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1977-067 Execution of Arbitrage Certificate Sewer/WaterRESOLUTION 67 .4 6 9 A RESOLUTION AUTHORIZTtdG THE EXECUTION BY THE MAYOR, CITY CLERK AND CITY TREASURER OF THE CITY OF MERIDIAN, IDAHO, OF AN ARBITRAGE CERTIFICATE IN CONNECTION WITH THE USE AND INVESTMENT OF THE PROCEIDS OF THE $2,040,000 WATER AND SEWER REVENUE REN'UNDING BONDS OF THE CITY OF MERIDIAN, IDAHO. WHEREAS, the City of Meridian, Idaho ("City") has authorized the issuance and sale of $2,040,000 Water and Sewer Revenue Refunding Bonds of the City dated September 1, 1877, and it is now desired to authorize the execution by the Mayor, City Clerk and City Treasurer of an Arbitrage Certificate in order to make the certifications and representations required pursuant to Section 103(c) of the Internal Revenue Code of 1954, as amended; NOW, THEREFORE, Be it resolved by the Mayor and Council of the City of Meridian, Ada County, Idaho, as follows: Section 1. The Mayor, City Clerk and City Treasurer of the City are hereby authorized and directed to execute and deliver an Arbitrage Certificate with respect to the $2,040,000 Water and Sewer Revenue Refunding Bonds of the City dated September 1, 1877, authorized to be issued pursuant to Ordinance No. X06 , adopted on Autust 1, lg7?, such Certificate to be in substantially the following form: ARBITRAGE CERTIFICATE We, the undersigned, the duly qualified and acting Mayor, City Clerk and City Treasurer, respectively of the City of Meridian, Ada County, Idaho (the "issuer") do hereby certify with respect to $2,040,000 Water and Sewer Revenue Refunding Bonds of the Issuer, dated September 1, 1977 (the "Bonds") presently being delivered by the Issuer, that the proceeds of the sale of the Bonds shall be devoted to and used with due diligence for the completion of the refunding for which the Bonds are authorized by ordinance adopted by the City Council of the Issuer, as the governing body of the Issuer, on August 1, 1977 (the "Bond Ordinance"). We further certify and represent that $2,O~j0,000.00 proceeds of the Bonds plus $56,948.21 other money (derived fs~om sources other than the proceeds of the Bonds or any other borrowing of the Issuer) has been paid over to The Idaho First National Bank of Boise, Idaho (the "Bank"), to be held, invested and applied to the payment of $2,040,000 Water and Sewer Revenue Bonds of the Issuer, dated October 1, 1975, numbered 58 to 465, inclusive (the "1975 Bonds"), plus-applicable redemption premium on October~l, 1985, pursuant to call for redemption, under the Bond Ordinance in accordance with that certain Escrow Agreement, dated as of September 1, 197?, between the Issuer and the Bank; and that all accrued interest from the date of the Bonds to the date of delivery thereof received from the purchasers of the Bonds has been deposited in the Escrow Fund in the Bank pursuant to the Escrow Agreement. We further certify that: (1) The Issuer has heretofore incurred, substantial binding obligations with respect to the improvements and extentiorus to the combined municipal water and sewer system of the Issuer to pay a portion of the cost of which the 1975 Bonds were originally issued (the "Project"), said binding obligations comprising Construction Contract with Chicago Bridge and Iron for $339,200.00; and Construction Contract with Idaho Construction Company for $566,325.00 in the amount of not less than $100,000. (2) It is expected that over 85~ of the spendable proceeds of the 1975 Bonds (including investment proceeds) deposited in the Construction Account established in Section 5.02 of Ordinance No. 283 of the Issuer will be expended on or before November 20, 1978, for the purpose of paying the cost of the Project, said date being within three years following the date of issue of the 1875 Bonds. (3) Work on the Project is expected to proceed with due diligence to completion. (4) The Project has not been or is not expected to be sold or otherwise disposed of in whole or in material part prior to the last maturity of the Bonds. "Material part" means (i) land, and (ii) any building, and (iii} personal property or fixtures in excess of that which is expected to be