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