Drafter
Clerk 01/10/2011
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A MOTION of the county council approving a bid for the county's Sewer Revenue Bonds, 2011, in the aggregate principal amount of $175,000,000 and establishing certain terms of such bonds, all in accordance with Ordinance 16868.
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WHEREAS, the county council by Ordinance 16868 passed on June 28, 2010 (the "Bond Ordinance"), authorized the issuance and sale of bonds of the county payable from sewer revenues, as follows: (i) not to exceed $475,000,000 principal amount of bonds to pay costs of certain capital improvements to the county's sewer system (the "System") in accordance with the county's comprehensive water pollution abatement plan (the "Project Bonds") and (ii) not to exceed $1,000,000,000 principal amount of bonds to refund certain outstanding bonds payable from sewer revenues (the "Refunding Bonds"), and
WHEREAS, the Bond Ordinance authorizes such bonds to be sold in one or more series, as Parity Bonds or Parity Lien Obligations (as such terms are defined in the Bond Ordinance), as Tax-Exempt Bonds, Tax-Benefited Bonds or otherwise, and by negotiated sale or competitive bid, as determined by the county's director of finance and business operations division (the "Finance Director") in consultation with the county's financial advisors, and
WHEREAS, the Finance Director has determined that $175,000,000 principal amount of Project Bonds be sold in a series of Parity Bonds in the aggregate principal amount of $175,000,000 to be designated as the county's Sewer Revenue Bonds, 2011 (the "Bonds"), structured as Tax-Exempt Bonds, and sold by competitive bid, and
WHEREAS, pursuant to the Bond Ordinance, a preliminary official statement dated December 30, 2010, has been prepared for the sale of the Bonds, the Official Notice of Bond Sale (the "Notice") has been distributed, and bids have been received in accordance with the Notice, and
WHEREAS, the attached bid of Citigroup Global Markets Inc. (the "Purchaser") to purchase the Bonds is the best bid received for the Bonds, and it is in the best interest of the county that the Bonds be sold to the Purchaser on the terms set forth in the Notice, the attached bid, the Bond Ordinance, and this motion, and
WHEREAS, in accordance with the Bond Ordinance, the council wishes to ratify and confirm certain terms of the Bonds as set forth herein;
NOW, THEREFORE, BE IT MOVED by the Council of King County:
A. Definitions. Except as expressly authorized herein, capitalized terms used in this motion have the meanings set forth in the Bond Ordinance.
B. Ratification of Notice of Sale, Acceptance of Bid and Authorization of Bonds. The issuance of the Bonds, designated as set forth in the recitals of this motion, and the terms and conditions thereof as set forth in the Official Notice of Bond Sale, attached hereto as Attachment A (the "Notice"), are hereby ratified and confirmed, and Purchaser's bid to purchase the Bonds, as set forth on Attachment B (the "Bid"), is hereby accepted. The Bonds shall bear interest at the rates set forth in the Bid and shall conform in all other respects to the terms and conditions specified in the Notice, Bid and Bond Ordinance. The Bonds shall be subject to redemption as set forth in the Notice and Bid.
C. Satisfaction of Parity Conditions. In accordance with the provisions of the ordinances authorizing the issuance of the currently outstanding Parity Bonds, which permit the issuance of additional Parity Bonds upon compliance with the conditions set forth therein (the "Parity Conditions"), the county council hereby finds and determines, as follows:
(i) The Bonds are to be issued for the purpose of acquiring, constructing and installing portions of the Comprehensive Plan and for acquiring, constructing and installing necessary renewals or replacements of the System.
(ii) There is not now, and when the Bonds are issued there will not then be, any deficiency in the Parity Bond Fund or any account therein.
(iii) The Bond Ordinance provides for payment out of the Parity Bond Fund of the principal of and interest on the Bonds and this motion provides for satisfaction of the Reserve Requirement, as required by the Parity Conditions.
(iv) The county will have on file at the Closing of the Bonds a certificate of the Finance Director to satisfy the revenue test for issuance of Future Parity Bonds required by the Parity Conditions.
The applicable Parity Conditions having been complied with in connection with the issuance of the Bonds, the pledge contained in the Bond Ordinance of Revenue of the System to pay and secure the payment of the Bonds shall constitute a lien and charge upon such revenue equal in rank with the lien and charge upon the Revenue of the System to pay and secure the payment of the outstanding Parity Bonds.
D. Application of Bond Proceeds; Satisfaction of Reserve Requirement. In accordance with Section 15.A of the Bond Ordinance, there is hereby established a special subaccount within the Construction Account to be designated as the Series 2011 Construction Subaccount (the "Construction Subaccount"). Proceeds of the Bonds (exclusive of accrued interest, if any, which shall be deposited into the Debt Service Account in the Parity Bond Fund) shall be deposited in the Construction Subaccount and applied to pay costs of improvements to the System and costs of issuance of the Bonds, in accordance with Section 15.A of the Bond Ordinance.
In accordance with Section 9.C of the Bond Ordinance, proceeds of the Bonds shall be deposited into the Bond Reserve Account in an amount sufficient to satisfy the Reserve Requirement with respect to the Bonds.
E. Undertaking to Provide Ongoing Disclosure.
1. Contract/Undertaking. In accordance with Section 31 of the Bond Ordinance, this Section E constitutes the county's written undertaking for the benefit of the owners and Beneficial Owners of the Bonds as required by Section (b)(5) of the Rule.
2. Financial Statements/Operating Data. The county agrees to provide or cause to be provided to the MSRB the following annual financial information and operating data for the prior fiscal year (commencing in 2011 for the fiscal year ended December 31, 2010):
(a) Annual financial statements, which may or may not be audited, showing year-end fund balance for the County's Water Quality Enterprise fund prepared in accordance with the Budget Accounting and Reporting System (BARS) prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statutes) and generally of the type included in the Official Statement for the Bonds as Appendix C: King County Water Quality Enterprise 2009 Audited Financial Statements;
(b) the amount of outstanding Parity Bonds; and
(c) Information regarding customers, revenues and expenses of the Sewer System as set forth in the Official Statement for the Bonds in the table titled "Historical Customers, Revenues and Expenses."
Items (b) and (c) shall be required only to the extent that such information is not included in the annual financial statements.
Such annual information and operating data described above shall be provided on or before the end of seven months after the end of the county's fiscal year. The county's fiscal year currently ends on December 31. The county may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such annual financial information and operating data, the county may cross-refer to other documents available to the public on the MSRB's internet website or filed with the Commission.
If not provided as part of the annual financial information discussed above, the county shall provide to the MSRB the county's audited annual financial statement prepared in accordance with BARS when and if available to the MSRB.
3. Material Events. The county agrees to provide or cause to be provided to the MSRB in a timely manner, not in excess of ten business days after the occurrence of the event, notice of any of the following events with respect to the Bonds:
(a) Principal and interest payment delinquencies;
(b) Non-payment related defaults, if material;
(c) Unscheduled draws on debt service reserves reflecting financial difficulties;
(d) Unscheduled draws on credit enhancements reflecting financial difficulties;
(e) Substitution of credit or liquidity providers, or their failure to perform;
(f) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;
(g) Modifications to rights of Bond holders, if material;
(h) Bond calls, if material, and tender offers for the Bonds;
(i) Defeasances;
(j) Release, substitution or sale of property securing repayment of the Bonds, if material;
(k) Rating changes;
(l) Bankruptcy, insolvency, receivership, or similar event of any obligated person (as such term is defined in the Rule;
(m) The consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and
(n) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
Solely for purposes of disclosure, and not intending to modify this undertaking, the county advises with reference to items (c) and (j) above that the Parity Bond Reserve Account is the debt service reserve for the Bonds and no property secures repayment of the Bonds.
4. Notification Upon Failure to Provide Financial Data. The county agrees to provide or cause to be provided , in a timely manner to the MSRB notice of its failure to provide the annual financial information described in subsection 2 above on or prior to the date set forth in subsection 2 above.
5. EMMA; Format for Filings with the MSRB. Until otherwise designated by the MSRB or the Commission, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. All notices, financial information and operating data required by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to this undertaking must be accompanied by identifying information as prescribed by the MSRB.
6. Termination/Modification. The county's obligations to provide annual financial information and notices of material events shall terminate upon the legal defeasance or payment in full of all of the Bonds. These obligations, or any provision of this section, shall be null and void if the county (i) obtains an opinion of nationally recognized bond counsel to the effect that those portions of the Rule that require these obligations, or any such provision, are invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and (ii) notifies the MSRB of such opinion and the cancellation of these obligations.
Notwithstanding any other provision of this motion, the county may amend this Section E and any provision of this Section E may be waived, with an approving opinion of nationally recognized bond counsel and in accordance with the Rule.
In the event of any amendment or waiver of a provision of this Section E, the county shall describe such amendment in the next annual report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the county. In addition, if an amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a material event under subsection 3, and (ii) the annual report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.
7. Bond Owner's Remedies Under This Section. The right of any Bond owner or Beneficial Owner of Bonds to enforce the provisions of this section shall be limited to a right to obtain specific enforcement of the county's obligations hereunder, and any failure by the county to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds hereunder. For purposes of this section, "Beneficial Owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories.
F. Further Authority. The county officials, their agents, attorneys and representatives are hereby authorized and directed to do everything necessary for the prompt issuance and delivery of the Bonds and for the proper use and application of the proceeds of such sale.
G. Severability. If any provision in this motion is declared by any court of competent jurisdiction to be contrary to law, then such provision shall be null and void
and shall be deemed separable from the remaining provisions of this motion and shall in no way affect the validity of the other provisions of this motion or of the Bonds.