10-18 City Hall Loan

CITY OF ELGIN, OREGON RESOLUTION 10 (2018)

A RESOLUTION ACCEPTING US BANKS LETTER OF INTEREST FOR THE NEW CITY HALL LOAN

WHERE AS: The Loan financing to the City will be used to purchase the WC Construction Complex to relocate the City's Public Works Department, City Hall, City Yard and City Kennel.

Fixed Rate Loan:

Amount: $1,180,000 Length: 7 years

Amortization: 20 years

Interest Rate: A fixed interest rate of 3.50% per annum as of September 13, 2018 with U.S. Bank's standard break funding prepayment provisions. For a prepayment waiver, add 37 bps in the rate.

Payments: Interest rates, above, assumes semiannual interest and annual principal payments that result in, essentially, level annual debt service requirements over the 20-year amortization period with a final balloon payment of all outstanding principal (plus accrued interest) in the 7th year.

Debt Service Reserve Fund: Not required.

Default Interest Rate: The default interest rate will be the stated rate plus 3%.

Security: The Loan will be a full faith and credit obligation of the City. U.S. Bank will not take a subordinate lien position to any other City full faith and credit obligation financing.

Loan Counsel: The loan documents and an unqualified legal opinion must be provided by a nationally recognized bond counsel that is currently listed in the "Red Book" more formally known as The Bond Buyer's Municipal Marketplace ("Loan Counsel").

Loan Agreement: In addition to the normal financing documents produced by Loan Counsel, there must be a loan agreement to be executed by the City and U.S. Bank. This Loan Agreement is similar to a bond purchase agreement but will contain covenants, default features, and other components of a relatively standard, municipal/government loan from U.S. Bank.

Costs: Various costs, expenses and fees relating to due diligence and Loan documentation, including all legal fees and expenses are the responsibility of the City. U.S. Bank does not expect to require separate Bank Counsel for this financing.

U.S. Bank must be explicitly permitted to rely on the documents and legal opinion of the City's Loan Counsel.

Covenants/Provisions: Documentation will include standard covenants regarding maintenance of business operations, adequate insurance coverage, and to collect fees, taxes and other revenues in an amount sufficient to meet all City obligations, including debt service on this Loan. The loan documents must not refer to the Bank as a "Purchaser" but, rather, a "Lender". We must not have a "Bond Purchase Agreement" but, rather a "Loan Agreement" in order to further distance this financing away from being a securities issuance in favor of being a "loan". The Loan Agreement will be signed by U.S. Bank and the City and will specifically include the following covenants/provisions:

1. 

1. The City will covenant to automatically provide the Government Banking Division of U.S. Bank with copies of its annual, audited financial statements within 330 days of the end of each fiscal year for the duration of the Loan.

2. The City will provide U.S. Bank with a copy of the City's final budget within 45 days after its adoption.

3. The City will provide the Bank financial or other information as may be reasonably requested from time to time.

4. The City will promptly notify the Bank of any development which is likely to have a material, adverse effect on the financial condition of the City.

5. The City will agree to take all actions necessary to preserve tax-exempt status of the obligation. Should the tax designation change, the interest rate will change accordingly and to be effective the same date as the tax designation.

6. There will not be a 3,, party paying agent.

7. The Loan will not be registered with the Depository Trust Company or any other securities depository.

8. The Loan shall not be:

   1. Assigned a separate rating by any rating agency;

   2. Issued pursuant to any type of offering document or official statement; and,

   3. Assigned a CUSIP number by Standard & Poor's CUSIP service.

Other: U.S. Bank's continued involvement with this financing is predicated upon U.S. Bank obtaining credit approval of the various terms, conditions, and creditworthiness of the City. The credit approval process includes the mandatory analysis of the City's most recent four years of audited financial statements. We hereby acknowledge possession of the requisite audited financial statements.

PASSED AND ADOPTED this 9th day of October, 2018.