HomeMy Public PortalAboutResolution 16-96 Authorizing Indebtedness for Portion of Cost Golf Course •
RESOLUTION NO. 16-96
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF McCALL, IDAHO,
AUTHORIZING THE ISSUANCE AND DELIVERY OF A PROMISSORY NOTE OF THE
CITY, IN THE PRINCIPAL AMOUNT OF $650, 000, TO U.S . BANK OF IDAHO,
AS EVIDENCE OF A LOAN INDEBTEDNESS OF THE CITY INCURRED FOR PAYING
A PORTION OF THE COST OF GOLF COURSE IRRIGATION SYSTEM
IMPROVEMENTS; PROVIDING FOR THE ISSUANCE, FORM, EXECUTION,
REGISTRATION, MATURITY, AND PAYMENT OF THE NOTE; PROVIDING
COVENANTS WITH RESPECT TO THE NOTE; AUTHORIZING THE EXECUTION OF
ADDITIONAL DOCUMENTS
WHEREAS, the City of McCall, Valley County, Idaho (the
"City") , is a municipal corporation duly organized and operating
under and pursuant to the laws of the State of Idaho; and
WHEREAS, the City presently owns and operates, and has for
many years owned and operated, a municipal golf course for public
recreational purposes (the "Golf Course") ; and
WHEREAS, the City Council (the "Council") of the City has
determined that certain improvements to the existing Golf Course
irrigation system (the "Improvements" ) are necessary for the
continued operation of the Golf Course, and, in order to finance
the cost of the Improvements, the City has made application to West
One Bank, Idaho, now U.S . Bank of Idaho (the "Bank") for a loan of
{ up to $650, 000, and the Bank has approved such loan application, to
be repaid by the City from Golf Course revenues over a 15-year
term; and
WHEREAS, the Council, by adoption of Resolution No. 9-96 on
May 23, 1996, approved and authorized the execution of a loan
agreement between the City and the Bank, and the Council further
determined and declared, in Resolution No. 9-96, that the
indebtedness to be incurred thereby is an ordinary and necessary
expense of the City within the meaning of Article 8, Section 3 ,
Idaho Constitution, for which no approval of the electors of the
City is necessary; and
WHEREAS, pursuant to Resolution No. 9-96, the City caused to
be filed, in the District Court of the Fourth Judicial District of
the State of Idaho, in and for the County of Valley (the "District
Court") , a Petition for Judicial Confirmation pursuant to Title 7,
Chapter 13 , Idaho Code, seeking a judicial determination and
declaration of the validity of the City' s incurring of an
indebtedness and the issuing of its promissory note as evidence
thereof for the purpose of financing the cost of the improvements;
and
WHEREAS, on June 27, 1996, the District Court, in Case No. SP-
96-98, entered its Findings of Fact, Conclusions of Law and
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Judgment (the "Judicial Confirmation Order" ) ordering, adjudging,
and decreeing that (1) the City is authorized to enter into the
loan agreement with the Bank without the approval of the electors
of the City voting at a special election called for such purpose;
(2) the indebtedness of the City incurred pursuant to the loan
agreement is an ordinary and necessary expense of the City within
the meaning of Article 8, Section 3, of the Idaho Constitution; (3)
the City is authorized to issue its evidence of indebtedness
pursuant to the loan agreement and to pledge its Golf Course
revenues to the payment thereof; and (4) such evidence of
indebtedness, when issued pursuant to such authority, will be a
valid and binding special obligation of the City in accordance with
its terms; and
WHEREAS, pursuant to the Judicial Confirmation Order, the City
now desires to issue its promissory note in the principal amount of
$650, 000 to the Bank in accordance with the loan agreement and the
Judicial Confirmation Order.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF McCALL, of Valley County, Idaho, as follows :
Section 1 : For the purpose of providing funds for the
financing of the Golf Course irrigation system improvement project,
and the payment of costs and fees incidental thereto, the Mayor is
hereby authorized to execute, and the City Clerk is hereby
authorized to attest, on behalf of the City, the promissory note
( (the "Note") of the City in the manner hereinafter provided.
