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HomeMy WebLinkAboutA020 - Closing Certificate Ames/4I 9370-47/FDC-Rev Please Return To: DORSEY & WHITNEY CLOSING CERTIFICATE ATTORNEYS AT LAW 801 Grand, Suite 4100 Wl We, the undersigned, Mayor, City Clerk and City Treasurer, of tl e�� ip}?Sof aBwa (the "City"), do hereby certify as of November 16, 2012 (the "Dated Date"),that we are now and were at the time of the execution of the City's $3,121,000 Sewer Revenue Bond, Series 2012 (the "Series 2012 Bond"), the officers respectively above indicated of the City; that in pursuance of Chapter 384 of the Code of Iowa, a resolution adopted by the City Council on October 9, 2012 (the "Resolution"), and a certain Loan and Disbursement Agreement (the "Agreement"), by and between the City and the Iowa Finance Authority, Des Moines, Iowa, as lender (the "Lender"), the Series 2012 Bond has been heretofore lawfully authorized and this day by us lawfully issued and delivered to the Lender and pursuant to the Agreement, the Lender shall loan to the City the maximum sum of$3,121,000. The Series 2012 Bond has been executed by the aforesaid officers; the certificate on the back of the Series 2012 Bond has been executed by the aforesaid City Treasurer; and the Series 2012 Bond has been fully registered as to principal and interest in the name of the Lender on the registration books of the City. We further certify that the Series 2012 Bond is being issued to evidence the City's obligation under the Agreement entered into by the City for the purpose of providing funds to pay a portion of the cost of constructing improvements and extensions (the "Project") to the Municipal Sanitary Sewer System of the City (the "Utility"). 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 Series 2012 Bond or in any way concerning the validity of the Series 2012 Bond or the power and duty of the City to appropriate and apply the Net Revenues (as defined in the Resolution) from the operation of the Utility to the full and prompt payment of the principal of and interest on the Series 2012 Bond, and that none of the proceedings incident to the authorization and issuance of the Series 2012 Bond has been repealed or rescinded. We further certify that no appeal of the decision of the City to enter into the Agreement and to issue the Series 2012 Bond has been taken to the district court. We further certify that the City has no other bonds or obligations of any kind now outstanding secured by or payable from the revenues to be derived from the operation of the Utility. We further certify that no board of trustees has been created for the management and control of the Utility and such management and control are vested in the Council of the City. We further certify that all meetings held in connection with the Bond 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 -1- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA Ames/4193 70-43/FDC-Rev 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, including engineering fees, are currently estimated to be at least $3,121,000. 2. The net sales proceeds of the Series 2012 Bond are $3,121,000 (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 into or, within six months of the date hereof, will enter into binding contracts for the Project 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 Project to completion and application of the Net Sales Proceeds to the payment of Total Project Costs will proceed with due diligence. 4. The Series 2012 Bond is payable from Net Revenues of the Utility which will be collected in a Sinking Fund and applied to the payment of interest on the Series 2012 Bond on each June 1 and December 1 and principal of the Series 2012 Bond on each June 1 (the 12-month period ending on each June 1 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 Series 2012 Bond 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. 5. None of the Net Sales Proceeds will be used to reimburse the City for prior expenditures on the Project. -2- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA Ames/419370-47/FDC-Rev 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 2012 Bond does not exceed the reasonably expected economic life of the Project. 8. The City expects to spend the Net Sales Proceeds (along with any investment earnings on such proceeds) by December 31, 2012. Accordingly, the City reasonably expects that the Net Sales Proceeds will be fully spent for costs of the Project within the time periods set forth in the 18 Month Exception described below: 18 Month Exception: The 18 Month Exception set forth in Section 1.148-7(d) of the United States Treasury Regulations (the "Regulations") applies to the Net Sales Proceeds. Accordingly, if all Net Sales Proceeds are expended at least as quickly as 15% within 6 months from the date of issuance of the Series 2012 Bond, 60% within 12 months and 100% within 18 months, then rebate will be required only with respect to a reasonably required reserve or replacement fund, if any. If the City exercises due diligence to complete the Project and an amount not exceeding the lesser of 3% of the Net Sales Proceeds allocated to the Project or $250,000 remains unspent as of the end of the eighteenth month, the City will be treated as satisfying the final expenditure requirement. In addition, a reasonable retainage of up to five percent of the Net Sales Proceeds as of the end of the 18-month period may be allocated to expenditures within 30 months of the Dated Date. We further certify that the City will comply with the investment requirements of Section 148 of the Code and the Regulations relating thereto with respect to the proceeds of the Bonds. The City acknowledges that if it fails to spend the proceeds of the Series 2012 Bond (along with the investment earnings thereon) within the time periods set forth in the 18 Month Exception (or another applicable rebate exception), the City may have a rebate liability to the United States pursuant to Section 148 of the Code. We further certify that the City will comply with the investment requirements of Section 148 of the Code and the Regulations relating thereto with respect to the proceeds of the Series 2012 Bond, including the requirement to invest the proceeds of the Series 2012 Bond (and the investment earnings thereon) at fair market value, and, if appropriate, to comply with the bidding requirements for investment contracts. The City shall consult with the appropriate auditors or rebate specialists with regard to determination of rebate liability. 9. To our best knowledge and belief, there are no facts, estimates or circumstances which would materially change the foregoing conclusions. -3- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA Ames/4,19370-47/FDC-Rev 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 2012 Bond to be an "arbitrage bond" 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. IN WITNESS WHEREOF, we have hereunto affixed our hands on the Dated Date. CITY OF AMES, IOWA Mayor Attest: T�1� City Clerk J , City Trea rer -4- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA