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HomeMy WebLinkAbout2002-143 Loan Agrmt - Preston Gates Ellis - AFN Preston IGates IEllis LLP HARVEY W. ROGERS August 5, 2002 To the persons on the attached Transcript Distribution List Subject: $2,520,000 City of Ashland, Jackson County, Oregon Taxable Loan Agreement, dated June 27, 2002 Ladies and Gentlemen: We have enclosed a copy of the transcript for this financing for your records. We have enjoyed working with you on this issue and look forward to working with each of you again. Please call if you have any questions. Cordially, PRESTON GATES & ELLIS LLP Harvey W. Rogers HWR/smc Enclosure A LAW FIRM I A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES 1 \H W R\Cl7ES\ASHLAND\Fiber Network Futancing\ RANSH W RDOC 222 SW COLUMBIA STREET, SUITE 1400 PORTLAND, OR 97201-6632 TEL: 1503) 228-3200 FAX: 1503) 248-9085 www.prestongates.com Anchorage Coeur d'Alene Hong Kong Los Angeles Orange County Palo Alto Portland San Francisco Seattle Spokane Washington, DC TRANSCRIPT DISTRIBUTION LIST $2,520,000 City of Ashland Jackson County, Oregon Taxable Loan Agreement June 27, 2002 ISSUER LENDER Lee Tuneberg, Finance Director Mark Farrell City of Ashland KeyBank National Association 20 E. Main Street Public Sector Division OR-20-21-0444 Ashland, OR 97520 1211 S. W. Fifth Ave., Suite 400 Telephone: (541)-552-2003 Portland, Oregon 97204 Telecopier: (541)-488-5311 Telephone: (503) 790-7543 Email: mailto:tuneberlQashland.or.us Telecopier: (503) 790-7574 Email: mark-m-farrell@keybank.com BOND COUNSEL Harvey Rogers Preston Gates & Ellis LLP 222 SW Columbia Street, Suite 1400 Portland, OR 97201 Telephone: (503) 228-3200 Telecopier: (503) 248-9085 Email: hrogers. a,prestongates,com $2,520,000 CITY OF ASHLAND JACKSON COUNTY, OREGON TAXABLE LOAN AGREEMENT Closing Date: June 27, 2002 Transcript Index $2,520,000 City of Ashland Jackson County, Oregon Taxable Loan Agreement DOCUMENTS 1. Transcript Certification. 2. Minutes of the June 18, 2002 City Council meeting at which Resolution No. 2002-18 was adopted, or excerpt. 3. Resolution No. 2002-18. 4. Taxable Loan Agreement. 5. General Certificate. 6. Receipt for Loan Proceeds. 7. Opinion of Bond Counsel. 8. Legal Closing Memorandum. j'\hWr\cilie \mhhnd%fiber network frt--g\mdex.doc TRANSCRIPT CERTIFICATION $2,520,000 City of Ashland Jackson County, Oregon Taxable Loan Agreement On behalf of the City of Ashland, Jackson County, Oregon (the "City"), I hereby certify that the attached documents are originals or true copies of the documents which were assembled at the closing of the City's $2,520,000 Taxable Loan Agreement, which closing was held at the offices of Preston Gates & Ellis LLP, Bond Counsel, on June 27, 2002. Dated as of this 27th day of June, 2002. City of Ashland Jackson County, Oregon By:_ x5e _ D.L. Tuneberg, Fin e Director 1:\H\VR\CI'f IES\ASHL.AVVD\Fiber Network Financi-\cld.doc ACTION MINUTES FOR THE REGULAR MEETING ASHLAND CITY COUNCIL June 18, 2002 - 7:00 p.m. Civic Center Council Chambers, 1175 E. Main Street PLEDGE OF ALLEGIANCE Mayor DeBoer called the meeting to order at 7:00 p.m. in the Civic Center Council Chambers. ROLL CALL Councilor Laws, Reid, Hartzell, and Hearn were present. Councilor Jackson arrived at 7:15 p.m. Councilor Morrison was absent. APPROVAL OF MINUTES The Regular Council Meeting Minutes of June 4, 2002 were approved as presented. SPECIAL PRESENTATIONS & AWARDS Mayor presented retirement plaque to Jim Smith for 35 years with the City of Ashland Electric Department. CONSENT AGENDA 1. Minutes of Boards, Commissions and Committees. 2. Ambulance License Renewal. 3. Confirmation of Mayor's re-appointment of Mavis Cloutier and Mary Jane Tilson to the Hospital Board for terms to expire June 30, 2006. Councilors Hearn/Reid m/s to approve Consent Agenda. Voice Vote: all AYES. Motion passed. PUBLIC HEARINGS 1. Public Hearing and decision on the, Action Plan for One-Year use of Community Development Block Grant Funds for Fiscal Year 2002-2003. Community Development Director John McLaughlin introduced Brandon Goldman, Assistant Planner who gave brief explanation on the action plan for the fiscal year 2002-2003. He clarified for the council that this is the only public hearing for the adoption of the plan and that the city Living Wage Ordinance has been incorporated into the plan. PUBLIC HEARING OPEN: 7:10 p.m. PUBLIC HEARING CLOSED: 7:10 p.m. Councilors Hartzell/Reid m/s to approve Action Plan for One-Year use of CDBG funds for Fiscal Year 2002-2003. Voice Vote: all AYES. Motion passed. 2. Public Hearing on a proposed supplemental budget for Fiscal Year 2001-2002. Finance Director Lee Tuneberg gave brief synopsis on the changes to the 2001-2002 Budget for unforeseen events including unanticipated revenues and corresponding expense for fire fuel reduction and construction loan proceeds. PUBLIC HEARING OPEN: 7:14 p.m. PUBLICHEARING CLOSED: 7:14 p.m. PUBLIC FORUM Steve Traisman/1001 N Main/Announced Town Meeting at Wellspring on June 21 at 5:00 p.m. for World Peace & Prayer Day. Encouraged attendance and presented schedule of events. Councilor Jackson arrived at 7:15 p.m. UNFINISHED BUSINESS (None) NEW AND MISCELLANEOUS BUSINESS 1. Appeal of Food & Beverage Tax Penalty to City Council. City Administrator Greg Scoles briefly explained that Ron Roth, General Manager of Geppetto's, is appealing the penalty assessed for failure to pay the Food & Beverage Tax for the quarter ending March 31, 2002. The total penalty assessed was 10% of the outstanding balance for a total of $200. Scoles presented the background on how the penalty had been assessed and explained that city ordinances provides for an appeal process to the council. Councilor Hearn announced a conflict of interest and his relationship with Ron Roth as a client with his firm and remaining councilors announced their personal contact with Ron Roth. Councilors Reid/Jackson m/s to allow Councilor Hearn to abstain from participating or voting on this matter due to conflict of interest. Voice Vote: all AYES. Motion passed. Ron Roth presented his appeal to the council stating that the taxes are paid, except for most recent billing. He expressed his confusion as to why the city felt it necessary to take them to court Roth shared letters that he felt supported his case and questioned the formuled used by the Finance Department when calculating the taxes due. He clarified that what he is appealing is regarding the penalty and interest methodology. He suggested that an ad-hoc committee be formed to review the Food & Beverage Tax ordinance. Kathleen MacMichael shared the challenge that this has created in her life and stated that it was not their intent to be late on their taxes and if possible would have done things differently. Supports revisiting the Food & Beverage Tax ordinance. Carlotta Woolcock/c/o NW Seasonal Workers Association 203 N Oakdale Medford/Represented this association and encouraged the council to drop all penalities and fees filed against Ron Roth and Kathleen MacMichael. She spoke of the support that Roth and MacMichael has given to thier association and hoped that this same support could now be given back. She noted the financial burdon that has been placed on this business and how it would affect the local community. Joanie McGowan/138 N 2"d/Shared her personal relationship with Roth and MacMichael and her appreciation of these people. She noted their high level of community involvement and generosity. She stated that Roth and MacMichael are the longest businesses owners in our community and requested that the council forgive the penalties and fees. Councilors Hartzell/Jackson m/s to deny appeal and for staff to negotiate with Geppetto's on a payment plan. DISCUSSION: Laws commented that staff had reported that they had tried to work with Geppetto's on a payment schedule. Hartzell clarified that the payment plan would be for the current $200 owed. Voice Vote: Reid, Hartzell and Jackson, YES; Laws, NO. Motion passed. 2. Petition of Appeal regarding Ashland Parks & Recreation Commission Rule. City Attorney Paul Nolte briefly explained the appeal process on Park Rules. Michael Johnson/1530 Oak Street/Read aloud his appeal letter submitted to the council. He requested that the council delete or amend APRC Rule 94-72-2: Playing of musical instruments prohibited. He commented on the restraints that this rule places on artists. He felt that the rule was enacted as reaction to a 1994 convergence of homeless, angry street kids who drummed enmasse. Johnson explained that he had not brought this up before the Park Commission and shared how he was made aware of this by a park patrol officer. Johnson acknowledged that there may be alternative places to drum but noted that regardless of the place when drumming, drumming is not encouraged or permitted. Reid shared the background on how this rule came about and felt that the rule was a compromise for those that wanted to drum in Lithia Park. Johnson stated that in two other communities that he has lived in, he has not met with the same restrictions placed on drumming as this community. Park & Recreation Director Ken Mickelson briefly gave background on how the Park Commission had made a decision on this rule. He explained that they had received numberous complaints of constant noise from drumming, not just in Lithia Park. From April 1994 to August 1994 public meeting and testimony was held and both arguments for and against drumming were heard. Constitutionality of expression was questioned and legal counsel advised that the Park Commission had the authority to regulate drumming and not violate constitutional rights. A committee was formed and a compromise was established. The decision was not to ban drumming, but to place a time and day restriction when drumming could occur. He explained that neither side was happy, but it was a compromise and became effective in August 1994. Mickelson stated that the current rule has not generated complaints until this current appeal. Police Chief Scott Flueter stated that very few citations are issued and that when violations do happen, most comply with no problems. The council determined that the rule has functioned very well and not to make any changes. Councilors Hearn/Reid m/s to deny appeal. Voice Vote: Laws, Reid, Jackson, Hearn, YES, Hartzell, NO. Motion passed. ORDINANCES, RESOLUTIONS AND CONTRACTS: 1. Second reading by title only of "An Ordinance levying taxes for period July 1, 2002 to and including June 30, 2003, such taxes in the sum of $7,762,000 upon all the real and personal property subject to assessment and levy within the corporate limits of the City of Ashland, Jackson County, Oregon." Councilors Reid/Laws m/s to approve Ordinance. Roll Call Vote: Laws, Reid, Hartzell, Jackson, and Hearn, YES. Motion passed. 2. Reading by title only of "A Resolution Adopting new Storm Water and Drainage Systems Development Charges pursuant to sections 4.20.040 and 4.20.050 of the Ashland Municipal Code." Public Works Director Paula Brown gave brief synopsis on the proposed Storm Water System Development Charges. She explained that there is a need for better water quality protection and this plan generates a long term storm drain and water quality capital improvement program. She noted that the plan was written on the premise that the city would choose to enhance water quality and be ready for the anticipated requirements of the National Pollution Discharge Elimination System permits for Phase H cities that could impact Ashland. Councilors Reid/Hartzell m/s to approve Resolution. Roll Call Vote: Hartzell, Laws, Hearn, Jackson and Reid, YES. Motion passed. 3. Reading by title only of "A Resolution adopting a Supplemental Budget establishing appropriations within the 2001-2002 Budget." Councilors Hartzell/Reid m/s to approve Resolution. Roll Call Vote: Reid, Hearn, Jackson, Hartzell and Laws, YES. Motion passed. 4. Reading by title only of "A Resolution adopting the Oregon Department of Aviation minimum standards as the new minimum standards for the Ashland Municipal Airport." Mayor DeBoer explained that the Airport Commission had reviewed the current Minimum Standards for commercial activities at the Ashland Municipal Code and agreed to adopt the Oregon Department of Aviation Minimum Standards. Councilors Reid/Jackson m/s to approve Resolution. Roll Call Vote: Reid, Jackson, Hartzell, Hearn, and Laws, YES. Motion passed. 5. Reading by title only of "A Resolution of the City Council of the City of Ashland, Oregon, authorizing the Financing of Capital Costs associated with the Ashland Fiber Network." Councilors Reid/H.artzell m/s to approve Resolution. Roll Call Vote: Laws, Jackson, Reid, Hartzell and Hearn, YES. Motion passed. 6. Reading by title only of "A Resolution Establishing Cable Television Rates for the Ashland Fiber Network, readopting all other rates without change and repealing Resolution No. 2001-32." Councilors Hartzell/Reid m/s to approve Resolution. Roll Call Vote: Hearn, Jackson, Hartzell, Reid and Laws, YES. Motion passed. 7. Reading by title only of "A Resolution of the City of Ashland Authorizing an Interim Bond Financing Loan from the Special Public Works Fund by entering into a Loan Contract with the Oregon Economic and Community Development Department for the Community Development/Public Works Administration Building (Hillah)." Councilors Reid/Hartzell m/s to approve Resolution. DISCUSSION: Finance Director Lee Tuneberg game brief explanation on the process for financing for the Community Development/Public Works Administration Building. Roll Call Vote: Jackson, Laws, Hearn, Hartzell and Reid, YES. Motion passed. OTHER BUSINESS FROM COUNCIL MEMBERS The council discussed the study session scheduled for the Mt Ashland Ski expansion and who would be attending. It was requested that the Sierra Club be allowed to participate. Laws noted that the city holds the license for Ski Ashland and has the authority to approve any improvements. Councilors Laws/Reid m/s to extend meeting past 10:00 p.m. Voice Vote: all AYES. Motion passed. The council discussed what their responsibility is and requested staff to clarify this role by providing information on the lease and licenses. Hartzell requested consideration of support for a resolution, which would give governing bodies the ability to establish System Development Charges that would bring in support for schools, fire, etc. Staff will check to see if there has been previous discussion regarding SDC's and schools. The council agreed to place this on a future agenda for discussion. Scoles gave brief update on the Fire Station project and noted that is currently over budget. He explained that staff is looking at major changes but minor in design and will be meeting with contractors to discuss modifications. He stated there might be a need to re-bid the project if we are not successful in bringing the bid amount to what has been budgeted. ADJOURNMENT Meeting was adjourned at 10:10 p.m. Barbara Christensen, City Recorder Alan DeBoer, Mayor CERTIFIED COPY RESOLUTION N0.2002 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASHLAND, OREGON, AUTHORIZING THE FINANCING OF CAPITAL COSTS ASSOCIATED WITH THE ASHLAND FIBER NETWORK Recitals: The City Council finds as follows: A. The City wishes to finance costs of expanding and improving the Ashland Fiber Network (the "Project"). B. The City is authorized by ORS 271.390 to enter into financing agreements in order to finance the cost of any real or personal property that the City determines is needed. C. The Project is needed to provide services for the City and its citizens. THE CITY OF ASHLAND RESOLVES AS FOLLOWS: Section 1. Loan Agreement Authorized. The City is authorized to enter into a loan agreement in an aggregate principal amount of not more than $2,520,000 (the "Loan Agreement"). Loan proceeds shall be used to finance the Project and related expenses and pay costs associated with the Loan Agreement. The Finance Director, the City Administrator or the designee of the Finance Director or the City Administrator (any one or which is described as the "City Official"), on behalf of the City and without further action by the City Council, may: 1.1. accept the proposal of Key Bank to fund the Loan Agreement, negotiate the terms of the Loan Agreement, and execute the Loan Agreement in an aggregate principal amount of not more than $2,520,000; 1.2. execute and deliver a note reflecting the City's obligation to make the payments due under the Loan Agreement: 1.3. provide that interest payable under the Loan Agreement will be includable in gross under the Internal Revenue Code of 1986, as amended (the "Code"); 1.4. execute and deliver any other certificates or documents and take any other actions which the City Official determines are desirable to finance the Project with the Loan Agreement in accordance with this resolution. Section 2. Security. The City Official may pledge the City's full faith and credit and taxing power within the limitations of Sections 11 and 11 b of Article XI of the Oregon Constitution, and any and all of the City's legally available funds, to make the payments due under the Loan Agreements. 1- Resolution HARNANCEWESOLUTIONS-AFN "2 LOAN 02APD CERTIFIED COPY Section 4. Effective Date. This resolution takes effect on adoption by the City Council. This reso ution was read by title only in accordance with Ashlaq(I Municipal Code §2.04. duly PASSED and D PTED this 1L day of , 2002. B rbara Christensen, City Recorder SIGNED and APPROVED this /1~1 day of .2002. _dZ'Zx- ..rte Alan W. DeBoer, Mayor dewed as to form: ul Nolte, City Attomey 2- Resolution NCOMPAOIIDATAIUSERSITUNEBERLIFINANCEIRESOLUTIONS-AFN 6-02 LOAN #2.WPD TAXABLE LOAN AGREEMENT KeyBank National Association enters into this Taxable Loan Agreement with the City of Ashland, Jackson County, Oregon, upon the terms and conditions described below. 