Section 2 : The Note shall be substantially in the form
annexed hereto as Exhibit "A" ; shall be dated the date of its
delivery; shall be issued to U.S . Bank of Idaho as Registered
Owner; shall be in the principal amount of $650, 000; and shall bear
interest at the rate of six and five hundredths percent (6.05%) per
annum on the unpaid principal balance from its date of issuance, or
the date from which the last interest payment has been made,
computed on the basis of a 365-day year, until November 1, 2004 .
The interest rate shall then be reestablished by the parties to a
tax-exempt rate equivalent to 4 . 0% plus the then-current 5-Year
Treasury Constant Maturity, as more fully set forth in Exhibit "B"
which is annexed hereto and by reference made a part of this
Resolution. All proceeds of the Notes shall be drawn by the City
by November 1, 1996 . Accrued interest on all advance draws shall
be paid in full by the City on November 1, 1996 . Semiannual
payments of principal and interest in the amount of $25, 000 (to be
applied first to interest and then to principal) shall be made by
the City on each May 1 and November 1, commencing on May 1, 1997,
and continuing through November 1, 2004 . Semiannual payments due
on May 1, 2005, through November 1, 2011, shall be adjusted to
amortize the remaining principal balance in approximately equal
semiannual payments on November 1, 2011 . The entire principal
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balance of the Notes and all interest accrued from the last payment
date shall be due on November 1, 2011 .
Section 3 : The Note shall be registered in the name of the
Bank as the Registered Owner, both as to principal and as to
interest, with the City Treasurer, and any transfer must likewise
be registered.
Section 4 : The City reserves the right to prepay the
outstanding principal balance of the Note, in full, together with
interest accrued thereon, on any scheduled payment date on or after
November 1, 2004, without penalty.
Section 5 : The Note shall be payable in lawful money of the
United States of America to the Registered Owner thereof at the
address of such Registered Owner as shown in the registration books
of the City.
Section 6 : The Note shall be executed in the name of the City
by the manual signature of the Mayor and attested by the manual
signature of the City Clerk, and the seal of the City shall be
impressed thereon.
Section 7 : The Note shall be payable from the net revenues
(gross revenues less costs of operation and maintenance) of the
Golf Course of the City (the "Net Revenues") . The Net Revenues are
hereby pledged for the payment of the Note on a parity with the
lien of the City' s Recreational Revenue Bonds, Series 1989, issued
pursuant to Ordinance No. 554, adopted on July 14, 1989 .
Section 8 : The City covenants with the Registered Owner of
the Note as follows :
A. In accordance with Section 149 (a) of the Internal Revenue
Code of 1986, as amended (the "Code") , the Note shall be issued and
remain in fully registered form in order that interest thereon be
excluded from gross income of the owner or owners for federal
income tax purposes . The City covenants and agrees that it will
take no action to permit the Note to be issued in or converted to
bearer form.
B. The Note is hereby designated a "qualified tax-exempt
obligation" within the meaning and for the purposes of Section
265 (b) (3) of the Code, and the City does not reasonably anticipate
that it will designate more than $10, 000, 000, including the Note,
as qualified tax-exempt obligations during the calendar year 1996 .
C. None of the proceeds of the Note will be used directly or
indirectly (i) to make or finance loans to persons or (ii) in any
trade or business carried on by any person (other than use as a
member of the general public) . For purposes of the preceding
sentence, the term "person" does not include a government unit
1 Page 3
other than the United States or any agency or instrumentality
( thereof, and the term "trade or business" means any activity
carried on by a person other than a natural person. The City
further covenants and agrees to take no action which would cause
the Note to be a "private activity bond, " nor will it omit to take
any action necessary to prevent the Note from becoming a "private
activity bond, " within the meaning of Section 141 of the Code.
D. The City reasonably anticipates that all proceeds of the
Note will be fully expended for the local governmental purposes of
the Note within six months of the date of issuance of the Note, and
that, pursuant to Section 148 (f) (B) (i) of the Code, the City will
not be required to pay rebates to the United States under Section
148 (f) of the Code. If, however, the proceeds of the Note are not
so expended, the City will comply with the applicable arbitrage
rebate requirements of Section 148 (f) of the Code.
