or appropriate to conform to any applicable rules and regulations of any governmental authority or any usage or requirement of law with respect thereto. 8. The Bonds sold in a public sale, whether negotiated or competitive, shall be issued in book-entry-only form in accordance with this paragraph 8. The Bonds shall be issued in fully-registered form and registered in the name of Cede& Co., as nominee of The Depository Trust Company, New York, New York ("DTC") as registered owner of the Bonds, and immobilized in the custody of DTC. One fully-registered Bond in typewritten or printed form for the principal amount of each maturity of the Bonds shall be registered to Cede & Co. Beneficial owners of the Bonds shall not receive physical delivery of the Bonds. Principal, premium, if any, and interest payments on the Bonds shall be made to DTC or its nominee as registered owner of the Bonds on the applicable payment date. -6- A RESOLUTION: APPROVAL OF THE REFUNDING OF THE TOWN'S 2011A GENERAL OBLIGATION BOND ISSUANCE SERIES AND APPROVAL OF THE DEBT RESTRUCTURING OF GENERAL OBLIGATION BOND ISSUANCES FROM 2014, 2015 AND 2019 Transfer of ownership interest in the Bonds shall be made by DTC and its participants (the "Participants"), acting as nominees of the beneficial owners of the Bonds in accordance with rules specified by DTC and its Participants. The Town shall comply with the agreements set forth in the Town's Letter of Representations to DTC. Replacement Bonds (the "Replacement Bonds") shall be issued directly to beneficial owners of the Bonds rather than to DTC or its nominee but only in the event that: (a) DTC determines not to continue to act as securities depository for the Bonds; (b) the Town has determined to use a securities depository other than DTC; or (c) the Town has determined that it is in the best interest of the beneficial owners of the Bonds or the Town not to continue the book-entry system of transfer. Upon occurrence of the event described in(a) or(b) above, the Town shall attempt to locate another qualified securities depository. If the Town fails to locate another qualified securities depository to replace DTC, or if the Town makes the determination noted in (c) above, and has made provisions to notify the beneficial owners of the Bonds by mailing an appropriate notice to DTC,the appropriate officers and agents of the Town shall execute and deliver Replacement Bonds substantially in the form of the Bonds. Principal of and interest on the Replacement Bonds shall be payable as provided in this Resolution and in the Bonds and such Replacement Bonds will be transferable in accordance with the provisions of this Resolution and the Bonds. 9. The Town Manager and the Clerk of the Town Council are hereby authorized and directed to execute appropriate negotiable Bonds and to affix the seal of the Town -7- A RESOLUTION: APPROVAL OF THE REFUNDING OF THE TOWN'S 2011A GENERAL OBLIGATION BOND ISSUANCE SERIES AND APPROVAL OF THE DEBT RESTRUCTURING OF GENERAL OBLIGATION BOND ISSUANCES FROM 2014, 2015 AND 2019 thereto and to deliver the Bonds to the purchaser thereof upon payment of the purchase price. The manner of execution and affixation of the seal may be by facsimile, provided, however, that if the signatures of the Town Manager and the Clerk are both by facsimile, the Bonds shall not be valid until signed at the foot thereof by the manual signature of the Bond Registrar. 10. Upon surrender for transfer or exchange of any Bond at the principal office of the Bond Registrar, the Town shall execute and deliver and the Bond Registrar shall authenticate in the name of the transferee or transferees a new Bond or Bonds of any authorized denomination in an aggregate principal amount equal to the Bond surrendered and of the same form and maturity and bearing interest at the same rate as the Bond surrendered, subject in each case to such reasonable regulations as the Town and the Bond Registrar may prescribe. All Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and substance reasonably satisfactory to the Town and the Bond Registrar, duly executed by the registered owner or by his or her duly authorized attorney-in-fact or legal representative. No Bond may be registered to bearer. 11.New Bonds delivered upon any transfer or exchange shall be valid obligations of the Town, evidencing the same debt as the Bonds surrendered, shall be secured by this Resolution and entitled to all of the security and benefits hereof to the same extent as the Bonds surrendered. 12.No charge shall be made for any exchange or transfer of Bonds, but the Town may require payment by the registered owner of any Bond of a sum sufficient to cover -8- A RESOLUTION: APPROVAL OF THE REFUNDING OF THE TOWN'S 2011A GENERAL OBLIGATION BOND ISSUANCE SERIES AND APPROVAL OF THE DEBT RESTRUCTURING OF GENERAL OBLIGATION BOND ISSUANCES FROM 2014, 2015 AND 2019 any tax or other governmental charge which may be imposed with respect to the transfer or exchange of such Bond. 13.The Town Manager and the Director of Finance and Administrative Services are hereby authorized and directed to prepare, execute, if required, and deliver an appropriate notice of sale, preliminary official statement, official statement, continuing disclosure agreement or such other offering or disclosure documents as may be necessary to expedite the sale of the Bonds. The notice of sale, preliminary official statement, official statement, continuing disclosure agreement or other documents shall be published in such publications and distributed in such manner, including by electronic distribution, and at such times as the Town Manager shall determine. The Town Manager is authorized and directed to deem the preliminary official statement "final" for purposes of Securities and Exchange Commission Rule 15c2-12. The Town Manager is hereby authorized and directed to enter into a Continuing Disclosure Agreement for the benefit of the owners of the Bonds to assist any underwriter(s) for the Bonds in complying with the provisions of Section (b)(5) of Securities and Exchange Commission Rule 15c2-12. 14.The Mayor, the Town Manager, the Town Attorney and the Director of Finance and Administrative Services are hereby authorized and directed to take such further action as they deem necessary regarding the issuance and sale of the Bonds and the refunding of certain of the Prior Bonds, and all actions taken by such officers and agents in connection with the issuance and sale of the Bonds and the refunding of certain of the Prior Bonds are hereby ratified and confirmed. 15.The authorizations granted in this Resolution to the Town Manager, Director of Finance and Administrative Services, Clerk or Town Attorney, as applicable, may -9- A RESOLUTION: APPROVAL OF THE REFUNDING OF THE TOWN'S 2011A GENERAL OBLIGATION BOND ISSUANCE SERIES AND APPROVAL OF THE DEBT RESTRUCTURING OF GENERAL OBLIGATION BOND ISSUANCES FROM 2014, 2015 AND 2019 be carried out by any Acting, Interim or Deputy Town Manager (in the case of the Town Manager),Acting, Interim or Deputy Director of Finance and Administrative Services(in the case of the Director of Finance and Administrative Services),Acting, Interim or Deputy Clerk (in the case of the Clerk) and Acting, Interim or Assistant Town Attorney (in the case of the Town Attorney, or such other officer as any of the named officers may designate in writing. When this Resolution authorizes the Town Manager and the Director of Finance and Administrative Services to act, it shall be sufficient for either to act. 16. In accordance with Section 15.2-2601 of the Code of Virginia of 1950, as amended, the Town Council elects to issue the Bonds pursuant to the provisions of the Public Finance Act of 1991. This Resolution shall take effect immediately. 17.The Town Attorney is authorized and directed to file or to cause to be filed a certified copy of this Resolution with the Circuit Court of the County of Loudoun, Virginia, pursuant to Section 15.2-2607 and 15.2-2627 of the Code of Virginia of 1950, as amended. PASSED this 27`t' day of October, 2020. Key ur ayor Town of Leesburg ATTEST: AI 4- Clerk of Council LF\LeesburgRMS\Town_Clerk\Resolutions\2020\1027 Financial Update and Strategic Debt Refunding/Restructuring