sold, traded in or discarded upon wearing out or becoming obsolete. (5) All of the principal proceeds of the Bonds are needed for the pur- poses stated in the form of Bond prescribed by the Bond Ordinance, including expenses c~ncidental to such purposes and to the issuance of the Bonds. (6) The purpose of t~~e refunding to be accomplished with Bond proceeds is to save debt service on the obligation represented by the Bonds; the amount of such savings will be $670,640.78 in the aggregate, the present value of which is $94,779.06. (7) Section 1.103-14(e) (3)(ii)(A) of the Proposed Regulations of the United States Treasury Department under Section 103 of the Internal Revenue Code of 1954, as amended, applies to the issue of the Bonds. The aforementioned investment of $2,040,000.00 of the proceeds of the Bonds will be made within. the 30 days period prescribed by said Section 1.103-14(e)(3)(ii)(A). (8) The yield on the Bonds is computed to be 6,258 per '(6/258°jo) per annum 470 RESOLUTION C7 and the yield on the obligations to be acquired with the aforementioned $2,040,000.00 of the proceeds of the Bonds is computed to be 6,250 per cent (6.250) per annum. (9) In computing the yield both on the Bonds and on the investments to be acquired with the Bond proceeds: (a) there has been determined that yield which, when used in computing the present worth of all payments of principal and interest to be paid on the obligations involved,_produces an amount equal to the purchase price; and (b) the yield both on the Bonds and on the investments has been calculated by the use of semiannual compounding of interest. (10) In computing the yield of the Bonds and the yield of the investments being acquired with Bond proceeds, the following administrative costs, which have actually been incurred and have been or will be paid with the Insurer's money, are allocated as follows: Am nt o u Allocated Amount ose Amount Allocated ~ ~ _ __ oS n3--~ e to Bonds Proceeds Bond Proceed -0- Fiscal Advisory Fee -0- -0- -0- and Expenses Printing costs: -0- Official Statement -0- -0- -0- -0- Bond Printing -0- -0- -0- -0- Bond Counsel Fees and Expenses -0- -0- -0- -0- Other Counsel Fees -0- -0- -0- and Expenses -0- Rating ,Agency Fees -0- -0- -0- -0- Escrow Agent Fees -0- -0- -0- (present value) -0 Trustee's Fees -0- -0- -0- (present value) $1,800 P~ying Agent Fees $1,800.00 -0- -0- present value) -0- Custodial Fees -0- -0- -0- -0- Accounting Fees -0- -0- -0- -0- Actuary Fees -0- -0- -0- TOTAL $1,800.00 -0- -0- (11) In computing the administrative costs set forth in paragraph (10) above, all costs to be paid more than six months after delivery of the Bonds have been computed at present value by discounting such costs, based on current prices without regard to any inflation adjustment, at a yield of 6.25 ~ per annum, compounded semiannually, which yield is not less than the yield of the Bonds (determined without regard to such administrative costs). (12) Administrative costs are allocated between the Bonds and the invest- ments in paragraph (10) above on the following basis: (a) costs which would be incurred in the same amount regardless of the investment of Bond proceeds are allocated to the Bonds; (b) costs which would not have been incurred but for the investment of Bond proceeds are allocated to the investments; (c) as to costs which would have been incurred in a'ny event but which are increased because of the investment of Bond proceeds, the amount of such increased cost is allocated to investments and the remainder to the Bonds; and (d) costs allocated to investments are further allocated between investments acquired with Bond proceeds and investments acquired with other money accord- ing to that proportion borne by the amount paid for investments acquired with Bond proceeds to the amount paid for investments made with other money. (13) In computing the yield on the investments as set forth in paragraph (8) above, as to each investment acquired, as part of the Escrow Fund pursuant to the Escrow Agreement, in part with the proceeds of the Bonds and in part with other funds, an amount of each receipt of principal and interest to be received from each such investment has been allocated do the proceeds of the Bonds in the same proportion as the amount of the Bond proceeds used to acquire such investment bears to the purchase price of such investment. (14) The Bonds are being purchased by the purchasers thereof at the price of $2,040,000, plus accrued interest to the date of delivery, which price is reasonable under customary standards applicable in the market. (15 $1,839,963.00 of the proceeds of the 1975 Bonds have been spent for the purpose for which the 1975 Bonds were issued and $485,037.00 of the .proceeds of the 1975 Bonds remains in the Construction Account established in Section 5.02 of Ordinance No. 283 of the Issuer and will be used within RESOLUTION 67 4'71 THREE years after delivery of the 1975 Bonds to complete the Pro3ect for which the 1975 Bonds were issued. (16) All accrued interest on the Bonds will be applied to the payment of interest falling due on the Bonds on March 1, 1978, which date is within the one year period beginning on the date of issue of the Bonds; to the extent that such accrued interest is for a period exceeding six months, such accrued interest will not be invested at a yield higher than the yield borne by the Bonds. (17) All the investments being acquired with Bond proceeds are being paid for at the market price thereof and are being acquired directly directly from the United States Treasury. (18) The "excess proceeds" of the Bonds (as defined in Section 1.103-15(c) of the currently proposed regulations of the United States Treasury Department pertaining to arbitrage bonds) are not expected to exceed one percent of the "original proceeds" of the Bonds. Said "excess proceeds" are calculated as follows: (a) Original Principal Proceeds of the Bonds (and premium, if any): $2,040,000.00 (b) Accrued Interest on the Bonds: $ -0- (c) Anticipated return on investments made with Bond proceeds (including reinvestments, if any): $1,020,000.00 (d) Indirect Proceeds expected from acquired purpose obligations and from sale or other disposition of asserts financed with the 1975 Bonds: $ -0- (e) Transferred Proceeds (including any unspent construction fund money, capitalized interest and reserve derived from proceeds of the 1975 Bonds: $ -0- (f) Investment Proceeds derived from the investment of a Reserve Fund or interest capitalized with the Bond proceeds: $ -0- Total Proceeds: $3,O~e~•~ Deductions (~;) "Proceeds" of the Bond to be used to pay principal on the 1975 Bonds: $2,040,000.00 (ii) Proceeds of the Bond to be used to pay (not more than six months) accrued interest on the Bonds: $ -0- (iii) Proceeds of the Bond to be used to pay capitalized interest on the Bonds: $ -0- (iv) Proceeds of the Bonds to be used as part of reasonably required reserve or replacement fund for the Bonds: $ -0- (v) Proceeds of the Bonds to be used to pay administrative costs: $ -0- (vi) Transferred Proceeds to be used for purpose of the 1975 Bonds: (vii) Investment Proceeds derived from the investment of a reasonably required reserve or replacement fund: Total Deductions: Excess Proceeds: $ Not Applicable $ -0- $2,040,000.00 $1,020,000.00 4'72 RESOLUTION'~7 (19) At least 99% of the "excess proceeds" of the Bonds will be used to pay interest that accrues on the 1975 Bonds on and prior to October 1, 1985 before the 1975 Bonds are retired; no proceeds of the Bonds will be used to pay interest on the 1975 Bonds or to replace funds that are used directly or indirectly to pay interest on the 1975 Bonds. (20) To the best of our knowledge and belief there are no facts, estimates or circumstances that would materially change the conclusions and representations set out in this certificate. (21) The Issuer has not been notified of any listing or proposed listing of it by the Internal Revenue Service as a bond issuer whose arbitrage certifications may not be relied upon. IN WITNESS WHEREOF, Ede have hereunder subscribed our official signatures and caused the official seal of the City of Meridian, Idaho to be impressed hereon, this ~ day of v us ~, 197?. ~v ~ ~'?" Sin ~°~~ Mayor, City of Meridian, Idaho ity Clerk, City Me dian, Idaho *If all Transferred Proceeds are to be used for purpose of the prior issue, write "not applicable" here.