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HomeMy WebLinkAbout9534-04 Supplementing and Amending Ordinance No. 8919-98 - the Sewage Works and Issuance of Revenue Bonds and Various mattersORDINANCE No. Passed by the Common Council of the City of South Bend, Indiana September 27, 2a 04 Attest: Attest: City Clerk President of Common Council Presented by me to the Mayor of the City of South Bend, Indiana September 28, 20 04 JOHN Approved and signed by me September 30, 20 04 City Clerk Mayor v ORDINANCE NOM S3`' -04 AN ORDINANCE OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA SUPPLEMENTING AND AMENDING ORDINANCE NO. 8919-98, CONCERNING THE ACQUISITION, CONSTRUCTION AND INSTALLATION OF CERTAIN IMPROVEMENTS AND EXTENSIONS TO THE SEWAGE WORKS OF THE CITY OF SOUTH BEND, AND THE ISSUANCE OF REVENUE BONDS TO PROVIDE THE COST THEREOF, AND THE COLLECTION, SEGREGATION AND DISTRIBUTION OF THE REVENUES OF SUCH SEWAGE WORKS, THE SAFEGUARDING OF THE INTERESTS OF THE OWNERS OF SAID BONDS, AND OTHER MATTERS CONNECTED THEREWITH. STATEMENT OF PURPOSE AND INTENT The City of South Bend, Indiana (the "City") has established, constructed and financed a sewage works (the "Sewage Works" or the "Works") and now owns and operates the Sewage Works, by and through its Board of Public Works, pursuant to IC 36-9-23, as amended, and other applicable laws. There are now outstanding bonds issued on account of the Sewage Works and payable out of the revenues therefrom designated as the "City of South Bend, Indiana Sewage Works Revenue Bonds of 1998," dated December 30, 1998 (the "1998 Bonds"), issued in the original amount of $24,095,000, authorized by Ordinance No. 8919-98, passed by the Common Council on June 22, 1998 (the "1998 Bond Ordinance"), now outstanding in the amount of $20,885,000. There are now outstanding bonds issued on account of the Sewage Works and payable out of the revenues therefrom designated as the "City of South Bend, Indiana Sewage Works Refunding Revenue Bonds of 2001," dated October 1, 2001 (the "2001 Bonds"), issued in the original amount of $5,240,000, authorized by Ordinance No. 9270-01, passed by the Common Council on September 24, 2001 (the "2001 Bond Ordinance"), now outstanding in the amount of $3,905,000. There are now outstanding bonds issued on account of the Sewage Works and payable out of the revenues therefrom designated as the "City of South Bend, Indiana Sewage Works Revenue Bonds of 2004," dated September 1, 2004 (the "2004 Bonds" and collectively with the 1998 Bonds and the 2001 Bonds, the "Outstanding Bonds"), issued in the original amount of $11,425,000, authorized byOrdinance No.9523-04, passed by the Common Council on August 9, 2004 (the "2004 Bond Ordinance" and collectively with the 1998 Bond Ordinance and the 2001 Bond Ordinance, the "Prior Bond Ordinances"), now outstanding in the amount of $11,425,000. The City entered into a Financial Assistance Agreement with the State of Indiana (the "State"), dated December 30, 1998, with respect to the 1998 Bonds, pursuant to the State's Wastewater Revolving Loan Program (the "Financial Assistance Agreement"). The Outstanding Bonds and the related Prior Bond Ordinances require the establishment of a Debt Service Reserve Account in the Sewage Works Sinking Fund and the funding of a Debt Service Reserve Requirement in order to provide payment in the event such monies in the Bond and Interest Account are insufficient to pay the principal and interest on the Outstanding Bonds when due. As an alternative to holding the Debt Service Reserve Requirement in the Debt Service Reserve Account in cash funds, the 2001 Ordinance and the 2004 Ordinance each include a provision (the "Debt Service Reserve Account Insurance Provision"), which permits the City to purchase one or more Debt Service Reserve Account insurance policy(s), to provide for payment of principal and interest on the Outstanding Bonds in the event that funds in the Bond and Interest Account are insufficient to pay the principal and interest on the Outstanding Bonds when due. The 1998 Ordinance does not include a Debt Service Reserve Account Insurance Provision, and the Council has determined that it is beneficial to the Sewage Works and the owners of the 1998 Bonds to adopt this supplemental ordinance, to supplement and amend the 1998 Ordinance, pursuant to Section 21 of the 1998 Ordinance, to add a Debt Service Reserve Account Insurance Provision to permit the City to substitute one or more insurance policy(s) to provide funds for the Debt Service Reserve Account thereby freeing monies currently held in the Debt Service Reserve Account for use by and improvement of the Sewage Works. The Indiana Bond Bank, the holder of the 1998 Bonds, and the State, have each reviewed this supplemental ordinance and have approved and consented in writing to supplementing and amending the 1998 Bonds and the 1998 Ordinance as provided herein, in accordance with Section 21 of the 1998 Ordinance and Section 3.02(m) of the Financial Assistance Agreement. NOW THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA AS FOLLOWS: SECTION 1. SUPPLEMENT AND AMENDMENT TO 1998 ORDINANCE -SEWAGE WORKS SINKING FUND. Subsection (b) of Section 11 of the 1998 Ordinance, more specifically Ordinance No.8919-98, is hereby supplemented and amended by adding the following paragraphs to such Subsection (b) of Section 11: "As an alternative to holding the Debt Service Reserve Requirement in the Debt Service Reserve Account in cash funds, and if permitted by applicable law and under the terms of all obligations and agreements to which the City is or may become subject, the City may purchase one or more Debt Service Reserve Account insurance policy(s) (the "Reserve Policy") provided by a bank, insurance company, financial institution or other entity ("Reserve Policy Issuer") with a long term debt rating at least equal to the rating category on the 1998 Bonds or additional bonds payable out of the net revenues of the Sewage Works on a parity with the 1998 Bonds ("Parity Bonds"), by the rating agency or agencies then rating the 1998 Bonds and the Parity -2- Bonds, to provide for payment of principal and interest on the 1998 Bonds in the event that funds in the Bond and Interest Account are insufficient to pay the principal and interest on the 1998 Bonds when due. The Mayor and the Controller are hereby authorized to obtain such a Reserve Policy, and are authorized to enter into an agreement ("Reserve Policy Agreement") with the Reserve Policy Issuer and to negotiate the terms of the Reserve Policy Agreement pursuant to advice of the City's financial advisor. The Mayor and the Controller are authorized to execute the Reserve Policy Agreement and any and all other documents or instruments required to obtain the Reserve Policy. In the event a draw is made against the Reserve Policy, the City shall repay the amount of the draw and related expenses incurred by the Reserve Policy Issuer together with interest thereon at the rate set forth in the Reserve Policy Agreement. The repayment of the draw amount, related expenses and accrued interest (the "Policy Costs") shall be paid from the funds that would have been set aside to replenish the Debt Service Reserve Account. Repayment of the Policy Costs shall commence in the first month following each draw, in an amount equal to no less than one twelfth (1/12) of the aggregate Policy Costs related to such draw. If and to the extent cash has been deposited to the Debt Service Reserve Account, all such cash (or permitted investments) shall be used prior to any drawing under the Reserve Policy, and the payment of any Policy Costs under the Reserve Policy shall be made prior to replenishment