Explanation
Background
The purpose of this legislation is to authorize the substitution of a Letter of Credit (LOC) providing liquidity enhancement to the Series 1996-1 Various Purpose Adjustable Rate Unlimited Tax Bonds that the City issued in 1996. The current provider of the LOC is West LB AG, New York Branch (WestLB AG). WestLB AG, however, is in the process of exiting the business of providing LOCs for municipal debt. This ordinance will not only allow the City to continue providing the liquidity enhancement but will also make it possible to significantly reduce the costs of the LOC. It is estimated that over the next five years this ordinance will make it possible for the City to reduce the applicable fees of this LOC by $63,000.00, net of replacement costs.
This ordinance is made possible under Section 55(B) of the Columbus City Charter. The City Auditor requests, therefore, that the second reading of the ordinance be waived and that the ordinance be approved as submitted.
Fiscal Impact
Funding of this legislation will provide an estimated savings to the City of Columbus in the amount of $63,000.00, net of replacement costs.
Title
To authorize and direct the Director of Finance and Management and the City Auditor, and either of them individually, to enter into an agreement with JPMorgan Chase Bank, National Association, for the purpose of obtaining an Alternate Liquidity Facility for the City's Various Purpose Adjustable Rate Unlimited Tax Bonds, Series 1996-1 ($70,000.00)
Section 55(B) of the City Charter
Body
WHEREAS, pursuant to ordinances 2731-96, 2732-96, 2733-96, 2734-96, 2735-96, 2736-96 and 2737-96 (collectively, the "1996 Bond Ordinances") adopted by this Council on November 18, 1996, the City of Columbus, Ohio (the "Municipality") issued its Various Purpose Adjustable Rate Unlimited Tax Bonds, Series 1996-1 (the "Bonds") and obtained a Liquidity Facility (as defined in the 1996 Bond Ordinances) for the Bonds by entering into a Standby Bond Purchase Agreement, dated as of December 1, 1996, with WestLB AG, New York Branch, as successor to Westdeutsche Landesbank Girozentrale, New York Branch ("WestLB AG"); and
WHEREAS, JPMorgan Chase Bank, National Association ("JPMorgan") has offered to provide the Municipality an Alternate Liquidity Facility (as defined in the 1996 Bond Ordinances) for the Bonds; and
WHEREAS, the City Auditor of the Municipality has advised this Council that, in his opinion, the Municipality will achieve lower costs on the Bonds if the City obtains an Alternate Liquidity Facility from JPMorgan in substitution for the Liquidity Facility provided by WestLB AG;
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. The Director of Finance and Management and the City Auditor, and either of them individually, are hereby authorized to negotiate, execute and deliver, in the name and on behalf of the Municipality, an Alternate Liquidity Facility in the form of a standby bond purchase agreement (the "Agreement") with JPMorgan. The Agreement shall be in such form, and shall contain such terms, covenants and conditions consistent with the terms of the proposal submitted to the Municipality by JPMorgan, as shall be approved by the officer executing the same. The execution of the Agreement by such officer shall evidence his approval thereof and that such terms, covenants and conditions are consistent with the proposal. The Director of Finance and Management and the City Auditor are further authorized to execute any other agreements, certifications, notices, and other instruments, and to take any other actions, as may be appropriate to implement this Ordinance.
SECTION 2. To the extent that moneys are required to pay any of the costs or expenses of negotiating the Agreement or to pay the commitment fees and other expenses payable pursuant to the Agreement, the City Auditor is hereby authorized to expend a sum not to exceed Seventy Thousand Dollars ($70,000.00), and such amount is hereby deemed appropriated, which amount shall be allocated to, and paid from, the benefiting funds as determined by the City Auditor. Initial funds for the payment of such costs are hereby appropriated from Debt Service Fund #430, which fund shall then be reimbursed by the benefiting funds as determined by the City Auditor.
SECTION 3. It is hereby found and determined that all formal actions of this Council concerning and relating to the adoption of this Ordinance were adopted in an open meeting of this Council, and that all deliberations of this Council and of any of its committees that resulted in such formal action, were in meetings open to the public, in compliance with all legal requirements including Section 121.22 of the Ohio Revised Code.
SECTION 4. In accordance with Section 55(b) of the Charter of the City of Columbus, Ohio, this Ordinance shall take effect and be in force from and immediately after its passage and approval by the Mayor, or ten days after passage if the Mayor neither approves nor vetoes the same.