E. The Mayor, Clerk, and Treasurer, and other appropriate
officials of the City, or any one or more of such officials, as may
be appropriate, are each hereby authorized and directed to execute,
on behalf of the City, such certificate or certificates as shall be
necessary to establish that the Note is not an "arbitrage bond"
within the meaning of Section 148 of the Code and the Treasury
Regulations promulgated thereunder, and to establish that interest
on the Note is not and will not become includable in the gross
income of the owners of the Note under the Code and applicable
regulations . The City covenants and agrees that no use will be
made of the proceeds of the Note, or any funds of the City which
may, pursuant to Section 148 of the Code and applicable
regulations, be deemed to be proceeds of the Note, which would
cause the Note to be an "arbitrage bond. "
F. The City will comply with the information reporting
requirements of Section 149 (e) of the Code.
G. None of the proceeds of the Note will be used to
reimburse the City for capital expenditures made prior to the date
of delivery of the Note unless the City, not later than 60 days
after the payment of such expenditure, shall have adopted an
official intent resolution as provided by Section 1 . 150-2 of the
Treasury Regulations .
H. The City has complied, or will, prior to the issuance of
the Note, have complied, with the requirements of Section 17 (A) of
Ordinance No. 554, adopted on July 14, 1989, with respect to the
issuance of additional obligations issued on a parity of lien with
the City' s Recreational Revenue Bonds, Series 1989 .
Section 9 : The Mayor, City Clerk, and City Treasurer, or any
one or more such officials, as shall be appropriate, are hereby
authorized to execute such further certifications and other
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documents as may be necessary or appropriate to carry out the
1 intent of this Resolution.
Section 10 : This Resolution shall take effect and be in force
from and after its passage an approval .
DATED this 22nd day of August, 1996 .
CITY OF McCALL
Valley County, Idaho
ifBy j 7 i
AT . G1'` KoR
/ City Clerk
( S E A L )
f
Page 5
[Form of Promissory Note]
U
UNITED STATES OF AMERICA
STATE OF IDAHO
COUNTY OF VALLEY
CITY OF McCALL
PROMISSORY NOTE, SERIES 1996
THE CITY OF McCALL, Valley County, Idaho (the "City") for
value received, acknowledges itself to owe and promises to pay in
lawful money of the United States of America, from the City of
McCall Golf Course Revenue Fund (the "Revenue Fund") created by
Ordinance No. 554, adopted on July 14, 1989, to
U.S . BANK OF IDAHO
the original Registered Owner hereof or its assignee, the principal
sum of
SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($650, 000 . 00) , and shall make payments on the then outstanding
principal balance, together with accrued interest, in thirty (30)
semi-annual payments, commencing on May 1, 1997, and all subsequent
payments coming due on the first day of November and May each year
thereafter. The City' s final payment will be due on or before
November 1, 2011, and will be for all principal and all accrued
interest not yet paid. The semi-annual payments due May 1, 1997,
through November 1, 2004, are hereby fixed in the amount of $25, 000
each. The subsequent semi-annual payments due May 1, 2005, through
November 1, 2011, will be determined in March 2005, so as to
amortize the unpaid balance in equal installments .
The proceeds of the Note will be drawn in the form of multiple
advances as funds are needed for financing the costs of
improvements to the City' s golf course irrigation system. All
proceeds shall be fully expended for the governmental purposes for
which the Note is issued on or before November 1, 1996 .
Accrued interest on the advances shall be payable on
November 1, 1996 . Unless otherwise agreed on or required by
applicable law, payments will be applied first to accrued unpaid
interest, then to principal and any remaining amount to any unpaid
collection costs and late charges . Interest shall be computed at
a rate of 6 . 0596 per annum based on an actual 365-day year until
November 1, 2004 . The interest rate for all subsequent semi-annual
payments due May 1, 2005, through and including November 1, 2011,
will be reset to a tax-exempt rate equivalent to 4 . 0pplus the
then-current 5-Year Treasury Constant Maturity, as more fully set
Page 1 - EXHIBIT "A"
forth in Exhibit °1B" which is annexed hereto and incorporated by
reference herein.
The City reserves the right to prepay the remaining principal
amount of this Note, in full, on any scheduled payment date on or
after November 1, 2004, without penalty or premium.
Both principal of and interest on this Note are payable in
lawful money of the United States of America at U.S. Bank of Idaho,
McCall Branch, 905 North Second Street, McCall, Idaho.
This Note is registered, both as to principal and interest,
with the Treasurer of the City of McCall, Valley County, Idaho, and
any transfer hereof must likewise be registered. This Note is a
negotiable instrument, authorized and approved by the McCall City
Council in a Resolution duly adopted and approved on the 22nd day
of August, 1996 . This Note is a special obligation of the City,
payable from the City' s Golf Course revenues, duly budgeted and
appropriated therefor for each fiscal year of the City on a parity
with the City of McCall Recreational Revenue Bonds, Series 1989,
issued pursuant to Ordinance No. 554, adopted on July 14, 1989 .
The City has covenanted to budget and appropriate annually
sufficient funds from its Golf Course revenues to pay the principal
and interest on the Note falling due during each fiscal year of the
City so long as this Note remains outstanding.
IT IS HEREBY CERTIFIED, RECITED, AND DECLARED that all
matters, acts, conditions, and things required by law of the State
of Idaho and the Resolution of the City referred to above exist,
have happened, and have been performed, and that the issuance of
this Note does not violate any constitutional, statutory, or other
limitations .
IN WITNESS WHEREOF, the City of McCall, Valley County, State
of Idaho, has caused this Note to be executed on its behalf and
under its official seal by the manual signature of the Mayor and
attested by the manual signature of the City Treasurer, and the
Seal of the City affixed hereto, all as of the day of
, 1996 .
CITY OF McCALL
Valley County, Idaho
By
Mayor
ATTEST:
City Treasurer
( ( S E A L )
Page 2 - EXHIBIT "A"
* * * * * * * * * * * * *
REGISTRATION CERTIFICATE
(No writing to be placed herein except by the Note Registrar)
This Note shall be payable only to the order of the registered
owner or its legal representative.
Date of Name and Address of Signature of
Registration Registered Owner Note Registrar
U.S . Bank of Idaho
McCall Branch
905 North Second Street
McCall, Idaho 83638
Page 3 - EXHIBIT "A"
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
Name of Transferee:
Address :
Tax Identification No.
the within Bond and hereby irrevocably constitutes and appoints
of
to transfer said Bond on the books kept for registration thereof
with full power of substitution in the premises .
Dated:
Registered Owner
NOTE: The signature on this
Assignment must correspond with the
name of the registered owner as it
appears upon the face of the within
Bond in every particular, without
alteration or enlargement or any
change whatever.
SIGNATURE GUARANTEED:
Bank, Trust Company or Member
Firm of the New York Stock
Exchange
Authorized Officer
Page 4 - EXHIBIT "A"
EXHIBIT "B"
Determination of Interest Rate after November 1, 2004
The interest rate will be determined in accordance with the
following formula:
((1 - MCTR) x (TCM + S)) + (ACF x MCTR x D) = R
TCM = Treasury Constant Maturity (5 yr), as published in
the Federal Reserve Bank of New York H.15
publication.
MCTR = Marginal corporate tax rate, including federal,
state and local tax rates.
S = Spread required, as stipulated in the loan
proposal 4.00%.
D = Disallowance percentage, currently 20% for bank
qualified obligations and 100% for non -bank
qualified obligations.
ACF = "Average Cost of Funds," the 90-day Treasury yield
to be used in place of the IRS definition for this
term.
R = The tax exempt interest rate to be used.
EXAMPLE
TCM = 6.30%
MCTR = 40%
S = 4.00%
D = 20%
ACF = 5.15%
((1 - .4)x (6.30 + 4.00)) + (5.15 x .4 x .2) = 6.59%