of any such cash amounts. If, in addition to the Reserve Policy, any other Debt Service Reserve Account substitute instrument ("Additional Reserve Policy") is provided, drawings under the Reserve Policy and any such Additional Reserve Policy, and repayment of Policy Costs and reimbursement of amounts due under the Additional Reserve Policy, shall be made on a pro-rata basis (calculated by reference to the maximum amounts available thereunder) after applying all available cash in the Debt Service Reserve Account and prior to replenishment of any such cash draws, respectively. The City hereby agrees that: (a.) If the Sewage Works fails to pay any Policy Costs in accordance with the requirements set forth above, the Reserve Policy Issuer shall be entitled to exercise any and all remedies available at law or under the authorized documents other than (i) acceleration of the maturity of the 1998 Bonds or (ii) remedies which would adversely affect the holders of the 1998 Bonds; (b.) This Ordinance shall not be discharged and the 1998 Bonds defeased until all Policy Costs owing to the Reserve Policy Issuer shall have been paid in full; (c.) The Reserve Policy Issuer is granted a security interest (subordinate to that of the holders of the 1998 Bonds and any Parity Bonds) in all revenues and -3- collateral pledged as security for the 1998 Bonds, for the repayment of the Policy Costs; (d.) No additional bonds will be issued without the Reserve Policy Issuer's prior written consent as long as Policy Costs are past due and still owing to the Reserve Policy Issuer; (e.) This Ordinance shall not be modified or amended without the prior written consent of the Reserve Policy Issuer; and (f.) The Reserve Policy Issuer shall be provided with written notice of the resignation or removal of the Registrar and Paying Agent and the appointment of a successor thereto and of the issuance of additional indebtedness of the City's Sewage Works at the address specified in the Reserve Policy Agreement." SECTION 2. TERMS AND PROVISIONS OF ORDINANCES. Except as expressly set forth herein, all of the terms and provisions of the 1998 Ordinance shall remain in full force and effect. SECTION 3. NO CONFLICT. The Council hereby finds and determines that the adoption of this Ordinance is in compliance with the 1998 Ordinance, and the 1998 Ordinance shall remain in full force and effect except as otherwise provided in this Ordinance. None of the provisions of this Ordinance shall be construed to prejudice or adversely affect the rights of the owners of any of the Outstanding Bonds. SECTION 4. SEVERABILITY. If any section, paragraph or provision of this Ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this Ordinance. SECTION 5. INTERPRETATION. Unless the context or laws clearly require otherwise, references herein to statutes or other laws include the same as modified, supplemented or superseded from time to time. SECTION 6. EFFECTIVENESS. This Ordinance shall be in full force and effect from and after its passage and compliance with the procedures required by law. -4- PASSED AND ADOPTED by the Common Council of the City of South Bend, Indiana, this day of September, 2004. ATTEST: Ci Cler COMMON COUN • IL OF THE CITY OF SOUTH BEND ~~ By. Q~i1l Member of the Commo Council Presented by me to the Mayor of the City of South Bend, Indiana on the ~ ~ day of September, 2004, at ~1i a o'clock ~. m. ~~~ {')z~ City Cler ` +~ Approved and signed by me on the 3° day of September, 2004, at `~~ ~~'clock cC . m. ~~ Mayor, City of th Bend, Indiana SBDS02 ABF 302323v2 1st REAbIN~ ~-l 3 "~`~ PUBLIC HEARINGQ-Z~-~~ 3 rd READING ~_ Ll_ py NOT APPROVED REFERRED PASSED ~-2.