HomeMy WebLinkAboutA018 - Letter from Dorsey & Whitney dated October 15, 2002 - opinionIm
DORSEY & WHITNEY LLP
ATTORNEYS AT LAW
MINNEAPOLIS
801 GRAND, SurrF 3900
COSTA MESA
NEW YORK
DES MOINES, IOWA $0309
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www.dorseylaw.com
NORTHERN VIRGINIA
TOKYO
DES MOINES
MISSOULA
LONDON
VANCOUVER
ANCHORAGE
TOP -ONTO
SALT LAKE CITY
SHANGHAI
BRUSSELS
October 15, 2002
We hereby certify that we have examined a certified copy of the proceedings of the City
Council of the City of Ames, in the County of Story, State of Iowa (the "Issuer"), passed
preliminary to the issue by the Issuer of its General Obligation Corporate Purpose Bonds, Series
2002B (the "Series 2002B Bonds") in the amount of $5,885,000, dated October 15, 2002, in the
denomination of $5,000 each, or any integral multiple thereof, maturing on June I in each of the
respective years and in the principal amounts and bearing interest payable semiannually,
commencing June 1, 2003, at the respective rates, as follows:
Principal
Interest Rate
Principal
Interest Rate
Year
Amount
Per Annurn
Year
Amount
Per Annurn
2003
$480,000
2.25%
2009
$485,000
3.00%
2004
$430,000
2.25%
2010
$500,000
3.15%
2005
$435,000
2.50%
2011
$515,000
3.25%
2006
$445,000
2.50%
2012
$535,000
3.30%
2007
$455,000
2.75%
2013
$555,000
3.45%
2008
$470,000
3.00%
2014
$580,000
3.60%
but the Series 2002B Bonds maturing in each of the years 2012 to 2014, inclusive, are subject to
redemption prior to maturity at the times and on the terms specified in the Series 2002B Bonds.
Based upon our examination, we are of the opinion, as of the date hereof, that:
1. The aforementioned proceedings show lawful authority for such issue under the
laws of the State of Iowa.
2. The Series 2002B Bonds are valid and binding general obligations of the Issuer.
3. All taxable property within the corporate boundaries of the Issuer is subject to the
levy of taxes to pay the principal of and interest on the Series 2002B Bonds without
constitutional or statutory limitation as to rate or amount.
DORSEY & WHITNEY LLP
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4. The interest on the Series 2002B Bonds (including any original issue discount
properly allocable to an owner thereof) is excluded from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations; it should be noted, however, that for the purpose of
computing the alternative minimum tax imposed on corporations (as defined for federal income
tax purposes), such interest is taken into account in determining adjusted current earnings. The
opinions set forth in the preceding sentence are subject to the condition that the Issuer comply
with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied
subsequent to the issuance of the Series 2002E Bonds in order that interest thereon be, or
continue to be, excluded from gross income for federal income tax purposes. The Issuer has
covenanted to comply with each such requirement. Failure to comply with certain of such
requirements may cause the inclusion of interest on the Series 2002B Bonds in gross income for
federal income tax purposes to be retroactive to the date of issuance of the Series 2002B Bonds.
5. The Series 2002B Bonds are not "qualified tax-exempt obligations" within the
meaning of Section 265(b)(3) of the Code, and, therefore, in the case of certain financial
institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is not allowed for
that portion of such financial institutions' interest expense allocable to interest on the Series
2002B Bonds.
We express no opinion regarding other federal tax consequences arising with respect to
the Series 2002B Bonds.
The rights of the owners of the Series 2002B Bonds and the enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, and their
enforcement may also be subject to the exercise of judicial discretion in appropriate cases.
DORSEY & WHITNEY LLP
P — � G---,
Ames/419370-25/FDC & Ltr
419370-25 FDC - G.O. Corporate Purpose
We, the undersigned Mayor, City Clerk and City Treasurer, of the City of Ames, in Story
County, Iowa (the "City"), do hereby certify that we are now and were at the time of the
execution of the City's $5,885,000 General Obligation Corporate Purpose Bonds, Series 2002B,
dated October 15, 2002 (the "Series 2002B Bonds"), the officers respectively above indicated;
and that in pursuance of Chapter 384 of the Code of Iowa and a resolution adopted by the City
Council on September 24, 2002 (the "Resolution"), the Series 2002B Bonds have been
heretofore lawfully authorized and this day by us lawfully issued, sold and delivered to the
purchaser thereof (the "Purchaser"), and the Purchaser has paid the City $5,879,001, receipt of
which is hereby acknowledged, which amount represents the purchase price of the Series 2002B
Bonds ($5,879,001), plus accrued interest ($-0-). The Series 2002B Bonds mature on June I in
each of the years, in the respective principal amounts and bear interest payable semiannually,
commencing June 1, 2003, at the respective rates, as follows:
Principal
Interest Rate
Principal
Interest Rate
Year
Amount
Per Annum
Year
Amount
Per Annum
2003
$480,000
2.25%
2009
$485,000
3.00%
2004
$430,000
2.25%
2010
$500,000
3.15%
2005
$435,000
2.50%
2011
$515,000
3.25%
2006
$445,000
2.50%
2012
$535,000
3.30%
2007
$455,000
2.75%
2013
$555,000
3.45%
2008
$470,000
3.00%
2014
$580,000
3.60%
Each of the Series 2002B Bonds has been executed with the facsimile signatures of the
aforesaid officers, with a facsimile of the official seal of the City imprinted thereon; and the
Series 2002B Bonds have been fully authenticated by the City Treasurer as Bond Registrar and
Paying Agent and registered as to principal and interest in the names of the owners on the
registration books of the City.
We further certify that the Series 2002B Bonds are being issued for the purpose of
defraying the cost of the acquisition of fire apparatus and equipment; and the construction of
various street, storm sewer and bridge improvements (the "Projects").
We further certify that no controversy or litigation is pending, prayed or threatened
involving the incorporation, organization, existence or boundaries of the City, or the titles of the
aforesaid officers to their respective positions, or the validity of the Series 2002E Bonds, or the
power and duty of the City to provide and apply adequate taxes for the full and prompt payment
of the principal of and interest on the Series 2002B Bonds, and that none of the proceedings
incident to the authorization and issuance of the Series 2002E Bonds has been repealed or
rescinded.
We further certify that no appeal of the decision of the City Council to issue the Series
2002E Bonds has been taken to the district court.
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DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA
., j Ames/419370-25/FDC & Ltr
We further certify that all meetings held in connection with the Series 2002B Bonds were
open to the public at a place reasonably accessible to the public and that notice was given at least
24 hours prior to the commencement of all meetings by advising the news media who requested
notice of the time, date, place and the tentative agenda and by posting such notice and agenda at
the City Hall or principal office of the City on a bulletin board or other prominent place which is
easily accessible to the public and is the place designated for the purpose of posting notices of
meetings.
We further certify as follows:
1. The Total Project Costs are estimated to be at least $5,885,000.
2. The net sales proceeds of the Series 2002B Bonds are $5,907,190.15 (the "Net
Sales Proceeds"), the same being the Issue Price thereof.
3. The Net Sales Proceeds, including investment earnings thereon, will be invested
by the City without restriction as to yield for a period not to exceed three years from the date
hereof (the "Three Year Temporary Period"), the following three tests being reasonably expected
to be satisfied by the City:
a. Time Test: The City has entered or, within six months of the date
hereof, will enter into binding contracts for the Projects with third parties (e.g.
engineers or contractors);
i. which are not subject to contingencies directly or
indirectly within the City's control;
ii. which provide for the payment by the City to such
third parties of an amount equal to at least 5% of the Net Sales
Proceeds;
b. Expenditure Test: At least 85% of Net Sales Proceeds will be
applied to the payment of Total Project Costs within the Three Year Temporary
Period; and
C. Due Diligence Test: Acquisition and construction of the Projects
to completion and application of the Net Sales Proceeds to the payment of Total
Project Costs will proceed with due diligence.
