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R-87-553N M RESOLUTION NO. 553 A RESOLUTION SUPPLEMENTING AND AMENDING RESOLU- TION NO. 475 ADOPTED BY THE CITY COUNCIL OF THE CITY OF CLERMONT, FLORIDA, ON AUGUST 14, 1984, ENTITLED: "RESOLUTION PROVIDING FOR THE ACQUISITION, CONSTRUCTION AND ERECTION OF EXTENSIONS AND IMPROVEMENTS TO THE MUNICIPAL WATER AND SEWER SYSTEM OF THE CITY OF CLERMONT, FLORIDA; AUTHORIZING THE ISSUANCE BY THE CITY OF NOT EXCEEDING $885,900 PRINCIPAL AMOUNT OF WATER AND SEWER REVENUE BONDS, SERIES 1984, TO FINANCE A PART OF THE COST THEREOF; PLEDGING THE NET REVENUES OF SAID SYSTEM, CERTAIN MUNI- CIPAL EXCISE TAXES TO SECURE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS; PROVID- ING FOR THE RIGHTS OF THE HOLDERS OF THE BONDS; AUTHORIZING ISSUANCE BY THE CITY OF NOT EXCEED- ING $885,900 PRINCIPAL AMOUNT OF 1984 WATER AND SEWER REVENUE BOND ANTICIPATION NOTES IN ANTICIPATION OF THE ISSUANCE OF SAID BONDS; PROVIDING FOR THE PAYMENT OF SAID NOTES; AND ENTERING INTO CERTAIN COVENANTS AND AGREEMENTS WITH THE HOLDERS OF SAID BONDS AND NOTES" FOR THE PURPOSE OF AUTHORIZING ISSUANCE BY THE CITY OF ITS 1987 WATER AND SEWER REVENUE BOND ANTICIPATION NOTE TO RENEW AND EXTEND THE OBLI- GATION EVIDENCED BY THE CITY'S 1984 WATER AND SEWER REVENUE BOND ANTICIPATION NOTE; AMENDING THE ARBITRAGE COVENANT SET FORTH IN SECTION 3.04(F) THEREOF; DESIGNATING THE 1987 NOTE FOR THE EXCEPTION TO THE PROVISIONS CONTAINED IN SECTION 265 OF THE INTERNAL REVENUE CODE OF 1986 WHICH DENY FINANCIAL INSTITUTIONS ANY DEDUCTIONS FOR INTEREST EXPENSE ALLOCABLE TO TAX-EXEMPT OBLIGATIONS; AUTHORIZING A NEGO- TIATED SALE OF THE 1987 NOTE TO THE PURCHASER THEREOF; MAKING CERTAIN OTHER COVENANTS AND AGREEMENTS IN CONNECTION WITH THE ISSUANCE OF THE 1987 NOTE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on August 14, 1984 the City Council of the City of Clermont, Florida (the "Issuer"), duly adopted Resolution No. 475 (the "Enabling Instrument"), the title of which is quoted in the title of this resolution, for the purpose of authorizing the issuance of not exceeding 885,900 principal amount of Water and Sewer Revenue Bonds, Series 1984 (the "Bonds") to finance the cost of acquiring, erecting and constructing extensions and improvements to the sewer facilities of the combined municipal water and sewer system of the Issuer and authorizing the issuance of not exceeding 885,900 principal amount of 1984 Water and Sewer -1- C Revenue Bond Anticipation Notes (the "Notes") to provide the interim financing for the construction of said project pending issuance of the Bonds; and WHEREAS, by final judgment of validation entered on October 16, 1984, the Bonds and the Notes were duly validated in Circuit Court for the Fifth Judicial Circuit in and for Lake County, Florida; and WHEREAS, on April 22, 1986, the City Council of the Issuer duly adopted Resolution No. 525 supplementing the Enabling Instrument for the purpose of awarding $885,900 principal amount of the Notes, maturing May 22, 1987, and bearing interest payable at maturity at the rate per annum equal to 65~ of the prime rate announced from time to time by Sun Banks, Inc., subject to certain adjustments as provided therein, to Sun Bank, National Association, a national banking association, Clermont, Florida (the "Purchaser"), at a price equal to 100 of the principal amount thereof; and WHEREAS, the project is not yet complete, and the Issuer is desirous of renewing the obligation evidenced by the Notes, and the Purchaser has indicated its willingness to renew the obligation evidenced by the Notes; and WHEREAS, the Issuer has determined that it is appropriate that a new note (the "1987 Note") be authorized and issued by the Issuer pursuant to Section 4.01 of the Enabling Instrument and purchased by the Purchaser in the form attached hereto as Exhibit A for the purpose of renewing and extending the maturity of the Notes until May 20, 1988:^; and that the 1987 Note be deemed to be a bond anticipation note authorized by the Enabling Instrument, entitled to all the security and benefit of the covenants and agreements of the Issuer contained in the Enabling Instrument and made for the protection of the holders of the Notes; and WHEREAS, the Purchaser is familiar with the project and the whole plan of financing thereof, including the security pledged, and the proposed exchange of the 1987 Note for the out- standing Notes held by the Purchaser is the least expensive method of extending the indebtedness represented by the Notes, and it is in the best interest of the Issuer that the sale of the 1987 Note be negotiated with the Purchaser rather than made in favor of any bidder at a public sale after incurring expenses of preparing offering materials to acquaint prospective bidders with the details of the plan of financing; and WHEREAS, the Issuer has been advised that the Internal Revenue Code of 1986 (the "Code"), imposes new requirements as conditions to the exemption of interest on the 1987 Note from federal income taxation, that the Code contains certain require- ments which must be met prior to the issuance of the 1987 Note -2- M ~ and other requirements which must be met subsequent to the issu- ance of the 1987 Note, that failure to comply with such new requirements could cause interest on the 1987 Note to become sub- ject to federal income taxation retroactively to its date of issuance, and that additional covenants are required to be inserted in the Enabling Instrument to provide for compliance with such new requirements; and the City Council of the Issuer does hereby find and determine that it is in the best interest of the Issuer that the Enabling Instrument be amended to include such additional covenants providing for compliance with such new requirements; and WHEREAS, the Issuer desires to qualify the 1987 Note for the small governmental units exception to the arbitrage rebate requirements imposed by Section 148(f) of the Code upon tax-exempt obligations such as the 1987 Note issued after September 1, 1986; and the City Council of the Issuer does hereby find and determine that it is a governmental unit with general taxing powers, that the 1987 Note is not a private activity bond as defined in Section 141 of the Code, that at least 95 percent of the net proceeds of the Notes (i.e., the proceeds of the Notes reduced by amounts in a reasonably required reserve or replacement fund, if any) have been or will be used for local governmental activities of the Issuer, and that the aggregate face amount of all tax-exempt obli- gations, other than private activity bonds (as defined in Section 141 of the Code), including the 1987 Note, issued by or on behalf of the Issuer (and all subordinate entities thereof) during the 1987 calendar year is not reasonably expected to exceed $5,000,000; and WHEREAS, the Issuer desires to qualify the 1987 Note for the exception contained in Section 265(b)(3) of the Code to the provisions of Section 256(b) of the Code which deny financial institutions any deduction for interest expense allocable to tax- exempt obligations acquired after August 7, 1986, and to desig- nate the 1987 Note for the purpose of qualifying for such excep- tion; and the City Council of the Issuer does hereby find and determine that the aggregate face amount of all qualified tax- exempt obligations (excluding private activity bonds, as defined in Section 141 of the Code, other than qualified 501(c)(3) bonds, as defined in Section 145 of the Code), including the 1987 Note, issued by or on behalf of the Issuer (and all subordinate entities thereof) during the 1987 calendar year is not expected to exceed $10,000,000, and that as of the date hereof, no tax-exempt obliga- tions issued or authorized to be issued by or on behalf of the Issuer (and all subordinate entities thereof), other than the 1987 Note, have been designated by the Issuer for the purpose of qualifying for such exception; and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CLERMONT, FLORIDA, as follows: -3- • Section 1. Amendments. The Enabling Instrument is hereby amended to read as follows: A. Paragraph (F) of Section 3.04 thereof is hereby amended to read as follows: "The Issuer covenants that it will not make any investments or acquiesce in the mak- ing of any investments by any depository pur- suant to or under the provisions of this Instrument which could cause the Notes or the Bonds to be "arbitrage bonds" within the mean- ing of Section 148 of the United States Inter- nal Revenue Code of 1986, as amended from time to time, and the applicable regulations issued thereunder (collectively, the "Internal Reve- nue Code"). Unless the Issuer is furnished with an opinion of counsel, which counsel's legal and tax opinion on municipal bond issues is nationally recognized ("Bond Counsel"), that the Notes or the Bonds qualify for any applicable exception to the arbitrage rebate requirements contained in the Internal Revenue Code, the Issuer covenants that it shall pay any rebate amount required to be paid on be- half of the Issuer to the U.S. Treasury pur- suant to Section 148 the Internal Revenue Code. The Issuer shall take the following actions to provide for payment to the U.S. Treasury pursuant to Section 148 of the Inter- nal Revenue Code: (1) Unless the Issuer is furnished with an opinion of Bond Counsel to the effect that failure to make such determinations will not adversely affect the tax-exempt status of the Notes or the Bonds, either the Issuer, or Bond Counsel employed by the Issuer, shall make a determination on behalf of the Issuer of the amount required to be paid to the U.S. Treas- ury at least every year (as of the anniversary of the date of issue of the Notes and the Bonds) and upon the final payment of the Notes and the Bonds. (2) An amount equal to the amount to be paid pursuant to paragraph (1) above shall be transferred from the Construction Account to be placed into a special account, which shall be held for the sole benefit of the U.S. Treas- ury and shall not be or be deemed to be a pledged fund (and no moneys deposited therein -4- M M shall be or deemed to be Pledged Funds). The Issuer shall promptly deposit into the special account any deficiency in such amount. (3) The Issuer shall make payment to the U.S. Treasury from the special account on the dates and in the manner required by law. (4) The Issuer shall take any additional action required to be taken pursuant to the nonarbitrage certificate, or other instruc- tions from Bond Counsel, delivered in connec- tion with or subsequent to the issuance and sale of the Notes or the Bonds. (5) The Issuer shall keep records of the determinations made under this Section until six years after the final payment on the Notes and the Bonds. The Issuer shall keep adequate records, including any necessary certifica- tions, to evidence the fair market value of any Federal Securities purchased with Note or Bond proceeds." B. Section 3.04 thereof is hereby amended to include the following paragraph (G) as the final paragraph thereof: "(G) Compliance with Internal Revenue Code. The Issuer covenants and agrees that it will take any additional action required to be taken pursuant to the nonarbitrage certifi- cate, or other instructions from Bond Counsel, whether delivered in connection with or subse- quent to the issuance and sale of the Notes or the Bonds, in order to comply with all provi- sions of the Internal Revenue Code compliance with which is required to maintain the tax- exempt status of the interest payable on the Notes or the Bonds, and that it will take any such additional action required to qualify the Notes and the Bonds for any applicable excep- tion to the arbitrage rebate requirements imposed by the Internal Revenue Code and to qualify the Notes and the Bonds for any appli- cable exception to the provisions of the Inter- nal Revenue Code which deny financial institu- tions any deduction for interest expense allo- cable to tax-exempt obligations." Section 2. Designation of Notes. For purposes of qual- ifying the 1987 Note for the exception contained in Section 265(b)(3) of the Code to the provisions of Section 265(b) of the -5- M ~ Code which deny financial institutions any deduction for interest expense allocable to tax-exempt obligations acquired after August 7, 1986, the Issuer hereby designates the 1987 Note for such exception. Section 3. Place of Payment. The 1987 Note shall be payable as to both principal and interest at Sun Bank, National Association, Clermont, Florida. Section 4. Sale of the 1987 Note. The 1987 Note in the principal amount of $885,900 is hereby sold and awarded to the Purchaser at the price of par and bearing interest payable at maturity at the rate per annum equal to 655 of the prime rate announced from time to time by Sun Banks, Inc., subject to adjust- ment as provided therein. Section 6. Effective Date. This resolution shall become effective immediately upon its adoption. DONE AND RESOLVED by the City Council of the City of Clermont, Lake County, Florida thisl2th day of May, 1987. CITY OF CLERMONT, FLORIDA (OFFICIAL SEAL) ~~~ Mayor ATTEST: ~.,. erk LTI8LCWRSI . ` ~ --~ : ~ ~ ~ ^.~s !'.J. ~n ~e ~'a -6-