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HomeMy WebLinkAboutA013 - Letter from Dorsey & Whitney dated October 11, 2002 - final approving opinionDORSEY & WHITNEY LLP ATTORNEYS A,r LAW MINNEAPOLIS NEW YORK SEATTLE DENVER WASHINGTON, D.C. NORTHERN VIRGINIA DES MOINES LONDON ANCHORAGE SALT LAKE CITY BRUSSELS Tony Si pson sor Z2 est j 1700 Hutch' ', Shockey, Erley & Co. son 222 est Adam Street Sui e C i 11 c go, cago, Illinois 60606 801 GRAND, SUITE 3900 DES MOINES, IOWA 50309 TELEPHONE: (515) 283-1000 FAX: (515) 283-1060 www.dorseylaw.com October 11, 2002 Re: Ames, Iowa $7,525,000 Electric Revenue Refunding Bonds, Series 2002D Our File No. 419370-28 COSTA MESA FARGO HONG KONG GKFAT FALLS ROCHESTER TOKYO MISSOULA VANCOUVER TORONTO SHANGHAI Dear Mr. Simpson: We have prepared and enclose our final approving opinion covering the captioned Bonds, dated as of October 15, the day of closing. We are also enclosing the City's final delivery, non -arbitrage certificate and a copy of the issuance resolution for your file. We understand that you will wire transfer the net settlement funds in the total amount of $7,485,798.12 on October 15, as outlined in Molly Doran's letter of October 3. On the day of closing, please telephone our office to confirm with us that the closing is taking place as scheduled and so that we may authorize the release of our opinion and the Bonds. If for any reason the closing will not take place on October 15, please notify our office as soon as possible. When you telephone, you may speak to Jeane Harrison or me. N DORSEY & WHITNEY L L P Page 2 If you require any further documentation to complete your file for this issue, please let us know. If you have any questions or if there is anything we can do to be of assistance, please do not hesitate to let us know. Ve tru yo S, Robert Hel is RHH Ames/419370-27/Closing Ltr Enclosures cc: Steven Schainker Duane Pitcher Diane R. Voss John Klaus Brian McQuillan Yolanda Ortiz DORSEY & WHITNEY LLP ATTORNEYS AT LAW MINNEAPOLIS 801 GRAND, SUITE 3900 COSTA MESA NEW YORK DES MOINES, lowA 50309 FARGO SEATTLE TELEPHONE: (515) 283-1000 HONG KONG DENVER GREAT FALLS FAX: (515) 283-1060 WASHINGTON, D.C. ROCHESTER www.dorseylaw.com NORTHERN VIRGINIA TOKYO DES MOINES MISSOULA LONDON VANCOUVER ANCHORAGE TORONTO SALT LAKE CITY SHANGHAI BRUSSELS October 15, 2002 We hereby certify that we have examined certified copies of the proceedings of the Council of the City of Ames, in Story County, Iowa (the "Issuer"), passed preliminary to the issue by the Issuer of its Electric Revenue Refunding Bonds, Series 2002D, in the amount of $7,525,000, dated October 15, 2002 (the "Series 2002D Bonds"), in the denomination of $5,000 each or any integral multiple thereof, maturing on January I in each of the respective years and in the principal amounts and bearing interest payable semiannually, commencing January 1, 2003, at the respective rates as follows: Principal Interest Rate Principal Interest Rate Year Amount Per Annurn Year Amount Per Annum 2003 $ 220,000 2.50% 2006 $1,825,000 2.50% 2004 $1,740,000 2.50% 2007 $1,860,000 2.75% 2005 $1,780,000 2.50% 2008 $ 100,000 3.00% 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 2002D Bonds are valid and legally binding obligations of the Issuer enforceable in accordance with their terms. 3. The Series 2002D Bonds, together with any additional obligations as may be hereafter issued and outstanding from time to time ranking on a parity therewith under the conditions and restrictions set forth in the said proceedings, are and will continue to be payable as to both principal and interest solely and only from the future Net Revenues of the Municipal Electric Light and Power Plant and System of the Issuer. 4. The interest on the Series 2002D 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 Aindividuals A U IA 1, + A 1, tl,.+ f��r f1l'. mirnnep nf mpose on an corporations; L should �, noted, I VVV%l M DORSEY & WHITNEY L L P Page 2 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 2002D 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 2002D Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Series 2002D Bonds. 5. The Series 2002D 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 2002D Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Series 2002D Bonds. The rights of the owners of the Series 2002D 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 "61 � "' L-t— Ames/419370-28/FDC & Ltr 419370-28 FDC 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 $7,525,000 Electric Revenue Refunding Bonds, Series 2002D, dated October 15, 2002 (the "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 "Resolutiorf'), the Bonds have been heretofore lawfully authorized and this day by us lawfully authorized, sold and issued to the purchaser thereof, and the purchaser has paid the City $7,561,998.12, receipt of which is hereby acknowledged, which amount represents the purchase price of the Bonds ($7,561,998.12), plus accrued interest thereon ($-0-). The Bonds mature on January I in each of the years, in the respective principal amounts and bear interest payable semiannually, commencing January 1, 2003, at the respective rates, as follows: Principal Interest Rate Principal Interest Rate Year Amount Per Annum. Year Amount Per Annum 2003 $ 220,000 2.50% 2006 $1,825,000 2.50% 2004 $1,740,000 2.50% 2007 $1,860,000 2.75% 2005 $1,780,000 2.50% 2008 $ 100,000 3.00% Each of the Bonds has been executed with the facsimile signatures of the aforesaid Mayor and City Clerk, with a facsimile of the official seal of the City imprinted thereon; the certificate on the back of each Bond has been executed with the facsimile signature of the aforesaid City Treasurer; and the City Treasurer has authenticated each of the Bonds as the Registrar and Paying Agent, and registered the Bonds as to principal and interest in the names of the owners on the registration books of the City. We further certify that the Bonds are being issued for the purpose of refunding the City's $9,985,000 Electric Revenue Refunding Bonds, Series 1993, dated May 1, 1993, on November 15, 2002 (the "Redemption Date'), which are hereinafter referred to as the "Refunded Obligations". 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 proceedings incident to the authorization of the Bonds or in any way concerning the validity of the Bonds or the power and duty of the City to appropriate and apply the Net Revenues from the operation of the Municipal Electric Light and Power Plant and System of the City (the "Utility') to the full and prompt payment of the principal of and interest on the Bonds, and that none of the proceedings incident to the authorization and issuance of the Bonds has been repealed or rescinded. We further certify that no appeal of the decision of the City Council to issue the Bonds has been taken to the district court. 4- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA Ames/419370-28/FDC & Ltr We further certify that all meetings held in connection with the 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. The Bonds are payable from the Net Revenues of the Utility, which will be collected in the City's Electric Revenue Bond Sinking Fund and applied to the payment of interest on the Bonds on each January I and July I and principal of the Bonds on each January I (the 12-month period ending on each January I being herein referred to as a "Bond Year"); the Sinking Fund is used primarily to achieve a proper matching of revenues with principal and interest payments within each Bond Year; the Sinking 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 Bonds for the immediately preceding Bond Year; amounts on deposit in the Sinking Fund will be invested by the City without restriction as to yield for a period of 13 months after their date of deposit. We further certify that there are no other obligations of any kind now outstanding secured by or payable from the revenues to be derived from the operation of the Utility. We ftirther certify as follows: I The estimated sources and uses of funds in connection with the Bonds are as follows: SOURCES USES Purchase price of Bonds $ 7,561,998.12 Transfer from 1993 Bond Debt Service Fund $ 1,438,488.00 Transfer from 1993 Bond Reserve Fund) $ 1,986,010.00 $10,986,496.12 Deposit to Current Refunding Account $10,180,662.33 Costs of issuance $ 51,000.00 Reserve Fund for Refunding Bonds $ 752,500.00 Excess Proceeds $ 2,333.79 $10,986,496.12 2. The sales proceeds of the Bonds are $7,611,331.35 (the "Sales Proceeds"), the same being the Issue Price thereof. 3. The net sales proceeds of the Bonds are $6,858,831.35 (the "Net Sales Proceeds"), the same being the Sales Proceeds as determined in number 2 above -2- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA Ames/419370-28/FDC & Ltr ($7,611,331.35), less the portion of such Sales Proceeds deposited into a reasonably required reserve or replacement fund ($752,500). 4. $6,756,164.33 of the Net Sales Proceeds has been deposited into a separate Refunding Account and, together with interest earnings thereon and other legally available funds of the City, will be applied to the redemption of the Refunded Obligations on the Redemption Date and, until so applied, will be invested by the City without restriction as to yield. 5. $51,000 of the Net Sales Proceeds will be disbursed to pay the issuance costs related to the issuance of the Bonds within 30 days of the date hereof. Until such time, the aforementioned amount may be invested without restriction as to yield. 6. $2,333.79 (excess proceeds) will be set aside and deposited into the City's Electric Revenue Bond Sinking Fund as provided in the Resolution and used to pay interest on the Bonds due on the first interest payment date. 7. (a) All of the original and investment proceeds of the Refunded Obligations have been expended for the purpose for which they were issued. (b) Not more than 50% of the proceeds of the Refunded Obligations were 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). (c) 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). 8. The weighted average maturity of the Bonds does not exceed 120% of the weighted average of the remaining reasonably expected economic life of the facilities originally financed by the Refunded Obligations. 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 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 original purchaser of the Bonds has advised the City that the reasonably expected reoffering price of the Bonds to the public is $7,611,331.35. -3- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA Ames/419370-28/FDC & Ur IN WITNESS WHEREOF, we have hereunto affixed our hands and the seal of the aforementioned City, as of October 15, 2002. (Seal) CITY OF AMES, IOWA K-- City Clerk Cify Treasurer 4- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA