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HomeMy WebLinkAboutA022 - Closing Certififcate dated September 12, 2019 Ames/419370-64/Closing Cert&Ltr FOR YOUR RECORDS 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 $10,775,000 General Obligation Corporate Purpose Bonds, Series 2019A, dated September 12, 2019 (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 August 28, 2019 (the "Resolution"), and a loan agreement dated as of September 12, 2019 (the "Loan Agreement"), by and between the City and Robert W. Baird & Co., Milwaukee, Wisconsin (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 $11,753,343.62, which amount represents the par amount of the Bonds ($10,775,000), plus reoffering premium ($1,052,828.90) minus underwriter's discount ($74,485.28). The Bonds mature on June 1 in each of the years, in the respective principal amounts and bear interest payable semiannually on each June 1 and December 1, commencing June 1, 2020, 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 improvements to streets, sanitary sewers and bridges, and acquiring emergency services communication equipment (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 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. DORSEY & wHITNEY LLP,ATTORNEYS,DES MOINES,IOwA Ames/419370-64/Closing Cert&Ltr We further certify as follows: 1. The net sales proceeds of the Bonds are $11,827,828.90 (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 _ Par amount of Bonds $10,775,000.00 ,Reoffering Premium $1,052,828.90. $11,827,828.90 USES Deposit to Project Fund $1 1,684,204.00 Underwriter's Discount $74,485.28 Costs of Issuance $65,300.00 :Additional Proceeds $3,839.62' $11,827,828.90' a. $139,785.28 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. $1 1,684,204 of the Net Sales Proceeds will be used to pav the costs of the Projects (the "Net Sales Proceeds"), and the Net Sales Proceeds will be expended and invested in accordance with Section 3 hereinafter set forth. C. The amount received as Additional Proceeds ($3,839.62) will be used for any lawful purpose of the City. 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 Projects with third parties (e.g. engineers or contractors); (i) which are not subject to contingencies directly or indirectly within the City's control; z DORSEY & WHITNEY LLP,ATTORNEYS, DES MOINES,IOWA Ames/419370-64/Closing Cert&Ltr (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 the 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 Net Sales Proceeds to the payment of costs of the Projects will proceed with due diligence. 4. The City Council adopted a resolution on February 12, 2019 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 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 Projects, 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 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$50,000. 5. 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 I (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 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. -3- DORSEY & wHITNEY LLP,ATTORNEYS,DES MOINES, IOwA 1 / Ames/419370-64/Closing Cert&Ltr 6. 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). 7. The weighted average maturity of the Bonds (6.4009), does not exceed 120% of the reasonably expected economic life of the Projects. 8. 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. 9. To the extent of the principal amount of the 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 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 Net Sales Proceeds are spent in accordance with these provisions, the Net Sales Proceeds may be invested b the w' restriction y y e City without ct on to yield and rebate payments to the United State will not be required; however, the City acknowledges that if it fails to spend the Net Sales Proceeds (along with the investment earnings thereon) within the time periods set forth in the Two-Year Exception (or another applicable rebate exception), the City may have a rebate liability to the United States pursuant to Section 148 of the Code. -4- DORSEY& WHITNEI' LLP,ATTORNEYS.DES MOINES, IOWA 01 Ames/419370-64/Closing Cert&Ur We further certify that the City will take such actions and make,-or cause to be made, all calculations, transfers and payments that may be necessary to comply with the rebate requirements contained in Section 148(f) of the Code. We further certify that the City will comply with the investment requirements of Section 148 of the Code and 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 to comply with the bidding requirements for investment contracts. 10. 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. 11. The Official Statement related to the Bonds is correct and complete in all material respects and does not contain any untrue statement of a material fact nor omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. No event affecting the City has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used in order to make the statements and information contained therein not misleading in any material respect. 12. 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. 13. 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 12, 2019. CITY ES, 10 By Mayor City Clerk -s- DORSEY & WHITNEY LLP.ATTORNEYS,DES MOINES.IOWA 1