4. The Series 2002B Bonds are payable from ad valorem taxes levied against all
taxable property within the City which will be collected in a Debt Service Fund and applied to
the payment of interest on the Series 2002B Bonds on each June I and December I and principal
of the Series 2002B Bonds on each June I (the 12-month period ending on each June I being
herein referred to as a "Bond Year"); the Debt Service Fund is used primarily to achieve a proper
matching of taxes with principal and interest payments within each Bond Year; the Debt Service
Fund will be depleted at least once each Bond Year except for a reasonable carryover amount not
to exceed the greater of (i) the earnings on the fund for the immediately preceding Bond Year; or
(ii) 1/12 of the principal and interest payments on the Series 2002B Bonds for the immediately
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DORSEY & WMTNEY LLP, ATTORNEYS, DES MOINES, IOWA
Ames/419370-25/FDC & Ltr
preceding Bond Year; amounts on deposit in the Debt Service Fund will be invested by the City
without restriction as to yield for a period of 13 months after their date of deposit.
5. The City Council has adopted resolutions declaring its official intent to acquire
and construct the Projects and finance the same with the Series 2002E Bonds (the "Intent
Resolutions"); none of the Total Project Costs to be paid for from the Net Sales Proceeds are for
expenditures made for a Project more than 60 days prior to the date of adoption of the Intent
Resolution with respect to that Project, except for (i) costs of issuance of the Series 2002E
Bonds; (ii) costs aggregating an amount not in excess of the lesser of $100,000 or 5% of the Net
Sales Proceeds; (iii) costs for preliminary expenditures (including architectural, engineering,
surveying, soil testing, and similar costs incurred prior to commencement of acquisition or
construction of the Projects, other than land acquisition, site preparation and similar costs) not in
excess of 20% of the Issue Price of the Series 2002B Bonds; the City will allocate Net Sales
Proceeds to reimbursement of such expenditures no later than 18 months after the later of (i) the
date any such expenditure was originally paid or (ii) the date the Project is placed in service, but
in no event more than 3 years after such expenditure was originally paid; and such allocations
will be made by the City in writing.
6. Not more than 50% of the Net Sales Proceeds will be invested in nonpurpose
investments (as defined in Section 148(f)(6)(A) of the Internal Revenue Code of 1986, as
amended (the "Code")) having a substantially guaranteed yield for four years or more (e.g., a
four-year guaranteed investment contract or a Treasury Obligation that does not mature for four
years).
7. The weighted average maturity of the Series 2002E Bonds does not exceed the
reasonably expected economic life of the Project.
8. Any amount received as accrued interest will be set aside and deposited into the
City's Debt Service Fund as provided in the Resolution and used to pay interest on the Series
2002B Bonds due on the first payment date.
9. To our best knowledge and belief, there are no facts, estimates or circumstances
which would materially change the foregoing conclusions.
On the basis of the foregoing, it is not expected that the Net Sales Proceeds will be used
in a manner that would cause the Series 2002B Bonds to be "arbitrage bonds" under Section 148
of the Code and the regulations prescribed under that section. The City 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.
We further certify that the Purchaser has advised the City that the reasonably expected
reoffering price of the Series 2002B Bonds to the public is $5,907,190.15.
We further certify that due provision has been made for the collection of taxes sufficient
to pay the principal of and interest on the Series 2002E Bonds when due, commencing with the
levy of taxes for collection in the fiscal year beginning July 1, 2003 (provisions having been
previously made, and funds being on hand and pledged to pay the interest on and principal of the
Series 2002E Bonds coming due in the fiscal year which began July 1, 2002).
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DORSEY & WMTNEY LLP, ATTORNEYS, DES MOINES, IOWA
Anies/419370-25[FDC & Ltr
IN WITNESS WHEREOF, we have hereunto affixed our hands and the seal of the
aforementioned City, as of October 15, 2002.
(Seal)
CITY 0, ",MES.A,
Mayor
City Clerk
'City Treasu4lr
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DORSEY & WHITNEY UP, ATTORNEYS, DES MOINES, IOWA