HomeMy WebLinkAboutA015 - Letter dated Septemer 28, 2015 to Dorsey & Whitney A m e s,M
Smart Choice
September 28, 2015
Dorsey & Whitney LLP
801 Grand, Suite 4100
Des Moines, Iowa 50309
Attention Robert E. Josten
RE: Ames, Iowa
$18,445,000 General Obligation Corporate Purpose Bonds, Series 2015A
Your File No. 419370-55
Dear Mr. Josten:
Enclosed please find the fully executed:
1. Closing Certificate
2. IRS 8038-G filing Form
If you have any questions, please call. Thank you for your assistance.
Sincerely,
Diane R. Voss
City Clerk
/dry
Enclosures
City Clerk's Office 515.239.5105 main 515 Clark Ave.,P.O.Box 811
515.239.5142 fax Ames,IA 50010
www.CityofAmes.org
Ames/419370-55/Closing Cert&Ur Please Return To:
. DORSEY & WHITNEY
!ate-ORNEYS /!T UW
CLOSING CERTIFICATE Sty C,,and, SJiz,j 4100
Des moine3, Iowa 50309
We, the undersigned Mayor and City Clerk, of the City of Ames (the "City"), in Story
County, Iowa, do hereby certify that we are now and were at the time of the execution of the
City's $18,445,000 General Obligation Corporate Purpose and Refunding Bonds, Series 2015A,
dated September 22, 2015 (the `Bonds"), the officers respectively above indicated; and that in
pursuance of Chapter 384 of the Code of Iowa, a resolution adopted by the City Council on
September 8, 2015 (the "Resolution"), and a loan agreement dated as of September 22, 2015 (the
"Loan Agreement"), by and between the City and FTN Financial Capital Markets, New York,
New York (the "Purchaser"), the Bonds have been heretofore lawfully authorized and this day by
us lawfully issued and delivered to or upon the direction of the Purchaser and pursuant to the
Loan Agreement, the City has received $19,894,168.15 which amount represents the par amount
of the Bonds ($18,445,000), plus reoffering premium ($1,493,221.95) minus underwriter's
discount ($44,053.80). The Bonds mature on June 1 in each of the years, in the respective
principal amounts and bear interest payable semiannually, commencing June 1, 2016, as set forth
in the Resolution.
Each of the Bonds has been executed with the facsimile signatures of these officers; and
the Bonds have been fully registered as to principal and interest in the names of the owners on
the registration books of the City maintained by the City Treasurer, as the Registrar and Paying
Agent.
We further certify that the Bonds are being issued to evidence the City's obligation under
the Loan Agreement entered into by the City for the purpose of paying the costs, to that extent,
of constructing street, water main, sanitary and storm sewer, bridge, and related improvements;
of constructing a new municipal airport terminal building; and of flood mitigation and
remediation (collectively, the "Projects"), and current refunding the outstanding balances of the
City's General Obligation Corporate Purpose Bonds, Series 2006A and General Obligation
Corporate Purpose Bonds, Series 2007A (collectively, 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 validity of the 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 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 enter into the
Loan Agreement or to issue the Bonds has been taken to the district court.
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.
-1-
DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA
Ames/419370-55/Closing Cert&Ltr
We further certify as follows:
1. The net sales proceeds of the Bonds are $19,938,221.95 (the "Net Sales Proceeds"),
the same being the Issue Price (hereinafter defined)thereof.
2. The estimated sources and uses of funds in connection with the Bonds are as follows:
SOURCES
jPar amount of Bonds $18,445,000.00
[Reoffering Premium I $1,493,221.95
eo
$19,938,221.95
USES
Deposit to Project Fund F $14,253,975.
00
r........................................................................._............._........................_......._.......__.__........................_.._........._.._..............._...._....._..._.......__............._._..........._.........._............_............._................_.........._.._................._...._..
JCurrent Refunding of Refunded Obligations ; $5,550,000.._00_.
_..._.._.... .......__...._...
.__....._.._......__..__..._.._._..__...._....__..._..........._._. _._............._._......_...._.._..._._..__
(Underwriter's Discount t $44,053.80'
(Costs of Issuance $88,488.00
Additional Proceeds $1,705,15
F $19,93 8,221.95
a. $132,541.80 of the Net Sales Proceeds will be used to pay costs of issuance,
including the underwriter's discount, within 45 days of the date hereof, and until so
applied, will be invested by the City without restriction as to yield
b. $5,550,000 of the Net Sales Proceeds will be used for the redemption of the
Refunded Obligations on September 25, 2015, and until so applied, will be invested by
the City without restriction as to yield.
c. $14,253,975 of the Net Sales Proceeds will be used to pay the costs of the
Projects (the "Project Net Sales Proceeds"), and the Project Net Sales Proceeds will be
expended and invested in accordance with Section 3 hereinafter set forth.
d. The amount received as Additional Proceeds ($1,705.15) will be used for
any lawful purpose of the City.
