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HomeMy WebLinkAboutO-1355ORDINANCE NO. 1355 AN ORDINANCE TO AUTHORIZE THE ISSUANCE OF THE CITY'S GENERAL OBLIGATION WARRANT IN THE PRINCIPAL AMOUNT OF $1,300,000 BE IT ORDAINED by the City Council (herein called the "Council") of the CITY OF FAIRHOPE (herein called the "City") in the State of Alabama, as follows: Section 1. Findings. The Council has found and ascertained and does hereby declare as follows: (a) it is necessary, desirable and in the public interest for the City to borrow the sum of $1,300,000 to retire the City's short-term indebtedness in that amount at Regions Bank, which was incurred for the purpose of paying a portion of the costs of constructing a new public library in the City; (b) it is necessary, desirable and in the public interest that the Warrant hereinafter authorized be issued for such purpose; and (c) Hancock Bank of Alabama has agreed to purchase the Warrant from the City. Section 2. Authorization and Representation. Pursuant to the provisions of Section 11-47-2 of the Code of Alabama of 1975, as amended, and for the purpose of providing funds for the purpose described in Section 1 hereof, the City is hereby authorized to borrow from Hancock Bank of Alabama (herein sometimes called the "Bank"), the principal sum of $1,300,000 and, in evidence of the money so borrowed, is authorized to issue and deliver to the Bank its General Obligation Warrant (herein called the "Warrant") in the principal amount of $1,300,000. The Warrant shall be dated the date on which the loan evidenced thereby is made, shall be issued as a single fiilly registered warrant, shall be payable to the Bank, and shall bear interest at the rate of 2.91% per annum computed on the basis of a 360 day year, based on the exact number of days elapsed. The principal shall be payable in equal annual installments of $130,000 on each April 1, commencing April 1, 2009, and shall be payable by check or draft mailed to the then registered holder except as provided hereinafter. The interest on the Warrant shall be payable semiannually on each April 1 and October 1, commencing October 1, 2008, by check or draft mailed by the City to the registered holder; provided, that the principal of and the interest on the Warrant due on April 1. 2018, shall be made only upon the surrender of the Warrant to the City. The City represents that it will budget and collect, to the extent permitted by law, in each fiscal year during which the Warrant is outstanding, revenues sufficient to pay the principal and interest on the Warrant as the same shall accrue and became due. Ordinance No. 1355 Page —2- Section 3. Subject to Prepayment. The City reserves the privilege of prepaying the principal of the Warrant in full on any date, without penalty or premium and with ten days prior written notice, provided that at the time of such prepayment the City pays the interest which shall have accrued, to the date of such prepayment, on the principal to be so prepaid with respect to the Warrant. The City reserves the privilege of prepaying the principal of the Warrant in part on any April 1, without penalty or premium and with ten days prior written notice, provided that at the time of each such prepayment the City pays the interest which shall have accrued, to the date of such prepayment, on the principal to be so prepaid with respect to the Warrant and provided, further, that any principal prepayments shall be in amounts not less than $25,000. Prepayments of principal shall be deemed to apply to those principal installments with the latest maturities, in inverse order. Section 4. Execution of the Warrant; Registration. The Warrant shall be executed and the corporate seal of the City shall be affixed thereto by the Mayor, and the City Clerk shall attest the same with her manual signature. The Warrant shall be registered in the records maintained by the City Clerk as a claim against the City. Said officers are hereby authorized and directed so to execute and attest the Warrant, affix said seal thereto and make such registration. A registration certificate by the City, in substantially the form set forth in Section 6 hereof, duly executed by the manual signature of the City Clerk, shall be endorsed on the Warrant and shall be essential to its validity. The Warrant shall be registered as to both principal and interest in the name of the Bank and shall be transferable only to an "accredited investor" (as hereinafter referred to) and only with the approval and consent of the City. Section 5. General Obligation. The indebtedness evidenced and ordered paid by the Warrant is and shall be a general obligation of the City for payment of the principal of and the interest on which the full faith and credit of the City are hereby irrevocably pledged. Section 6. Form of Warrant. The Warrant shall be in substantially the following form, with such changes therein as shall be necessary to comply with the provisions of this Ordinance: Ordinance No. 1355 Page —3- (Form of Warrant) ANY TRANSFER OF THIS WARRANT MAY ONLY BE TO AN "ACCREDITED INVESTOR" AS DEFINED IN THE SECURITIES AND EXCHANGE ACT OF 1933 AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND ONLY UPON COMPLIANCE WITH APPLICABLE STATE AND FEDERAL SECURITIES LAWS AND WITH THE AUTHORIZING ORDINANCE REFERRED TO HEREIN. $1,300,000 UNITED STATES OF AMERICA STATE OF ALABAMA CITY OF FAIRHOPE GENERAL OBLIGATION WARRANT $1,300,000 The City Treasurer of the CITY OF FAIRHOPE (herein called the "City"), a municipal corporation in the State of Alabama, is hereby ordered to pay to Hancock Bank of Alabama, or its assigns, the principal sum of ONE MILLION THREE HUNDRED THOUSAND DOLLARS ($1,300,000) with interest thereon from the date hereof until the maturity hereof as is hereinafter specified at the rate of 2.91% per annum, computed on the basis of a 360 day year based on the actual number of days elapsed. The principal hereof shall be due in equal annual installments of $130,000 on each April 1, commencing April 1, 2009, with the final installment coming due on April 1, 2018, and the interest hereon shall be payable semiannually on each April 1 and October 1, commencing October 1, 2008, by check or draft mailed to the said registered holder; provided, that the principal of and the interest on the Warrant due on April 1, 2018, shall be made only upon the surrender of the Warrant to the City. The City reserves the privilege of prepaying, in whole, the principal on the Warrant on any date, without penalty or premium and with ten days written notice, provided that at the time of such prepayment the City pays the interest which shall have accrued, to the date of such prepayment, on the principal to be so prepaid with respect to the Warrant. The City reserves the privilege of prepaying, in part, the principal on the Warrant on any April 1, without penalty or premium and with ten days written notice, provided that at the time of each such prepayment the City pays the interest which shall have accrued, to the date of such prepayment, on the principal to be so prepaid with respect to Ordinance No. 1355 Page —4- the Warrant and provided, further, that any principal prepayments shall be in amounts not less than $25,000. This Warrant has been issued pursuant to the applicable provisions of the constitution and laws of the State of Alabama, including particularly Section 11-47-2 of the Code of Alabama 1975, as amended, and an ordinance of the governing body of the City duly and legally adopted to provide funds for purposes for which the City is authorized to borrow money under said section. This Warrant evidences a valid general obligation of the City for payment of the principal of and the interest on which the City has irrevocably pledged its full faith and credit. It is hereby certified that the indebtedness evidenced hereby has been duly and legally incurred and will at the maturity hereof become lawfully due without condition, abatement or offset of any description; that all conditions, actions and things required by the constitution and laws of the State of Alabama to exist, be performed and happen precedent to and in the issuance of this Warrant, exist, have been performed and have happened; and that the indebtedness evidenced by this Warrant, together with all other indebtedness of the City, was at the time the same was incurred and is now within every debt and other limit prescribed by the constitution and laws of the State of Alabama. IN WITNESS WHEREOF, the City has caused this Warrant to be executed and its official seal to be hereunto affixed by the Mayor and has caused the same to be attested by its City Clerk, both of whom have hereunto subscribed their signatures and are hereunto duly authorized, and has caused this Warrant to be dated March 6, 2008. CITY OF FAIRHOPE, ALABAMA �j 1 t It �� [SEAL_] Attest: Ordinance No. 1355 Page —5- (Form of Certificate of Registration by City Treasurer) I hereby certify that this Warrant was at the time of issuance thereof duly registered by me as a claim against the City of Fairhope, Alabama. 1 Nancy K. on, City Treasurer CITY OF FAIRHOPE, ALABAMA Ordinance No. 1355 Page —6- Section 7. Sale and Delivery of Warrant. The Warrant is hereby sold to Hancock Bank of Alabama, at and for a purchase price equal to $1,300,000. The Mayor is hereby authorized and directed to deliver the Warrant, which shall have been executed, sealed, attested and registered as herein provided, to the Bank upon payment to the City by the Bank of an amount equal to the purchase price of the Warrant. Section 8. Use of Proceeds. The proceeds of the Warrant shall be paid to the City and immediately applied for the purpose specified in Section 1 hereof. Section 9. Additional Documents Authorized. The Mayor and the City Clerk, or either of them, are each hereby authorized and directed to execute such other documents or certificates as may be necessary in order to carry out the transactions contemplated by this Ordinance. The City understands that one of the principal inducements to the purchase of the Warrant by the purchaser thereof is that the interest income on the Warrant be and remain exempt from federal income taxation. Accordingly, without in any way limiting the generality of the foregoing, the Mayor and the City Clerk are each hereby authorized and directed to cause to be prepared, signed on behalf of the City and filed with the Internal Revenue Service a Form 8038-G or other form prescribed by the Internal Revenue Service as a condition to the exemption of the interest income on the Warrant from federal income taxation. The Mayor and the City Clerk are each hereby authorized and directed to execute such certificates, agreements and other documents respecting the Internal Revenue Code of 1986, as amended (herein called the "Code"), as contemplated by this Ordinance, to the end that the interest income on the Warrant be and remain exempt from federal income taxation. Section 10. Concerning the Code. (a) General. The City recognizes that the Code imposes certain conditions to the exemption from federal income taxation of interest income on the Warrant. Accordingly, the City agrees that it will continually comply with all requirements imposed by the Code as a condition to the exemption from federal income taxation of the interest income on the Warrant. With respect to any question arising under this Section 10, the City may rely upon an opinion of nationally recognized bond counsel acceptable to it. (b) Warrant not to be a "Private Activity Bond." The City will not apply the proceeds of the Warrant in a manner that would cause the Warrant to be a "private activity bond" within the meaning of Section 141(a) of the Code. (c) Concerning the Arbitrage Provisions of the Code. The City agrees that it will comply with all provisions of the Code necessary to preclude the Warrant being considered an "arbitrage bond" within the meaning of Section 148 of the Code. (d) Required Rebate. The City recognizes and agrees that, absent the expenditure of all the proceeds of the Warrant within twenty-four months from the date of the delivery of the Warrant in accordance with the so-called two-year spend -down Ordinance No. 1355 Page —7- exemption, it will be necessary for all Required Rebates to be made in order for the interest income on the Warrant to be and remain exempt from federal income taxation. As used in this Section 10, the term "Required Rebates" means the amounts, if any, required by the provisions of Section 148(f) of the Code and any regulations of the Department of Treasury issued thereunder, to be paid by the City to the United States of America in order that the Warrant shall not be treated as an "arbitrage bond" within the meaning of Section 103(b)(2) and Section 148 of the Code. Section 11. Creation of Contract. The provisions of this Ordinance shall constitute a contract between the City and the Holder of the Warrant. Section 12. Provisions of Ordinance Severable. The provisions of this Ordinance are hereby declared to be severable. In the event any provision hereof shall be held invalid by a court of competent jurisdiction, such invalidity shall not affect any other portion of this Ordinance. ATTEST: Geniece W. Johnson, ity Clerk W m �i Q U Q �- to ac N Z� W OF-o ADOPTED this 61h day of March, 2008.