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HomeMy WebLinkAboutO-1985-1448 'J . .e . ORDINANCE NO. 1~~8 ORDINANCE AUTHORIZING THE DEFEASANCE OF THE CITY'S OUTSTANDING WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 1965, AUTHORIZING THE EXECUTION AND DELIVERY OF AN ESCROW AGREEMENT AND DECLARING THAT SAID ORDINANCE SHALL BE EFFECTIVE IMMEDIATELY UPON ITS ADOPTION WHEREAS, the City has heretofore authorized, issued and delivered, and there is currently outstanding, the following series or issue of bonds, to-wit: City of La Porte, Texas, Waterworks and Sewer System Revenue Bonds, Series 1965, dated March 15, 1965, issued in the original aggregate principal amount of $300,000, of which $75,000 principal amount is presently outstanding (hereinafter called the "Defeased Bonds") ; and WHEREAS, moneys held in the interest and sinking fund, reserve fund and contingency fund for the Defeased Bonds are more than adequate to provide for the full payment when due of the principal of and interest on the Defeased Bonds, and it appears that it would be advantageous to the City to provide firm banking and financial arrangements for the timely payment in full of the principal of and interest on the Defeased Bonds so that they will not be regarded as outstanding as a matter of law; and WHEREAS, at an election ,held in the City on the 15th day of June, 1985, the duly qualified resident electors of the City adopted propositions for the issuance of water- works and sewer system improvement revenue bonds and the City Council is now authorized to issue and sell such bonds; and WHEREAS, if the Defeased Bonds remained outstanding, the City might find it difficult, in issuing some or all of such voted revenue bonds, to satisfy certain covenants con- tained in the ordinance authorizing the issuance of the Defeased Bonds; and WHEREAS, First City National Bank of Houston is the Paying Agent for the Defeased Bonds, and the City Council . . -,e e has determined to effectuate the defeasance of the Defeased Bonds pursuant to an escrow agreement under which provision is made for the safekeeping, investment, reinvestment, administration and disposition of the moneys made available in connection with such defeasance so as to provide firm banking and financial arrangements for the discharge and final payment of the Defeased Bonds; therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. That the term, "Defeased Bonds", defined in the preamble of this ordinance shall have the same meaning when hereafter used in the body of this ordinance. Section 2. That the City Council hereby affirma- tively finds and determines that the moneys held in the City's interest and sinking fund, reserve fund and contingency fund for the Defeased Bonds are more than adequate to provide for the full payment when due of the principal of and interest on said Bonds and that it would be advantageous and to the best interests of the City to provide firm banking and financial arrangements for the timely payment in full of the principal of and interest on the Defeased Bonds so that they will not be regarded as outstanding as a matter of law. Section 3. The form, terms and provisions of the Special Escrow Agreement dated as of July 15, 1985, by and between the City and First City National Bank of Houston, annexed hereto as Exhibit A, are hereby approved in all respects, and the Mayor and the City Secretary of the City are hereby authorized and directed, in the name and on behalf of the City, to sign, seal and deliver an escrow agreement with First City National Bank of Houston substantially in the form thereof set forth in said Exhibit A, with such changes therein as the officers executing the same shall, as conclusively evidenced by their signatures thereon, approve. 00IRDRBS/193BOl -2- e e Section 4. That the Mayor and other officers of the City are hereby further authorized and directed to take all such action as may be necessary for the City to discharge its obligations contained in such Escrow Agreement or otherwise to complete the defeasance of the Defeased Bonds including without limitation the withdrawal of moneys in .the interest and sinking fund, reserve fund and contingency fund for the Defeased Bonds and the deposit of such moneys with the Escrow Agent in order to provide for the full payment when due of the principal of and interest on the Defeased Bonds and the payment of the costs and expenses specified in said Escrow Agreement. Section 5. Any moneys remaining in the interest and sinking fund, reserve fund and contingency fund for the Defeased Bonds after the defeasance thereof shall be transferred to and deposited in the City's general revenue fund. c Section 6. That this ordinance shall take effect and be in full force immediately upon and after its adoption. PASSED AND APPROVED this the ~ day of July, 1985. ATTEST: (l~~ City Secretary, City of La Porte, Texas :.:":': .:.:!F-!,l!::::lo"". '" [SEAL ] 001RDRBS/193B01 -3- ,.. ., APPROVED: &d~. City Attorney, City La Porte, Texas 001RDRBS/193BOl e e -4- e Dra~dated 6-24-85 SPECIAL ESCROW AGREEMENT THIS SPECIAL ESCROW AGREEMENT (the "Escrow Agreement") is made and entered into as of July 15, 1985, by and between the City of La Porte, Texas (the "City") and First City National Bank of Houston, a national banking association having its principal corporate trust office in Houston, Texas, as escrow agent (together with any successor or assign in such capacity, the "Escrow Agent") . WHEREAS, the City has heretofore authorized and de- livered, and there is currently outstanding, the following series or issue of bonds, to-wit: City of La Porte, Texas, Waterworks and Sewer System Revenue Bonds, Series 1965, dated March 15, 1965, issued in the original aggregate principal amoUnt of $300,000, of which $75,000 principal amount is presently outstanding (the "Defeased Bonds"); and WHEREAS, moneys held in the City's interest and sinking fund, reserve fund and contingency fund for the Defeased Bonds are more than adequate to provide for the full payment when due of the principal of and interest on the Defeased Bonds and the City Council of the City has determined, and hereby determines, that it would be advantageous to the City to provide firm banking and financial arrangements for the timely payment in full of the principal of and interest on the Defeased Bonds so that they will not be regarded as outstanding as a matter of law; and WHEREAS, the Escrow Agent is the paying agent for the Defeased Bonds, and the City Council of the City has deter- mined to effectuate the defeasance of the Defeased Bonds pursuant to this Escrow Agreement, under which provision is made for the safekeeping, investment, reinvestment, admini- stration and disposition of the moneys made available in connection with such defeasance so as to provide firm banking and financial arrangements for the discharge and final payment of the Defeased Bonds; NOW, THEREFORE, in consideration of the premises, the mutual undertakings, promises and agreements herein con- tained, and other good and valuable consideration, the receipt and sufficiency of which are hereby expressly . e . acknowledged, and in order to secure the full and timely payment of the principal of and the interest on the Defeased Bonds, the City and the Escrow Agent contract and agree as follows: Section 1.01. Deposit with Escrow Agent. The City has deposited, or caused to be deposited, with the Escrow Agent the sum of $ from the City's interest and sinking fund, reserve fund and contingency fund for the Defeased Bonds, of which $ shall be applied by the Escrow Agent to purchase the United States Treasury Securities (the "Escrowed Securities") described in Exhibit A annexed hereto and hereby made a part of this Escrow Agreement, and $ of which shall be deposited in the fund (the "Escrow Fund") created pursuant to the provisions of Section 2.01 hereof as a beginning cash balance. Section 2.01. Establishment of Escrow Fund. The Escrow Agent has created on its b.ooks a special fund and irrevocable escrow to be known as the "Special 1985 City of La Porte, Texas, Bond Escrow Fund. II The Escrow Agent hereby acknowledges that there has been deposited to the credit of such Escrow Fund the cash described in Section 1.01 hereof, and the Escrow Agent agrees (a) to apply such deposit to the purchase of the Escrowed Securities in accordance with the provisions of said Section 1.01 and (b) to pay the cost of defeasance of the Defeased Bonds identified in Exhibit B annexed hereto and hereby made a part of this Escrow Agreement. The Escrowed Securities, all proceeds therefrom and all cash balances from time to time on deposit in the Escrow Fund shall be the property of the Escrow Fund, and shall be applied only in strict conformity with the terms and conditions hereof. The Escrowed Securities, all proceeds therefrom and all cash balances from time to time on deposit in the Escrow Fund are hereby irrevocably pledged to the payment of the principal of and interest on the Defeased Bonds, which payment shall be made by timely transfers to First City National Bank of Houston, as Paying Agent (the IIpaying Agent") for the Defeased Bonds, of such amounts and at such times as are specified in Section 2.02 hereof. When the final transfers have been made to the Paying Agent for the payment of such principal of and interest on the Defeased Bonds, any balance then remaining in the Escrow Fund shall be transferred to the City, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 2.02. Payment of Principal of and Interest on Defeased Bonds. (a) Subject to the remaining provisions of 001RDRBR/193BOl -2- - . this Escrow Agreement, the Escrow Agent shall from time to time collect and receive for the credit of the Escrow Fund the principal of and interest on the Escrowed Securities as they respectively mature and fall due. The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent from the cash balances from time to time on deposit in the Escrow Fund the amounts required to pay the principal of, and interest on, the Defeased Bonds as the same become due and payable. (b) Moneys transferred to and held by the Paying Agent in accordance with the provisions hereof shall be held by the Paying Agent as a separate trust fund for the account of the respective owners and/or holders of the Defeased Bonds in connection with which such moneys are held; provided, however, that moneys so held remaining unclaimed by the owners and/or holders of such Defeased Bonds for six (6) years after the dates on which payment thereon was due, payable and available for payment shall be paid to the City to be used for any lawful purpose. Thereafter, neither the City, the Escrow Agent, the Paying Agent nor any other person shall be liable or responsible to any owners and/or holders of such Defeased Bonds for any further payment of such unclaimed moneys or on account of any such Defeased Bonds. Section 2.03. Sufficiency of Escrow Fund. The City represents that the debt service requirements of the Defeased Bonds are correctly set forth in the Certificate of (the "CPA Certificate") annexed hereto as "Exhibit C" and hereby made a part of this Escrow Agreement and that, based upon the CPA Certificate, the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will at all times be sufficient to provide moneys for transfer to the Paying Agent at the times and in the amounts required to pay the interest on the Defeased Bonds as such interest comes due and to pay the principal of the Defeased Bonds as it matures. Section 2.04. Status and Use of Escrow Fund. Except as specified in Section 3.02 hereof, the Escrow Agent at all times shall hold the Escrow Fund, the Escrowed Securities and all other assets of the Escrow Fund wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assp.ts of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only 001RDRBR/193BOl -3- e . as set forth herein. Except as specified in Section 3.02 hereof, the Escrowed Securities and other assets of the Escrow Fund always shall be maintained by the Escrow Agent for the benefit of the owners and/or holders of the Defeased Bonds; and a special account thereof evidencing such fact shall be maintained at all times on the books of the Escrow Agent. The owners and/or holders of the Defeased Bonds shall be entitled to the same preferred claim and first lien upon the Escrowed Securities, the proceeds thereof and all other assets of the Escrow Fund as are enjoyed by other beneficiaries of similar accounts. The amounts received by the Escrow Agent under this Escrow Agreement shall not be considered as a banking deposit by the City, and the Escrow Agent shall have no right or title with respect thereto except as escrow agent under the terms hereof. The amount received by the Escrow Agent hereunder shall not be subject to warrants, drafts or checks drawn by the City. Section 2.05. Security for Cash Balances. Cash balances from time to time on deposit in the Escrow Fund, to the extent not insured by the Federal Deposit Insurance Corporation or its successor, shall be continuously secured by a pledge of direct obligations of, or obligations uncon- ditionally guaranteed by, the United States of America, having a market value at least equal to such cash balances. Section 3.01. Limitations on Investments. Except as herein o~herwise expressly provided, the Escrow Agent shall not have any power or duty to invest any money held hereun- der; or to make substitutions of the Escrowed Securities; or to sell, transfer or otherwise dispose of the Escrowed Securities. In particular, except as provided in Section 3.02 hereof, cash balances on deposit in the Escrow Fund shall not be reinvested or bear interest, and the Escrow Agent shall be entitled to retain any benefit from the deposit of such uninvested funds as additional compensation for its services hereunder. Section 3.02. Substitution of Securities. At the written request of the City, and upon compliance with the condition hereinafter stated, the Escrow Agent shall sell, transfer, otherwise dispose of or request the redemption of all or any portion of the Escrowed Securities and apply the proceeds therefrom to purchase Defeased Bonds or direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America and which do not permit the redemption thereof at the option of the obligor. Any such transaction may be effected by the Escrow Agent only if the Escrow Agent 001RDRBR/193BOl -4- e e shall have received a written opinion from a recognized firm of certified public accountants that such transaction will not cause the amount of money and securities in the Escrow Fund to be reduced below an amount which will be sufficient, when added to the interest to accrue thereon, to provide for the payment of principal of and interest on the remaining Defeased Bonds as they become due. Section 4.01. Records. The Escrow Agent shall keep books of record and account in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such books shall be available for inspection at reasonable hours and under reasonable conditions by the City and the owners and/or holders of the Defeased Bonds. Section 4.02. Reports. For the period beginning on the date hereof and ending on August 31, 1986, and for each twelve (12) month period thereafter while this Agreement remains in effect, the Escrow Agent shall prepare and send to the City within thirty (30) days following the end of such period a written report summarizing all transactions relating to the Escrow Fund during such period, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from the Escrow Fund to the Paying Agent or otherwise, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. Section 5.01. Representations of Escrow Agent. The Escrow Agent hereby represents that it is the Paying Agent, that it has all necessary power and authority to enter into this Escrow Agreement and undertake the obligations and responsibilities imposed upon it herein, and that it will carry out all of its obligations hereunder. Section 5.02. Limitation on Escrow Agent's Liability. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in the exercise of reasonable care and in the belief that such action is within the discretion or power conferred upon it by this Escrow Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for its own neglect or default, nor for any loss unless the same shall have been through its negligence or want of good faith. 001RDRBR/193B01 -5- e e The liability of the Escrow Agent to transfer funds to the Paying Agent for the payments of the principal of and interest on the Defeased Bonds shall be limited to the proceeds of the Escrowed Securities and the cash balances from time to time on deposit in the Escrow Fund. Notwith- standing any provision contained herein to the contrary, the Escrow Agent shall have no liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligor of the Escrowed Securities to make timely payment thereon, except for its obligation to notify the City promptly of any such occurrence. The recitals and representations herein (other than those in Section 5.01) shall be taken as the statements of the City and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Escrow Agreement. The Escrow Agent makes no representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the City thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall incur no liability or responsibility in respect to any of such matters. It is the intention of the City and the Escrow Agent that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of ~ts duties or the exercise of any of its rights and powers hereunder. Unless it is specifically provided otherwise herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the City with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund and to dispose of and deliver the same in accordance with this Escrow Agreement. If, however, the Escrow Agent is called upon by the terms of this Escrow Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determi- nation the Escrow Agent shall be liable only for its own misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may 001RDRBR/193B01 -6- e e request from the City or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this con- nection may make inquiries of, and consult with the City, among others, at any time. Section 5.03. Compensation of Escrow Agent. The City has paid the Escrow Agent, as a fee for performing the services hereunder and for all expenses incurred or to be incurred by the Escrow Agent in the administration of this Escrow Agreement, the sum of $ , the receipt and sufficiency of which are hereby acknowledged by the Escrow Agent. Moreover, in the event that the Escrow Agent is requested to perform any extraordinary services hereunder, the City hereby agrees to pay reasonable fees to the Escrow Agent for such extraordinary services and to reimburse the Escrow Agent for all expenses incurred by the Escrow Agent in performing such extraordinary services. It is expressly provided that the Escrow Agent shall look only to the City for the payment of such additional fees and reimbursement of such additional expenses. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees for its services, whether regular, additional or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses. Section 5.04. Successor Escrow Agents. If at any time the Escrow Agent or its legal successor or successors should cease to be the Paying Agent, a vacancy shall forthwith exist hereunder in the office of the Escrow Agent. Any successor Paying Agent appointed by the City shall succeed, without further act, to all the rights, immunities, powers and trusts of the predecessor Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the City shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such immunities, rights, powers and duties. The Escrow Agent shall pay over to its succes- sor Escrow Agent a proportional part of the Escrow Agent's fee hereunder equal to the portion of such fee attributable to duties to be performed after the date of succession. Section 6.01. Notices. Any notice, authorization, request, or demand required or permitted to be given here- under shall be in writing and may be given to or served upon the party to be notified by delivering the same to an officer of such party in person or by prepaid telegram 001RDRBR/193BOl -7- e e addressed to such party or by depositing the same in the United States mail, postpaid and registered or certified and addressed to such party as follows: To the Escrow Agent: First City National Bank of Houston P. O. Box 809 Houston, Texas 77001 Att'n: Corporate Trust Department To the City: City of La Porte P. O. Box 1115 La Porte, Texas 77571 Att'n: The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery if mailed in the specified manner. Notice given in any other manner shall be effective only if and when received by the party to be notified. Any party hereto may change the address to which notices are to be delivered by giving at least ten (10) days' notice thereof to the other party. Section 6.02. Termination of Escrow Agent's Obliga- tions. Upon the taking by the Escrow Agent of all the actions as described herein, the Escrow Agent shall have no further obligations or responsibilities hereunder to the City, the holders of the Outstanding Bonds or to any other person or persons in connection with this Escrow Agreement. Section 6.03. Binding Agreement. This Escrow Agree- ment shall be binding upon the City and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the holders of the Defeased Bonds, the City, the Escrow Agent and their respec- tive successors and legal representatives. Section 6.04. Interpretations. The titles of the sections of this Escrow Agreement have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Escrow Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the 001RDRBR/193B01 -8- - e intended purpose of providing for the refunding of the Defeased Bonds in accordance with applicable law. Section 6.05. Governing Law. This Escrow Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Texas. Section 6.06. Time of Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Escrow Agreement. Executed as of the date first written above. -~~~~!~~~..' ," ->::i...~ .; . .,t"- ., ~ . 1.. ...... . ~ ~ '", '.,. ~" .: ..... . '? /~ f " ";.'-- / ~of. .~..... ,,-........ ,1" " - ~ ~~ < of -...r r / - ." :,.. ~ ..i. .. ~ ~:~~~ .C~ty Secretary ::~~o;a;;~ ay r ( SEAL) FIRST CITY NATIONAL BANK OF HOUSTON, as Escrow Agent By Title: ATTEST: Title: ( SEAL) 001RDRBR/193BOl -9- . e EXHIBIT A Annexed to Special Escrow Agreement dated as of July 15, 1985, between City of La Porte, Texas, and First City National Bank of Houston, as Escrow Agent United States Treasury Securities With Coupons Maturity Date Maturing Amount Purchase Price Interest Rate [to come] United States Treasury Securities - Zero Coupons Maturity Date Maturing Amount Purchase Price [to come] 001RDRBR/193B01 . e EXHIBIT B Annexed to Special Escrow Agreement dated as of July 15, 1985, between City of La Porte, Texas, and First City National Bank of Houston, as Escrow Agent Costs of Refunding [to come] 00IRDRBR/193BOl ~. ' . , -- e EXHIBIT C Annexed to Special Escrow Agreement dated as of July 15, 1985, between City of La Porte, Texas, and First City National Bank of Houston, as Escrow Agent CPA Certificate [to come] 00IRDRBR/193BOl