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R-2659-9-07RESOLUTION NO. 2659-9-07(R) A RESOLUTION of the City Council of the City of Allen, Collin County, Texas, relating to the "Allen Community Development Corporation Sales Tax Revenue Refunding Bonds, Series 2007A"; approving the resolution of the Corporation authorizing the issuance of such Bonds; resolving other matters incident and related to the issuance of such Bonds; and providing an effective date. WHEREAS, Allen Community Development Corporation (the "Issuer) was created by the City of Allen, Texas (the "City"), pursuant to the provisions of Section 4B of the Development Corporation Act of 1979, Article 5190.6, Vernon's Texas Civil Statutes, as amended (the "Act"); and WHEREAS, the Issuer is empowered to issue bonds for the purpose of refunding outstanding bonds issued on account of a "project' defined as such by the Act; and WHEREAS, the Issuer has determined to refund the following described outstanding bonds of the Corporation (hereinafter collectively referred to as the "Refunded Bonds"), to wit: (1) "Allen Community Development Corporation Sales Tax Revenue Bonds, Series 1997", dated- August 1, 1997, scheduled to mature on September 1, 2008, and aggregating in principal amount $260,000 (the "Series 1997 Refunded Bonds"); and ' (2) "Allen Community Development Corporation Sales Tax Revenue Bonds, Series 1999", dated April 1, 1999, scheduled to mature on September 1, 2008 through 2012, and aggregating in principal amount $1,295,000 (the "Series 1999 Refunded Bonds"); AND WHEREAS, Section 25(f) of the Act requires the City Council of the City approve the resolution of the Issuer providing for the issuance of the Bonds no more than sixty (60) days prior to the delivery of the Bonds; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN COUNTY. TEXAS: SECTION 1: The Resolution authorizing the issuance of "Allen Community Development Corporation Sales Tax Revenue Refunding Bonds, Series 2007A", adopted by the Issuer (the "Issuer Resolution") on September 17, 2007 and submitted to the City Council this day, is hereby approved in all respects. The Bonds are being issued to refund the Refunded Bonds (identified in the preamble hereof) to allow for the reserve fund maintained for the payment and security of Parity Obligations (defined in the Issuer Resolution) to be funded with a surety bond. SECTION 2: The approvals herein given are in accordance with Section 25(f) of the Act and the Issuers bylaws, and the Bonds shall never be construed as an indebtedness or pledge of the City, or the State of Texas (the "State"), within the meaning of any constitutional or ' statutory provision, and the owner of the Bonds shall never be paid in whole or in part out of any funds raised or to be raised by taxation (other than sales tax proceeds as authorized pursuant to 459W%2/10713171 I 11 Section 4B of the Act) or any other revenues of the Issuer, the City, or the State, except those revenues assigned and pledged by the Issuer Resolution. SECTION 3: The City hereby agrees to promptly collect and remit to the Issuer the Gross Sales Tax Revenues (as defined in the Issuer Resolution) in accordance with the terms of the Issuer Resolution and the Act to provide for the prompt payment of the Bonds, and to assist and cooperate with the Issuer in the enforcement and collection of sales and use taxes imposed on behalf of the Issuer. SECTION 4: The City hereby acknowledges and recognizes that the Bonds are being issued as tax exempt obligations under and pursuant to section 103(a) of the Code (as defined below) and, in connection therewith, the City hereby makes the following representations and warranties to the Issuer: (a) Definitions. When used in this Section, the following terms have the following meanings: "Closing Date" means the date on which the Bonds are first authenticated and delivered to the initial purchasers against payment therefor. "Code" means the Internal Revenue Code of 1986, as amended by all legislation, if any, effective on or before the Closing Date. "Computation Date" has the meaning set forth in Section 1.148-1(b) of the Regulations. "Gross Proceeds" means any proceeds as defined in Section 1.148-1(b) of the Regulations, and any replacement proceeds as defined in Section 1.148-1(c) of the Regulations, of the Bonds. "Investment" has the meaning set forth in Section 1.148-1(b) of the Regulations. "Nonpurpose Investment' means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and which is not acquired to carry out the governmental purposes of the Bonds. "Rebate Amount" has the meaning set forth in Section 1.148-1(b) of the Regulations. "Regulations" means any proposed, temporary, or final Income Tax Regulations issued pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue Code of 1954, which are applicable to the Bonds. Any reference to any specific Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation designed to supplement, amend or replace the speck Regulation referenced. "Yield" of (1) any Investment has the meaning set forth in Section 1.148- 5 of the Regulations and (2) the Bonds has the meaning set forth in Section 1.148-4 of the Regulations. 45954596.2h071317-7 Resolution No. 2659-9-07(R), Page 2 ' (b) Not to Cause Interest to Become Taxable, The City shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any Bond to become includable in the gross income, as defined in section 61 of the Code, of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the City receives a written opinion of counsel nationally recognized in the field of municipal bond law to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the interest on any Bond, the City shall comply with each of the speck covenants in this Section. (c) No Private Use or Private Payments. Except as permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall at all times prior to the last Stated Maturity of Bonds: (1) exclusively own, operate and possess all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Bonds (including property financed with Gross Proceeds of the Refunded Bonds), and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired, constructed or - -improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (2) not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the Bonds or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds (including property financed with the Gross Proceeds of the Refunded Bonds), other than taxes of general application within the City or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (d) No Private Loan. Except to the extent permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall not use Gross Proceeds of the Bonds to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be 'loaned" to a person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction which creates a debt for federal income tax purposes; (2) capacity in or service from such property is committed to such person or entity under a take -or -pay, output or similar contract or arrangement; or (3) indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds or any property acquired, constructed or improved with such Gross Proceeds are otherwise transferred in a transaction which is the economic equivalent of a loan. ' (e) Not to Invest at Higher Yield. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the final Stated Maturity of the Bonds directly or indirectly invest Gross Proceedsin any Investment (or use Gross Proceeds to replace money so invested), If as a result of such investment the 45e5n6e6z110713M Resolution No. 2659-9-07(R), Page 3 ' Yield from the Closing Date of all Investments acquired with Gross Proceeds (or with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of the Bonds. (f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any action which would cause the Bonds to be federally guaranteed within the meaning of section 149(b) of the Code and the Regulations and rulings thereunder. (g) Payment of Rebatable Arbitrage. Except to the extent otherwise provided in section 148(f) of the Code and the Regulations and rulings thereunder: (1) The City shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last Outstanding Bond is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of the Bonds with other money of the City, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. - (2) Not less frequently than each Computation Date, the City shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Regulations and rulings thereunder. The City shall maintain such calculations with its official transcript of proceedings relating to the issuance of the Bonds until six years after the final Computation Date. (3) As additional consideration for the purchase of the Bonds by the Purchasers and the loan of the money represented thereby and in order to induce such purchase by measures designed to insure the excludability of the interest thereon from the gross income of the owners thereof for federal income tax purposes, the City shall remit to the Issuer for payment to the United States the amount described in paragraph (3) of the Issuer Resolution, at the times, in the manner and accompanied by such forms or other information as is or may be required by Section 148(f) of the Code and the Regulations and rulings thereunder. (4) The City shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraph (2), and if an error is made, to discover and promptly correct such error within a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including the amount remitted to the Issuer for payment to the United States of any additional Rebate Amount owed to @, interest thereon, and any penalty imposed under Section 1.148-3(h) of the Regulations. (h) Bonds Not Hedge Bonds. (1) At the time the original bonds refunded by the Bonds were issued, the Corporation reasonably expected to spend at least 85% of the spendable proceeds of such bonds within three years after such bonds were issued and (2) not more than 50% of the proceeds of the original bonds refunded by the Bonds were invested in 459546962/10713177 Resolution No. 2659-9-07(R), Page 4 . Nonpurpose Investments having a substantially guaranteed Yield for a period of 4 years or more. (i) Current Refunding of Series 1997 Refunded Bonds. The Bonds are issued in part to refund the Series 1997 Refunded Bonds, and the Bonds are a current refunding of such Series 1997 Refunded Bonds in that such bonds will be paid and redeemed within ninety (90) days of the date of the delivery of the Bonds. Q) Qualified Advance Refunding. The Bonds are issued in part to refund the Series 1999 Refunded Bonds, and the Bonds will be issued more than 90 days before the redemption of the Series 1999 Refunded Bonds. The Corporation represents as follows: (1) The Bonds are the first advance refunding of the Series 1999 Refunded Bonds, within the meaning of section 149(d)(3) of the Code. (2) The Series 1999 Refunded Bonds are being called for redemption, and will be redeemed not later than the earliest date on which such bonds may be redeemed. (3) The initial temporary period under section 148(c) of the Code will end: (i) with respect to the proceeds of the Bonds not later than 30 days after the date of issue of such Bonds; and (ii) with respect to proceeds of the Series 1999 Refunded Bonds on the Closing Date K not ended prior thereto. (4) On and after the date of issue of the Bonds, no proceeds of the Series 1999 Refunded Bonds will be invested in Nonpurpose Investments having a Yield in excess of the Yield on such Series 1999 Refunded Bonds. (5) The Bonds are being issued for the purposes stated in the preamble of this Resolution. There is not a present value savings associated with the refunding. In the issuance of the Bonds the Corporation has neither: (i) overburdened the tax exempt bond market by issuing more bonds, issuing bonds earlier or allowing bonds to remain outstanding longer than reasonably necessary to accomplish the governmental purposes for which the Bonds were issued; (ii) employed on "abusive arbitrage device" within the meaning of Section 1.148-10(a) of the Regulations; nor (iii) employed a "device" to obtain a material financial advantage based on arbitrage, within the meaning of section 149(d)(4) of the Code, apart from savings attributable to lower interest rates, if any, and reduced debt service payments in early years. SECTION 5: It is officially found, determined, and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Resolution, was given, all as required by V.T.C.A., Government Code, Chapter 551, as amended. SECTION 6: This Resolution shall be in force and effect from and after its passage on the date shown below. [remainder of page left blank intentionally] 45954696.2110713177 Resolution No. 2659-9-07(R), Page 5 L PASSED AND ADOPTED, this September 25, 2007. CITY OF ALLEN, TEXAS STEPHEN TERRELL, Mayor I ATTEST: SHELLEY B. GEQRGE, TRMC, City Secretary 459546962%10713177 Resolution No. 2659-9-07(R), Page 6