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HomeMy WebLinkAboutOrdinance No. 846 ORIGINAL CITY OF THE COLONY, TEXAS ORDINANCE NO. ce~ AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF THE COLONY, TEXAS AUTHORIZING EXECUTION OF A I.P. TrER AGREEMENT WITH FIRST INTERSTATE BANK OF TEXAS FOR $250,000 FOR THE PURCHASE OF CERTAIN EQUIPMENT; AUTHORIZING A TAX I.EVY FOR PAYMENT OF THE NOTE; DESIGNATING THE NOTE AS A QUAIJFIED TAX EXEMPI' OBLIGATION; FROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF THE COLONY, TEXAS: Section 1. Pursuant to authority granted under Chapter 271, subchapter A, Texas Local Government Code, as amended, the City Council of the City of The Colony hereby authorize the Mayor to enter into a letter agreement with First Interstate Bank of Texas for $250,000 for the purchase of personal property to be secured by a Note, the execution and delivery of which is also herein authorized, said agreement being attached hereto and incorporated herein and labeled Exhibit "A". Section 2. That the personal property to be purchased is contained in Exhibit "B" which is attached hereto and incorporated herein. Section 3. Tax Levy_ for Payment of the Not_e. (a) The City Council hereby declares and covenants that it will provide and levy a tax legally and fully sufficient for payment of the Note, it having been determined that the existing and available taxing authority of the City for such purpose is adequate to permit a legally sufficient tax in consideration of all other outstanding obligations of the City. (b) In order to provide for the payment of the debt service requirements of the Note, being (i) the interest on the Note, and (ii) a sinking fund for its payment at maturity or a sinking fund of two percent per annum (whichever amount is greater), there is hereby levied for the current year and each succeeding year thereafter, while the Note or interest thereon remain outstanding and unpaid, an ad valorem tax on each one hundred dollars valuation of taxable property within the City at a rate sufficient, within the limit prescribed by law, to pay such debt service requirements, fully allowance being made for delinquencies and costs of collection. (c) The tax levied by this Section shall be assessed and collected each year and deposited into an interest and sinking fund (the "Interest and Sinking Fund") for the payment of the debt service requirements on the Note, and the tax shall not be diverted to any other purpose. Section 4. e r T v n n . (a) The City hereby represents that the proceeds of the Note are needed at this time for the purposes specified in Section 1 hereof,; that based on current facts, estimates and circumstances, it is reasonably expected that final disbursement of the proceeds of the Note will occur within three years after the date the Note is delivered to the Bank (the "Delivery Date") that substantial binding obligations to commence such projects will be incurred within six months of the Delivery Date and that the accomplishment of the projects w\for which the Note is executed and delivered will proceed with due diligence to completion; that it is not reasonably expected that the proceeds of the Note or money deposited in the Interest and Sinking Fund will be used or invested in a manner that would cause the Note to be or become an "arbitrage bond", within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"); and that, except for the Interest and Sinking Fund, no other funds or accounts have been established or pledged to the payment of the Note. (b) The City will not take any action or fail to take any action with respect to the investment of the proceeds of the Note or any other funds of the City, including amounts received from the investment of any of the foregoing, which act or omission based upon the facts, estimates, and circumstances known on the Delivery Date, would result in constituting the Note an "arbitrage bond", within the meaning of Section 148(0 of the Code, and the City will not take any deliberate action motivated by arbitrage that would have such result. (c) The City will not take any action of fail to take any action which act or omission would (i) result in the interest on the Note being includable in gross income for federal tax purposes; (ii) result in the Note being treated as a "private activity bond" within the meaning of Section 141(a) of the Code; or (iii) result in the note being treated as "federally guaranteed" within the meaning of Section 149(b) of the Code. (d) The City will comply with the provisions of Section 148 (0 of the Code (relating to paying certain excess earnings of investment proceeds of the Note to the United States) and the regulations promulgated thereunder. (e) The Note is hereby designated as a "qualified tax-exempt obligation" for the purposes of section 265(b)(3) of the Code. In this regard, neither the City nor any of its subordinate entities, ff any, reasonably expect to issue in excess of $10,000,000 aggregate amount of tax-exempt obligations (other than obligations not taken into account pursuant to section 265Co)(3)(C)(ii) during the calendar year in which the Note is delivered, and the City hereby covenants not to designate more than $10,000,000 aggregate amount of tax- exempt obligations as qualified tax-exempt obligations during the calendar year in which the Note is delivered. (f) Proper officers of the City are hereby directed to make, execute and deliver certifications as to facts, estimates and circumstances in existence as of the Delivery Date and stating whether there are any facts, estimates or circumstances that would materially change the City's current expectations. Section 5. That this ordinance shall take effect immediately upon approval, and it is so ordained. PASSED AND APPROVED by the City Council of the City of The Colony, Texas, this 4th day of April, 1994. William W. Manning, Mayor Patti A. Hicks, TRMC, City Secretary APP~S TO FORM: