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HomeMy WebLinkAboutA011 - Closing Certificate dated December 29, 2015 Ames/419370-52/Closing Cert&Ltr CLOSING CERTIFICATE 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 $9,500,000 Electric Revenue Bonds, Series 2015B, dated December 29, 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 December 8, 2015 (the "Resolution"), and a loan agreement dated as of December 29, 2015 (the "Loan Agreement"), by and between the City and Hutchinson, Shockey, Erley & Co., Chicago, Illinois (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 $10,250,189.41 receipt of which is hereby acknowledged, which amount represents the par amount of the Bonds ($9,500,000), plus reoffering premium ($818,381.55), minus underwriter's discount ($68,192.14). 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 financing construction of improvements (the "Project") to the Municipal Electric Light and Power Plant and System (the "Utility"). We further certify that the City currently has no obligations outstanding and payable from the Net Revenues of the Utility except for the Bonds. 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 these officers to their respective positions, or the validity of 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/419370-52/Closing Cen&Ltr We further certify as follows: 1. The net sales proceeds of the Bonds are $10,318,381.55 (the "Net Sales Proceeds"), the same being the Issue Price hereinafter referred to. 2. The estimated sources and uses of funds in connection with the Bonds are as follows: SOURCES Par amount of Bonds $9,500,000.00 Reoffering Premium $818,381.55', Cash on Hand t $969,306.26' $11,287,687.81 USES Underwriter's Discount $68,192.14; Costs of Issuance $73,300.00 ;Project Fund $10 175 000.00 1 ,Deposit to Debt Service Reserve Fund $969,306.261 Additional Proceeds $1,889.41 $11,287,687.81 '. 3. $141,492.14 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. 4. $10,175,000 of the Net Sales Proceeds (the "Net Sales Proceeds") will be deposited in a Project Fund, used to pay the costs of the Project and spent and invested in accordance with Paragraph 7 below. 5. $969,306.26 of the City's cash on hand will be used to fund a Debt Service Reserve Fund, as required by the Resolution. 6. The Additional Proceeds ($1,889.41) will be used for any lawful purpose of the City. 7. 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): -2- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA Ames/419370-52/Closing Cert&Ltr (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 costs of the Project 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 the total costs of the Project will proceed with due diligence. 8. The Bonds are payable from the Net Revenues of the Utility which will be collected in a Sinking Fund and applied to the payment of interest on the Bonds on each June 1 and December 1 and principal installments 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 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. 9. The City Council adopted a resolution on October 27, 2015 declaring its official intent to acquire and construct the Project and finance the same with bonds or other obligations (the "Intent Resolution"). The City certifies that none of the costs of the Project to be paid for from the 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 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 Project, other than land acquisition, site preparation and similar costs) not in excess of 20% of the Net Sales Proceeds of the Bonds; the City will allocate 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 Project is 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$5,136,981.75. -3- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA Ames/419370-52/Closing Cert&Ltr 10. The weighted average maturity of the Bonds does not exceed 120% of the reasonably expected economic life of the Project. 11. The City expects to spend the Net Sales Proceeds (along with any investment earnings on such proceeds) by June 30, 2017. 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 of the Bonds, are expended at least as quickly as 15% within 6 months from the date of issuance of the Bonds, 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 of the Bonds 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 Bonds (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 Bonds, including the requirement to invest the proceeds of the Bonds (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. 12. The Debt Service Reserve Fund is not subject to a rebate exception. 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, including the requirement to invest the proceeds of the Bonds (and the investment earnings thereon) at fair market value, and, if appropriate, to comply with the bidding requirements for investment contracts. 13. 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). 14. We further certify that the City's financial advisor has advised the City that the reasonably expected reoffering price (the "Issue Price") of the Bonds to the public is $10,318,381.55. -4- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA Ames/419370-52/Closing Cert&Ltr 15. To our best knowledge and belief, there are no facts, estimates or circumstances which would materially change the foregoing conclusions. 16. 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. IN WITNESS WHEREOF, we have hereunto affixed our hands, as of December 29, 2015. CITY OF AMES, IOWA By Mayor Attest: City Clerk -5- DORSEY&WHITNEY LLP,ATTORNEYS,DES MOINES,IOWA