3. The Project 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 into or, within six months of the
date hereof, will enter into binding contracts for the Projects with third parties
(e.g. engineers or contractors);
2
DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA
Ames/419370-55/Closing Cert&Ur
(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 Project Net
Sales Proceeds;
b. Expenditure Test: At least 85% of the Project Net Sales Proceeds
will be applied to the payment of costs of the Projects within the Three Year
Temporary Period; and
c. Due Diligence Test: Acquisition and construction of the Projects to
completion and application of the Project Net Sales Proceeds to the payment of costs of
the Projects will proceed with due diligence.
4. The City hereby covenants that it will not make any expenditures of the Project
Net Sales Proceeds on the construction of the new municipal airport terminal building until any
management contracts related to the municipal airport have been reviewed by Bond Counsel.
5. All of the original and investment proceeds of the Refunded Obligations have
been expended for the purposes for which they were issued.
6. The City Council adopted a resolution on March 3, 2015 declaring its official
intent to acquire and construct the Projects and finance the same with bonds or other obligations
(the "Intent Resolution").
The City certifies that none of the costs of the Projects to be paid for from the Project Net
Sales Proceeds are for expenditures made more than 60 days prior to the date of adoption of the
Intent Resolution, except for (i) costs of issuance of the Bonds; (ii) costs aggregating an amount
not in excess of the lesser of $100,000 or 5% of the Project 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 Project Net
Sales Proceeds of the Bonds; the City will allocate Project Net Sales Proceeds to reimbursement
of such expenditures no later than 3 years after the later of(i) the date any such expenditure was
originally paid or (ii) the date the Projects are placed in service (or abandoned); and such
allocations will be made by the City in writing.
The City will seek reimbursement of prior expenditures already paid by the City from the
proceeds of the Bonds in the amount of$1,208,803.
7. The 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 Bonds on each June 1 and December 1 and principal of the Bonds on each June 1
(the 12-month period ending on each June 1 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
-3-
DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA
Ames/419370-55/Closing Cert&Ltr
payments on the Bonds for the immediately 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.
8. Not more than 50% of the Net Sales Proceeds will be invested in non-purpose
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).
9. The weighted average maturity of the Bonds, does not exceed 120% of (a) the
reasonably expected economic life of the Projects or (b)the remaining reasonably expected
economic life of the facilities originally financed by the Refunded Obligations,
10. The City intends that it will be the sole owner of the Projects financed by the
Bonds and agrees that it will not use, or suffer or permit to be used by any natural person, firm,
joint venture, association, partnership, business trust, corporation, public body, agency or
political subdivision thereof or any other similar entity ("Person") by lease or other use
agreement, any of the Projects by any Person who is not a "governmental person" as defined in
Section 1.141-1 of the Regulations, or if such Person is a not a "governmental person" such use
meets the requirements set out in Section 1.141-3 of the Regulations, Internal Revenue Service
Revenue Procedure 97-13 and Internal Revenue Service Revenue Procedure 2001-39 (or any
applicable successor procedures, rulings or regulations) or is allowable private activity pursuant
to Section 1.141 of the Regulations and Section 141 of the Code (or any applicable successor
procedures, rulings or regulations). The City agrees that it will not allow any other user to use or
occupy the Projects for any purposes which would cause interest on the Bonds to be includable
in gross income under Section 103 of the Code.
11. To the extent of the principal amount of the Project Net Sales Proceeds, the
issuance of the Bonds qualifies as a "construction issue" as defined in Section 148(f)(4)(c)(vi) of
the Code and Section 1.148-7(f) of the Regulations because at least 75% of the "available
construction proceeds" of the Bonds as defined in Section 148(f)(4)(c)(vi) of the Code will be
allocated to capital expenditures that are allocable to the cost of land, improvements, buildings,
permanent structures or constructed personal property. The costs of acquisition of land are not
"available construction proceeds." The City reasonably expects to spend the Project Net Sales
Proceeds to pay capital costs (including capitalized interest) within the following time periods
(the "Two-Year Exception"):
(a) At least 10% will be spent within 6 months of the date hereof;
(b) At least 45% will be spent within 12 months of the date hereof;
(c) At least 75% will be spent within 18 months of the date hereof; and
(d) All of the proceeds will be spent within 24 months of the date hereof.
If the Project Net Sales Proceeds are spent in accordance with these provisions, the
Project Net Sales Proceeds may be invested by the City without restriction to yield and rebate
-4-
DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA
Ames/41 9370-55/Closing Cert&Ltr
payments to the United State will not be required; however, if the Project Net Sales Proceeds are
not spent within the foregoing timeframes, rebate payments to the United States may be required
to be made by the City.
12. 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.
13. We further certify that due provision has been made for the collection of taxes
sufficient to pay the principal of and interest on the Bonds when due. All payments coming due
before the collection of any such taxes will be paid promptly when due from legally available
funds.
14. To our best knowledge and belief, there are no facts, estimates or circumstances
which would materially change the foregoing conclusions
IN WITNESS WHEREOF, we have hereunto affixed our hands, as of September 22,
2015.
CITY OF AMES, IOWA
By d-.-.
Mayor
tt �)/D A I�/�
City Clerk
-5-
DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA