Explanation
The City has an opportunity to reduce the debt service costs on certain of its outstanding bonds by currently refunding them. The call date of the existing bonds to be refunded is May 15, 2004. Since the City is planning its more traditional general obligation bond sale in approximately July 2004 it is necessary for an interim financing step to be taken.
The potential savings to the City by taking this action is estimated to be approximately $680,000.00.
The bonds to be refunded were issued May 15, 1994, callable May 15, 2004 and have final maturity dates of May 15, 2005, 2006, 2007, 2008 and 2015. This ordinance will authorize the City's Treasury Investment Board (the Board) to purchase the refunding (the new) bonds. Chapter 325 of the Columbus City Code identifies bonds of the City of Columbus as eligible investments for the Board to purchase.
The existing bonds to be refunded are:
Principal Issue Stated
Amount Name of Issue Date Maturity
$ 2,120,000 Various Purpose Limited Tax Bonds, Series 1994-1 May 15, 1994 May 15, 2005
5,990,000 Various Purpose Unlimited Tax Bonds, Series 1994-2 May 15, 1994 May 15, 2005;
2008; 2015
1,005,000 Street Lighting and Electricity Distribution (E-L) Bonds May 15, 1994 May 15, 2005;
2006; 2007
600,000 Street Lighting and Electricity Distribution No. 27 (EU) Bonds May 15, 1994 May 15, 2005;
2006; 2007
$ 9,775,000 Total
Title
Authorizing the issuance of limited tax bonds in an aggregate amount not to exceed $3,125,000 and unlimited tax bonds in an aggregate principal amount not to exceed $6,650,000 for the purpose of providing funds to currently refund certain outstanding general obligation bonds of the City dated May 15, 1994 ($9,775,000)
Section 55(B) of the City Charter.
Body
WHEREAS, pursuant to Ordinance Nos. 984-94, 985-94, 986-94, 987-94, 988-94, 989-94, 990-94, 991-94, and 992-94 passed on May 12, 1994 by the City Council (the "Council") of the City of Columbus, Ohio (the "Municipality"), the Municipality issued and sold limited tax general obligation bonds, designated "City of Columbus, Ohio Various Purpose Limited Tax Bonds, Series 1994-1" in the aggregate principal amount of $38,110,000 (the "1994-1 Bonds"), for the purposes described in the ordinances referred to above, of which $2,120,000 currently remains outstanding (the "Outstanding 1994-1 Bonds"); and
WHEREAS, pursuant to Ordinance Nos. 982-94 and 983-94 passed on May 12, 1994 by the Council, the Municipality issued and sold unlimited tax general obligation bonds, designated "City of Columbus, Ohio Various Purpose Unlimited Tax Bonds, Series 1994-2" in the aggregate principal amount of $15,470,000 (the "1994-2 Bonds"), for the purposes described in the ordinances referred to above and as authorized by the voters of the Municipality as described in the ordinances referred to above, of which $5,990,000 currently remains outstanding (the "Outstanding 1994-2 Bonds"); and
WHEREAS, pursuant to Ordinance No. 980-94 passed on May 12, 1994 by the Council, the Municipality issued and sold limited tax general obligation bonds, designated "City of Columbus, Ohio Street Lighting and Electricity Distribution (E-L) Bonds" in the aggregate principal amount of $4,005,000 (the "1994 E-L Bonds"), for the purposes described in the ordinances referred to above, of which $1,005,000 currently remains outstanding (the "Outstanding 1994 E-L Bonds"); and
WHEREAS, pursuant to Ordinance No. 981-94 passed on May 12, 1994 by the Council, the Municipality issued and sold unlimited tax general obligation bonds, designated "City of Columbus, Ohio Street Lighting and Electricity Distribution No. 27 (E-U) Bonds" in the aggregate principal amount of $2,635,000 (the "1994 E-U Bonds"), for the purposes described in the ordinances referred to above and as authorized by the voters of the Municipality as described in the ordinances referred to above, of which $660,000 currently remains outstanding (the "Outstanding 1994 E-U Bonds" and, together with the Outstanding 1994-1 Bonds, the Outstanding 1994-2 Bonds, and the Outstanding 1994 E-L Bonds, the "Outstanding Bonds"); and
WHEREAS, the Municipality can achieve a reduction in the debt service by providing for the current refunding of the Outstanding Bonds maturing after May 15, 2004 (collectively, the "Refunded Bonds"), which Refunded Bonds are subject to optional redemption on May 15, 2004; and
WHEREAS, this Council believes that it is in the best interests of the Municipality to currently refund the Refunded Bonds using proceeds of refunding bonds, authorized pursuant to Section 133.34(A)(1), Ohio Revised Code, together with other moneys available for that purpose, if any; and
WHEREAS, the Municipality's Treasury Investment Board is authorized to purchase bonds of the Municipality as eligible investments pursuant to Chapter 325 of the Columbus City Code;
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1 . Bonds of the Municipality shall be issued in the principal sum not to exceed Nine Million Seven Hundred Seventy-Five Thousand Dollars ($9,775,000) (the "Bonds") for the purpose of providing a portion of the funds necessary to currently refund the Refunded Bonds, and paying certain costs incidental thereto. The Bonds shall be issued in two series. One series, in an aggregate principal amount not to exceed Three Million One Hundred Twenty-Five Thousand Dollars ($3,125,000), shall be designated "City of Columbus, Ohio Limited Tax General Obligation Refunding Bonds, Series 2004A" (the "Series A Bonds"). The second series, in an aggregate principal amount not to exceed Six Million Six Hundred Fifty Thousand Dollars ($6,650,000), shall be designated "City of Columbus, Ohio Unlimited Tax General Obligation Refunding Bonds, Series 2004B" (the "Series B Bonds").
Section 2 . There shall be and is hereby levied annually on all the taxable property in the Municipality, in addition to all other taxes and within the ten mill limitation, a direct tax (the "Series A Debt Service Levy") for each year during which any of the Series A Bonds are outstanding, for the purpose of providing, and in an amount which is sufficient to provide, funds to pay interest upon the Series A Bonds as and when the same falls due and to provide a fund for the repayment of the principal of the Series A Bonds at maturity or upon redemption. There shall be and is hereby levied annually on all the taxable property in the Municipality, in addition to all other taxes and outside the ten mill limitation, a direct tax (the "Series B Debt Service Levy" and, together with the Series A Debt Service Levy, the "Debt Service Levies") for each year during which any of the Series B Bonds are outstanding, for the purpose of providing, and in an amount which is sufficient to provide, funds to pay interest upon the Series B Bonds as and when the same falls due and to provide a fund for the repayment of the principal of the Series B Bonds at maturity or upon redemption. The Debt Service Levies shall not be less than the interest and sinking fund tax required by Article XII, Section 11 of the Ohio Constitution.
Section 3 . The Debt Service Levies shall be and are hereby ordered computed, certified, levied and extended upon the tax duplicate and collected by the same officers, in the same manner, and at the same time that taxes for general purposes for each of such years are certified, extended and collected. The Debt Service Levies shall be placed before and in preference to all other items and for the full amount thereof. The funds derived from the Debt Service Levies shall be placed in a separate and distinct fund, which shall be irrevocably pledged for the payment of the premium, if any, and interest on and principal of the applicable series of Bonds when and as the same falls due. Notwithstanding the foregoing, if the Municipality determines that funds will be available from other sources for the payment of the Bonds in any year, the amount of the Debt Service Levies applicable to such Bonds for such year shall be reduced by the amount of funds which will be so available, and the Municipality shall appropriate such funds to the payment of the Bonds in accordance with law.
Section 4 . The Series A Bonds shall be issued only as fully registered bonds, in an amount not exceeding the principal amount of the Series A Bonds; shall be numbered from RA-1 upward; shall be dated May 15, 2004; shall bear interest payable semi-annually on the fifteenth day of May and November of each year (the "Interest Payment Dates") beginning November 15, 2004, until the principal sum is paid; and shall be subject to redemption at the option of the Municipality in whole or in part, at a redemption price of 100% of the principal amount thereof plus accrued interest to the redemption date, on any date upon one day's notice to the registered owner.
The Series A Bonds shall mature in the following principal amounts on May 15 of the years indicated and shall bear interest at the rates per annum as indicated:
Principal Interest
Year Amount Maturing Rate
2005 $2,455,000 1.47%
2006 335,000 2.15
2007 335,000 2.15
The registered owner of the Series A Bonds maturing on May 15, 2007 shall have the option to tender for purchase at 100% of the principal amount thereof plus accrued interest to the purchase date, all of such Series A Bonds (so long as such Series A Bonds have not previously been selected for redemption) owned by such registered owner on any Interest Payment Date on or after May 15, 2006. The purchase price for such Series A Bonds shall be payable in lawful money of the United States of America, shall equal the principal amount to be purchased and shall be paid in full on the applicable Interest Payment Date.
To exercise the tender option described in the preceding paragraph, the registered owner shall (A) give notice to the Bond Registrar, in writing, not less than forty-five (45) days preceding the Interest Payment Date, stating (i) the name and address of the registered owner, (ii) the principal amount of the Series A Bonds to be tendered, and (iii) the Interest Payment Date on which such Series A Bonds are to be tendered for purchase, and (B) deliver to the Bond Registrar the Series A Bonds to be purchased in proper form, accompanied by fully completed and executed Instructions to Sell, the form of which will be printed on the Series A Bonds.
Section 5 . The Series B Bonds shall be issued only as fully registered bonds, in an amount not exceeding the principal amount of the Series B Bonds; shall be numbered from RB-1 upward; shall be dated May 15, 2004; shall bear interest payable semi-annually on the fifteenth day of May and November of each year (the "Interest Payment Dates") beginning November 15, 2004, until the principal sum is paid; and shall be subject to redemption at the option of the Municipality in whole or in part, at a redemption price of 100% of the principal amount thereof plus accrued interest to the redemption date, on any date upon one day's notice to the registered owner.
The Series B Bonds shall mature in the following principal amounts on May 15 of the years indicated and shall bear interest at the rates per annum as indicated:
Principal Interest
Year Amount Maturing Rate
2005 $1,275,000 1.47%
2006 1,275,000 2.15
2015 4,100,000 2.15
The Series B Bonds maturing on May 15, 2015 shall be subject to mandatory sinking fund redemption, prior to stated maturity, at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on May 15 of the years and in the respective principal amounts as follows:
Year Amount to be Redeemed
2007 $1,275,000
2008 1,055,000
2009 250,000
2010 250,000
2011 250,000
2012 255,000
2013 255,000
2014 255,000
The remaining principal amount of such Series B Bonds ($255,000) shall mature at stated maturity on May 15, 2015.
The registered owner of the Series B Bonds maturing on May 15, 2015 shall have the option to tender for purchase at 100% of the principal amount thereof plus accrued interest to the purchase date, all of such Series B Bonds (so long as such Series B Bonds have not previously been selected for redemption) owned by such registered owner on any Interest Payment Date on or after May 15, 2006. The purchase price for such Series B Bonds shall be payable in lawful money of the United States of America, shall equal the principal amount to be purchased and shall be paid in full on the applicable Interest Payment Date.
To exercise the tender option described in the preceding paragraph, the registered owner shall (A) give notice to the Bond Registrar, in writing, not less than forty-five (45) days preceding the Interest Payment Date, stating (i) the name and address of the registered owner, (ii) the principal amount of the Series B Bonds to be tendered, and (iii) the Interest Payment Date on which such Series B Bonds are to be tendered for purchase, and (B) deliver to the Bond Registrar the Series B Bonds to be purchased in proper form, accompanied by fully completed and executed Instructions to Sell, the form of which will be printed on the Series B Bonds.
Section 6 . The Bonds shall set forth the purposes for which they are issued and that they are issued pursuant to this Ordinance and shall be executed by the Mayor and the City Auditor of the Municipality, in their official capacities, provided that any of those signatures may be a facsimile. No Bond shall be valid or become obligatory for any purpose or shall be entitled to any security or benefit under this Ordinance unless and until a certificate of authentication, as printed on the Bond, is signed by the Bond Registrar (as defined in Section 8 hereof) as authenticating agent. Authentication by the Bond Registrar shall be conclusive evidence that the Bond so authenticated has been duly issued and delivered under this Ordinance and is entitled to the security and benefit of this Ordinance.
Section 7 . The principal of and premium, if any, and interest on the Bonds shall be payable in lawful money of the United States of America without deduction for the services of the Bond Registrar as paying agent. The principal of the Bonds shall be payable upon presentation and surrender of the Bonds at the office of the Bond Registrar. Each Bond shall bear interest from the later of the date thereof, or the most recent Interest Payment Date to which interest has been paid or duly provided for, unless the date of authentication of any Bond is after the 15th day of the calendar month immediately preceding the month in which an Interest Payment Date occurs, in which case interest shall accrue from such Interest Payment Date. Interest on any Bond shall be paid on each Interest Payment Date by check or draft mailed to the person in whose name the Bond is registered, at the close of business on the 15th day (unless such 15th day is a non-business day, in which case the record date will be the preceding business day) of the calendar month immediately preceding the month in which occurs that Interest Payment Date (the "Record Date"), on the Bond Register (as defined in Section 7 hereof) at the address appearing therein.
Any interest on any Bond which is payable, but is not punctually paid or provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered owner on the relevant Record Date by virtue of having been such owner and such Defaulted Interest shall be paid to the registered owner in whose name the Bond is registered at the close of business on a date (the "Special Record Date") to be fixed by the Bond Registrar, such Special Record Date to be not more than 15 nor less than 10 days prior to the date of proposed payment. The Bond Registrar shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each registered owner, at his address as it appears in the Bond Register, not less than 10 days prior to such Special Record Date, and may, in its discretion, cause a similar notice to be published once in a newspaper in each place where Bonds are payable, but such publication shall not be a condition precedent to the establishment of such Special Record Date.
Subject to the foregoing provisions of this Section 7, each Bond delivered by the Bond Registrar upon transfer of or in exchange for or in lieu of any other Bond shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond.
Section 8 . The Trustees of the Sinking Fund of the City of Columbus is appointed to act as the authenticating agent, bond registrar, transfer agent and paying agent (collectively, the "Bond Registrar") for the Bonds. So long as any of the Bonds remain outstanding, the Municipality will cause to be maintained and kept by the Bond Registrar, at the office of the Bond Registrar, all books and records necessary for the registration, exchange and transfer of Bonds as provided in this Section (the "Bond Register"). Subject to the provisions of Section 7 hereof, the person in whose name any Bonds shall be registered on the Bond Register shall be regarded as the absolute owner thereof for all purposes. Payment of or on account of the principal of and premium, if, any, and interest on any Bond shall be made only to or upon the order of that person. Neither the Municipality nor the Bond Registrar shall be affected by any notice to the contrary, but the registration may be changed as herein provided. All payments shall be valid and effectual to satisfy and discharge the liability upon the Bonds, including the interest thereon, to the extent of the amount or amounts so paid.
Any Bond, upon presentation and surrender at the principal office of the Bond Registrar, together with a request for exchange signed by the registered owner or by a person authorized by the owner to do so by a power of attorney in a form satisfactory to the Bond Registrar, may be exchanged for Bonds of any authorized denomination or denominations equal in the aggregate to the unmatured principal amount of the Bonds surrendered, and bearing interest at the same rate and maturing on the same date.
A Bond may be transferred only on the Bond Register upon presentation and surrender thereof at the principal office of the Bond Registrar, together with an assignment executed by the registered owner or by a person authorized by the owner to do so by a power of attorney in a form satisfactory to the Bond Registrar. Upon that transfer, the Bond Registrar shall complete, authenticate and deliver a new Bond or Bonds of any authorized denomination or denominations equal in the aggregate to the unmatured principal amount of the Bonds surrendered, and bearing interest at the same rate and maturing on the same date.
The Municipality and the Bond Registrar shall not be required to transfer or exchange any Bond for a period of fifteen days next preceding the date of its maturity.
In all cases in which Bonds are exchanged or transferred hereunder, the Municipality shall cause to be executed and the Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of this Ordinance. The exchange or transfer shall be without charge to the owner; except that the Municipality and Bond Registrar may make a charge sufficient to reimburse them for any tax or other governmental charge required to be paid with respect to the exchange or transfer. The Municipality or the Bond Registrar may require that those charges, if any, be paid before it begins the procedure for the exchange or transfer of the Bonds. All Bonds issued upon any transfer or exchange shall be the valid obligations of the Municipality, evidencing the same debt, and entitled to the same benefits under this Ordinance, as the Bonds surrendered upon that transfer or exchange.
Section 9 . The Bonds shall be sold to the Municipality's Treasury Investment Board at a price equal to 100% of the principal amount thereof on May 15, 2004 and, notwithstanding the limitations of Section 325.012(F) of the Columbus City Code, the Municipality's Treasury Investment Board is hereby authorized to purchase the Bonds. The proceeds from the sale of the Bonds shall be deposited in the City Treasury and applied to the payment of the Refunded Bonds on May 15, 2004, the redemption date for the Refunded Bonds.
To provide for the payment of certain costs of issuance of the Bonds, the Municipality is hereby authorized to expend a sum not to exceed Ten Thousand Dollars ($10,000), and such amount is hereby deemed appropriated. Initial funds for the payment of such costs of issuance are hereby appropriated from Debt Service Fund #430, which fund shall then be reimbursed by the benefiting funds as determined by the City Auditor.
All moneys necessary to carry out the purpose of this Ordinance, including, but not limited to, all principal of and interest on the Bonds and the premium on the Refunded Bonds, are hereby deemed appropriated.
The Bonds shall be sold in a transaction exempt from the requirements of Rule 15c2-12 of the United States Securities and Exchange Commission.
Section 10 . The Municipality hereby covenants that it will comply with the requirements of all existing and future laws which must be satisfied in order that interest on the Bonds is and will continue to be excluded from gross income for federal income tax purposes, including without limitation restrictions on the use of the property financed with the proceeds of the Bonds so that the Bonds will not constitute "private activity bonds" within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended (the "Code"). The Municipality further covenants that it will restrict the use of the proceeds of the Bonds in such manner and to such extent, if any, as may be necessary, after taking into account reasonable expectations at the time the debt is incurred, so that they will not constitute arbitrage bonds under Section 148 of the Code and the regulations prescribed thereunder (the "Regulations").
The City Auditor or the Director of Finance, or any other officer, including the City Clerk, is hereby authorized and directed (a) to make or effect any election, selection, designation, choice, consent, approval or waiver on behalf of the Municipality with respect to the Bonds as permitted or required to be made or given under the federal income tax laws, for the purpose of assuring, enhancing or protecting favorable tax treatment or the status of the Bonds or interest thereon or assisting compliance with requirements for that purpose, reducing the burden or expense of such compliance, reducing any rebate amount or any payment of penalties, or making any payments of special amounts in lieu of making computations to determine, or paying, any excess earnings as rebate, or obviating those amounts or payments, as determined by the City Auditor or the Director of Finance, which action shall be in writing and signed by the City Auditor or the Director of Finance, or any other officer, including the City Clerk, on behalf of the Municipality; (b) to take any and all actions, make or obtain calculations, and make or give reports, covenants and certifications of and on behalf of the Municipality, as may be appropriate to assure such exclusion of interest from gross income and the intended tax status of the Bonds; and (c) to give an appropriate certificate on behalf of the Municipality, for inclusion in the transcript of proceedings, setting forth the facts, estimates and circumstances, and reasonable expectations of the Municipality pertaining to Section 148 and the Regulations, and the representations, warranties and covenants of the Municipality regarding compliance by the Municipality with sections 141 though 150 of the Code and the Regulations.
The City Auditor shall keep and maintain adequate records pertaining to investment of all proceeds of the Bonds sufficient to permit, to the maximum extent possible and presently foreseeable, the Municipality to comply with any federal law or regulation now or hereafter having applicability to the Bonds which limits the amount of Bond proceeds which may be invested on an unrestricted yield or requires the Municipality to rebate arbitrage profits (or penalties in lieu thereof) to the United States Department of the Treasury. The City Auditor is hereby authorized and directed to file such reports with, and rebate arbitrage profits (or penalties in lieu thereof) to, the United States Department of the Treasury, to the extent that any federal law or regulation having applicability to the Bonds requires any such reports or rebates, and moneys necessary to make such rebates are hereby appropriated for such purpose.
Section 11 . The Director of Finance and the City Auditor and each of them, acting alone, are hereby authorized and directed, for and in the name of the Municipality and on its behalf, to give such notices as may be required in order to effect the redemption of the Refunded Bonds.
Section 12 . It is hereby found and determined that all acts, conditions and things necessary to be done precedent to and in the issuing of the Bonds in order to make them legal, valid and binding obligations of the Municipality have happened, been done and been performed in regular and due form as required by law; that the faith, credit and revenue of the Municipality are hereby irrevocably pledged for the prompt payment of the principal and interest thereof at maturity; and that no limitation of indebtedness or taxation, either statutory or constitutional, has been exceeded in issuing the Bonds.
Section 13 . 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 14 . The City Clerk is hereby directed to forward certified copies of this Ordinance to the County Auditors of Franklin, Fairfield and Delaware Counties, Ohio.
Section 15 . 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.