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HomeMy Public PortalAboutResolution 15-96 Municipal Bond Insurance Policy Water Revenue Bond SeriesRESOLUTION NO. 15-96 A RESOLUTION OF THE CITY OF MCCALL, VALLEY COUNTY, IDAHO, APPROVING AND AUTHORIZING THE EXECUTION OF AN AGREEMENT BETWEEN THE CITY OF MCCALL AND WEST ONE BANK, IDAHO, RELATING TO A MUNICIPAL BOND INSURANCE POLICY FOR THE CITY OF MCCALL PARITY LIEN WATER REVENUE BONDS, SERIES 1996; AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City of McCall, Valley County, Idaho (the "City"), is a municipal corporation organized and existing under the laws of Idaho; and WHEREAS, the City, pursuant to the authority of a special bond election duly held and conducted within the City on August 31, 1993, and pursuant to Ordinance No. 700 of the City, adopted on July 11, 1996 (the "Bond Ordinance"), has authorized the issuance, sale, and delivery of its Parity Lien Water Revenue Bonds, Series 1996, in the principal amount of $4,990,000, to Seattle -Northwest Securities Corporation, and has appointed West One Bank, Idaho, as Bond Registrar, paying agent, and transfer and authenticating agent for the Bonds; and WHEREAS, the Bonds were sold to the purchaser subject to the provision of a policy of municipal bond insurance by Financial Security Assurance Inc. (the "Bond Insurer") guaranteeing the scheduled payment of principal of and interest on the Bonds; and WHEREAS, the Bond Insurer has issued its commitment to provide a municipal bond insurance policy and the Bond Ordinance provides that the Mayor and Clerk -Treasurer of the City are authorized to execute any additional documents as may be required by the Bond Insurer in order to insure the payment of the Bonds; and WHEREAS, the City desires to approve the execution of an Agreement Relating to Municipal Bond Insurance between the City and West One Bank, Idaho (the "Agreement"), relating to the Bond Insurance Policy. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE CITY OF MCCALL, OF VALLEY COUNTY, IDAHO, as follows: Section 1: The foregoing recitations are hereby adopted as findings and determinations of the Council. Page 1 Section 2: The Agreement between the City and West One Bank, Idaho, a copy of which is annexed• hereto and by reference incorporated herein, is hereby approved in all respects. The Mayor is hereby authorized to execute, and the City Clerk is hereby authorized to attest, the Agreement on behalf of the City. Section 3: This Resolution shall take effect and be in full force from and after its passage and approval. DATED this 25th day of July, 1996. ATTEST: City Cler ( S E A L ) Page 2 CITY OF McCALL Valley County, Idaho AGREEMENT RELATING TO MUNICIPAL BOND INSURANCE AGREEMENT, dated as of the first day of August, 1996, between THE CITY OF McCALL, Valley County, Idaho, an Idaho municipal corporation (the "City"), and WEST ONE BANK, IDAHO, Boise, Idaho, acting by and through its Corporate Trust Department. WITNESSETH: WHEREAS, the City, pursuant to the authority of a special bond election duly held and conducted within the City on August 31, 1993, and pursuant to Ordinance No. 700 of the City, adopted on July 11, 1996 (the "Bond Ordinance"), has authorized the issuance, sale, and delivery of its Parity Lien Water Revenue Bonds, Series 1996, in the principal amount of $4,990,000, to Seattle -Northwest Securities Corporation, and has appointed West One Bank, Idaho, as Bond Registrar, paying agent, and transfer and authenticating agent for the Bonds (the "Bond Registrar"); and WHEREAS, the Bonds were sold to the purchaser subject to the provision of a policy of municipal bond insurance by Financial Security Assurance Inc. (the "Bond Insurer") guaranteeing the scheduled payment of principal of and interest on the Bonds; and WHEREAS, the Bond Insurer has issued its Municipal Bond Insurance Commitment (the "Commitment") to provide a municipal bond insurance policy and the Bond Ordinance provides that the Mayor and Clerk -Treasurer of the. City are authorized to execute any additional documents as may be required by the Bond Insurer in order to insure the payment of the Bonds; and WHEREAS, the intent of this Agreement is to provide for the rights and obligations of the parties with respect to the Municipal Bond Insurance Policy, as required by the conditions of the Commitment. NOW, THEREFORE, the parties agree: FIRST: A. In addition to the definitions set forth in Section 1 of the Bond Ordinance, the following definitions shall apply: 1. "Bond Insurance Policy" shall mean the municipal bond insurance policy issued by the Bond Insurer guaranteeing the scheduled payment of principal of and interest on the Bonds, as set forth in the Municipal Bond Insurance Commitment issued to the City by the Bond Insurer on July 11, 1996. Page 1 2. "Bond Insurer" shall mean Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto. B. The prior written consent of the Bond Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Debt Service Reserve Fund required by the Bond Ordinance unless such instrument shall meet the criteria required by the Bond Insurer. C. The Bond Insurer shall be deemed to be the Bole holder of the Bonds insured by it for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the holders of the Bonds insured by it are entitled to take pursuant to the Bond Ordinance. D. In the event the maturity of the Bonds is accelerated, the Bond Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued or accreted, as applicable, on such principal to the date of acceleration (to the extent unpaid by the City) and the Bond Registrar shall be required to accept such amounts. Upon payment of such accelerated principal and interest accrued to the acceleration date as provided above, the Bond Insurer's obligations under the Bond Insurance Policy shall be fully discharged. .. E. No grace period for a covenant default under the Bond Ordinance shall exceed 30 days, nor be extended for more than 60 days, without the prior written consent of the Bond Insurer. F. The Bond Insurer shall have the right to require the City to remove the Bond Registrar for good cause. G. The Bond Insurer shall be included as a third party beneficiary to the Bond Ordinance. H. No amendment or supplement to the Bond Ordinance or any other Related Document may become effective except upon obtaining the prior written consent of the Bond Insurer. I. Copies of any modification or amendment to the Bond Ordinance or any other Related Document shall be sent to Standard & Poor's Ratings Services and Moody's Investors Service, Inc. at least 10 days prior to the effective date thereof. J. Rights of the Bond Insurer to direct or consent to City, Bond Registrar or Bondholder actions under the Bond Ordinance shall be suspended during any period in which the Bond Insurer is in default in its payment obligations under the Bond Insurance Policy (except to the extent of amounts previously paid by the Bond Insurer and due and owing to the Bond Insurer) and shall be of no force or effect in the event the Bond Insurance Policy is no longer Page 2 in effect or the Bond Insurer asserts that the Bond Insurance Policy is not in effect or the Bond Insurer shall have provided written notice that it waives such rights. K. Therights granted to the Bond Insurer under this Agreement and the- Bond Ordinance or any other Related Document to request, consent to or direct any action are rights granted to the Bond Insurer in consideration of its issuance of the Bond Insurance Policy. Any exercise by the Bond Insurer of such rights is merely an exercise of the Bond Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does such action evidence any position of the Bond Insurer, positive or negative, as to whether Bondholder consent is required in addition to consent of the Bond Insurer. L. Only (1) cash, (2) non -callable direct obligations of the United States of America ("Treasuries"), (3) evidences of ownership of proportionate interests in future interest andprincipal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated or (4) pre -refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively (or any combination thereof) shall be authorized to be used to effect defeasance of the Bonds unless the Bond Insurer otherwise approves. To accomplish defeasance the City shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the Bond Insurer ("Accountant") verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity date ("Verification"), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the Bond Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding" under the Bond Ordinance; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the City, the Bond Registrar and the Bond Insurer. In the event a forward purchase agreement will be employed in the refunding, such agreement shall be subject to the approval of the Bond Insurer and shall be accompanied by such opinions of counsel as may be required by the Bond Insurer. The Bond Insurer shall be provided with final drafts of the above -referenced documentation not less than five business days prior to the funding of the escrow. Bonds shall be deemed "Outstanding" under the Bond Ordinance unless and until they are in fact paid and retired or the above criteria is met. Page 3 M. Amounts paid by the Bond Insurer under the Bond Insurance Policy shall not be deemed paid for purposes of the Bond Ordinance and shall remain Outstanding and continue to be due and owing until paid by the City in accordance with the Bond Ordinance. N. The Bond Ordinance shall not be discharged unless all amounts due or to become due to the Bond Insurer have been paid in full. SECOND: Claims Upon the Bond Insurance Policy and Payment by and to the Bond Insurer. If, on the third business day prior to the related scheduled interest payment date or principal payment date or the date to which Bond maturity has been accelerated ("Payment Date") there is not on deposit with the Bond Registrar, after making all transfers and deposits required under the Bond Ordinance, moneys sufficient to pay the principal ofand interest on the Bonds due on such Payment Date, the Bond Registrar shall give notice to the Bond Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on :he second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the Bonds due on such Payment Date, the Bond Registrar shall make a claim under the Bond Insurance Policy and give notice to the Bond Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Bonds and the amount required to pay principal of the Bonds, confirmed in writing to the Bond Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Bond Insurance Policy. In the event the claim to be made is for a mandatory sinking fund redemption installment, upon receipt of the moneys due, the Bond Registrar shall authenticate and deliver to affected Bondholders who surrender their Bonds a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered. The Bond Registrar shall designate any portion of payment of principal on Bonds paid by the Bond Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Bonds registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the Bond Insurer, registered in the name of Financial Security Assurance Inc., in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Bond Registrar's failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable Page 4 by the City on any Bond or the subrogation rights of the Bond Insurer. The Bond Registrar shall keep a complete and accurate record of all funds deposited by the Bond Insurer into the Policy Payments Account and the allocation of such funds to payment of interest on and principal paid in respect of any Bond. The Bond Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Bond Registrar. Upon payment of a claim under the Bond Insurance Policy the Bond Registrar shall establish a separate special purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments Account" and over which the Bond Registrar shall have exclusive control and sole right of withdrawal. The Bond Registrar shall receive any amount paid under the Bond Insurance Policy in trust on behalf of Bondholders and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Bond Registrar to Bondholders in the same manner as principal and interest payments are to be made with respect to the Bonds under the sections hereof regarding payment of Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Funds held in the Policy Payments Account shall not be invested by the Bond Registrar and may not be applied to satisfy any costs, expenses or liabilities of the Bond Registrar. Any funds remaining in the Policy Payments Account following a Bond payment date shall promptly be remitted to the Bond Insurer. THIRD: The Bond Insurer shall, to the extent it makes any payment of principal of (or, in the case of Capital Appreciation Bonds, accreted value) or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Bond Insurance Policy. FOURTH: The City agrees to pay or reimburse the Bond Insurer any and all charges, fees, costs and expenses_ which the Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in respect of the Bond Ordinance or any other Related Document, (ii) the pursuit of any remedies under the Bond Ordinance or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Bond Ordinance or any other Related Document whether or not executed or completed, (iv) the violation by the City of any law, rule or regulation, or any judgment, order or decree applicable to it or (v) any litigation or other dispute in Page 5 connection with the Bond Ordinance or any other Related Document or the transactions contemplated thereby, other than amounts resulting from the failure of the Bond Insurer to honor its obligations. under the Bond Insurance Policy. The Bond Insurer reserves the right to charge.a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Bond Ordinance or any other Related Document. FIFTH: Payments required to be made to the Bond Insurer shall be payable solely from the Trust Estate and shall be paid (i) prior to an event of default, to the extent not paid from the Bond Fund, after required deposits to the Debt Service Reserve Fund and (ii) after an event of default, with respect to amounts other than principal and interest on the Bonds, on the same priority as payments to the Bond Registrar for expenses. The obligations to the Bond Insurer shall survive discharge or termination of the Related Documents. SIXTH: The Bond Insurer shall be entitled to pay principal (or, in the case of Capital Appreciation Bonds, accreted value) or interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the :ssuer (as such terms are defined in the Bond Insurance Policy) and any amounts due on the Bonds as a result of acceleration of the maturity thereof in accordance with the Bond Ordinance, whether or not the Bond Insurer has received a Notice (as defined in the Bond Insurance Policy) of Nonpayment or a claim upon the Bond Insurance Policy. SEVENTH: The notice address of the Bond Insurer is: Financial Security Assurance Inc., 350 Park Avenue, New York, New York 10022- 6022, Attention: Managing Director -- Surveillance. -- Re: Policy No. 20-N; Telephone: (212) 826-0100; Telecopier: (212) 339-3529. In each case in which notice or other communication refers to an Event of Default or with respect to which failure on the part of the Bond Insurer to respond shall be deemed to constitute consent or acceptance, then a copy of such notice or other communication shall also be sent to the attention of General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." EIGHTH: The Bond Insurer shall be provided with the following information: (i) Annual audited financial statements within 120 days after the end of the City's fiscal year and the City's annual budget within 30 days after the approval thereof; (ii) Notice of any draw upon the Debt Service Reserve Fund within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Debt Service Reserve Requirement and Page 6 (ii) withdrawals in connection with a refunding of Bonds; (iii) Notice of any default known to the Bond Registrar within five Business Days after knowledge thereof; (iv) Prior notice of the advance refunding or redemption of any of the Bonds, including the principal amount, maturities and CUSIP numbers thereof; (v) Notice of the resignation or removal of the Bond Registrar, Paying Agent and Bond Registrar and the appointment of, and acceptance of duties by, any successor thereto; (vi) the commencement of any proceeding by or against the City commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (vii) the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds; (viii) A full original transcript of all proceedings relating to the execution of any amendment or supplement to the Related Documents; and (ix) A11 reports, notices and correspondence to be delivered under the terms of the Related Documents. NINTH: Funds and accounts shall be invested in qualified Investments. Qualified Investments shall not include corporate debt other than commercial paper rated in the highest category by the rating agencies. Investments purchased with funds on deposit in the Debt Service Reserve Fund shall have an average aggregate weighted term to maturity not greater than five years. TENTH: Notwithstanding satisfaction of other conditions to the issuance of additional bonds contained in the Bond Ordinance, no such issuance may occur (1) should any Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) have occurred and be continuing unless such default shall be cured upon such issuance and (2) unless the Debt Service Reserve Fund is fully funded at its requirement (including the new issue) upon the issuance of such Additional Bonds, in either case unless otherwise permitted by the Bond Insurer. Page 7 ELEVENTH: The provisions of the Agreement shall govern the rights and obligations of the parties with respect to the Bond Insurance Policy and the Bond Insurer, notwithstanding anything to the contrary set forth in the Bond Ordinance. IN WITNESS WHEREOF, the parties have executed the foregoing agreement as of the date and year first above written. CITY OF McCALL Valley County, Idaho By ATTEST: 7 (a Mayor WEST ONE BANK, IDAHO as Bond Registrar By Corporate Trust Officer Page 8