~1-~~ -5- Filed to Clerk's Office ~~ - 1 2004 JOHN VOOADE CrTY CLERK, 50. BEND, IN. TO THE COMMON COUNCIL OF THE CITY OF SOUTH BEND: Your Committee of the Whole, to whom was referred: BILL NO. 58-04 A BILL OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA SUPPLEMENTING AND AMENDING ORDINANCE NO. 8919-98, CONCERNING THE ACQUISITION, CONSTRUCTION AND INSTALLATION OF CERTAIN IMPROVEMENTS AND EXTENSIONS TO THE SEWAGE WORKS OF THE CITY OF SOUTH BEND, AND THE ISSUANCE OF REVENUE BONDS TO PROVIDE THE COST THEREOF, AND THE COLLECTION, SEGREGATION AND DISTRIBUTION OF THE REVENUES OF SUCH SEWAGE WORKS, THE SAFEGUARDING OF THE INTERESTS OF THE OWNERS OF SAID BONDS, AND OTHER MATTERS CONNECTED THEREWITH Respectfully report that they have examined the matter and that in their opinion, this bill is being recommended to the full Council with a favorable recommendation. Sean Coleman Chairman COUNTY-CITY BUILDING $OVR-I BEND, INDIANA 46601-1830 CITY OF SOUTH BEND STEPHEN J. LUECKE, MAYOR PHONE 574/ 235-9216 Fnx 574/235-9928 TDD 574/ 235-5567 DEPARTMENT OF ADMINISTRATION AND FINANCE FREDERICK B. OLLETT, III CONTROLLER September 1, 2004 Ms. Karen White President, South Bend Common Council 4`'' Floor, County-City Building South Bend, IN 46601 Re: An Ordinance Amending Ordinance #8919-98 to Authorize Procurement of a Debt Service Reserve Account Insurance Policy in Lieu of Cash Funds Dear Ms. White: The South Bend Common Council has previously authorized the issuance of bonds, which remain outstanding, for capital improvements to the South Bend Sewage Works. Specifically, Indiana Sewage Works Revenue Bonds were issued in the original amount of $24,095,000 dated December 30, 1998 (the 1998 Bonds) pursuant to Ordinance 8919-98. South Bend Sewage Works Refunding Revenue Bonds of 2001 (the 2001 Bonds) were issued in the original amount of $5,240,000 per Ordinance 9270-01. Most recently, Indiana Sewage Works Revenue Bonds have been issued in 2004 in the original amount of $11,425,000 per Ordinance 9523-04 (the 2004 Bonds). All outstanding Bonds and their corresponding Bond Ordinances require the establishment of a Debt Service Reserve Account in the Sewage Works Sinking Fund and the funding of a Debt Service Reserve Requirement in order to provide payment in the event such monies in the Bond and Interest Account are insufficient to pay the principal and interest on the Outstanding Bonds when due. As an alternative to cash funding of the Debt Service Reserve Account, a Debt Service Reserve Account insurance policy can be procured to pay the principal and interest on the Outstanding Bonds if the Bond and Interest Account are insufficient to pay principal and interest on the Outstanding Bonds when due. Both the 2001 Bond Ordinance and the 2004 Bond Ordinance include a provision authorizing a Debt Service Reserve Account insurance policy in lieu of the Debt Service Reserve Account in cash funds. The City's Finance Department has determined that a Debt Reserve Account insurance policy CATHERINE A.HUBBARD-BREAD I.IZROWE THOMAS$KARBEK SUSANWALLACE RoBERTAI.I.EN DIRECTOR DIRECTOR DIRECTOR MANAGER DIRECTOR I"IUMAN RESOURCES CITY FINANCE BUDGETING & FINANCIAL REPORTING BENEFIT'S INFORMATIONTECHNOLOGY Ms. White Page 2 September 1, 2004 is fiscally beneficial to the City. This ordinance amends the 1998 Bond Ordinance (8919-98) to permit the City to substitute one or more insurance policy(s) to provide funds for the Debt Service Reserve Account. This proposed Ordinance has been reviewed and approved by the Indiana Bond Bank, holder of the 1998 bonds, as well as by the State of Indiana. I will present this Ordinance to the Common Council at its appropriate committee meeting as well as at the Council's public hearing. Attorney Alan Feldbaum of Barnes & Thornburg, will also be available to answer any technical questions the Council may have. The Council's favorable consideration of this Ordinance would be most appreciated. Sincerely, Frederick B. Ollett, III Controller Filed in Clerk's Office JOHN YOORDE CITY CLERK, S0. BEND, (N.