1. Definitions For purposes of this Taxable Loan Agreement, the capitalized terms below shall have the following meanings, unless the context clearly requires otherwise: "Agreement" means this Taxable Loan Agreement. "Bank" means KeyBank National Association, or its successor. "Banking Day" means a day other than a Saturday or a Sunday on which the Bank is open for business in Oregon. "City" means the City of Ashland, Jackson County, Oregon. "City Official" means the City's Finance Director, the City Administrator or the designee of the Finance Director or the City Administrator. "Event of Default" means the declaration by the Bank of an event of default as a result of a determination by the Bank that there has been: (i) a failure to pay the Loan Payments when due, as provided in this Agreement; or (ii) a failure by the City to comply with any of its obligations, or to perform any of its duties, under this Agreement, which failure continues, and is not cured, for a period of more than 30 days after the Bank has made written demand on the City to cure such failure; or (iii) a material misrepresentation by the City in this Agreement. "Loan" means the loan from the Bank to the City under this Agreement. "Loan Amount" means $2,520,000.00. "Loan Payments" means the principal payments described in Section 3.3 herein. "Project" means the expansion and improvement of the City's Ashland Fiber Network. "Project Costs" means the costs of the Project, including the costs associated with executing this Agreement. "Resolution" means the City's Resolution No. 2002-18, adopted June 18, 2002, authorizing this Agreement. "Special Counsel" means the law firm of Preston Gates & Ellis LLP, of Portland, Oregon. Taxable Loan Agreement - Page 1 2. Recitals 2.1 The City recites that the City is authorized to finance real and personal property by loan agreement pursuant to ORS 271.390, and executes this Agreement to finance the Project. 2.2 The Bank recites that the Bank desires to loan the Loan Amount to the City to finance the Project in accordance with this Agreement. 3. The Loan and the Loan Payments 3.1 The Bank agrees to loan the City an amount equal to the Loan Amount on the date of this Agreement, subject to the terms and conditions contained in this Agreement. 3.2 This Agreement shall commence on its dated date and shall end on the date that all Loan Payments have been paid. 3.3 The City agrees to borrow the Loan Amount from the Bank, and to pay all accrued interest on the Loan on January 15 and July 15 of each year, commencing January 15, 2003. The unpaid amount of the Loan will bear interest at seven and one hundredth percent (7.01%) per annum, calculated on a 30/360-day basis. Interest on this Agreement is not excludable from gross income under Section 103(a) of the Internal Revenue Code of 1986, as amended. The City agrees to repay the Loan Amount by making Loan Payments on July 15 of each year, commencing July 15, 2004, in accordance with the following table. Payment Date Principal Amount (July 1 S) 2004 $50,000.00 2005 $75,000.00 2006 $100,000.00 2007 $125,000.00 2008 $175,000.00 2009 $350,000.00 2010 $500,000.00 2011 $570,000.00 2012 $575,000.00 The above principal amounts will be adjusted for any prepayments by the City to the Bank as provided in Section 4 of this Agreement, provided that all principal and interest shall be paid not later than July 15, 2012. 3.4 Any payments by the City to the Bank shall be applied first to pay accrued interest, and second to pay principal of the Loan. 4. Prepayment Upon two Banking Day's notice by the City to the Bank, the City may prepay all or any portion of the outstanding principal amount of the Loan on July 15, 2003 and on any Banking Day thereafter by paying a premium of two percent (2.00%) of the principal amount being prepaid. Taxable Loan Agreement - Page 2 Prepayments by the City to the Bank shall be applied first to pay accrued interest, and second to prepay the principal of the Loan in inverse order of maturity. 5. Security This Agreement is authorized by ORS 271.390. The obligation of the City to make Loan Payments and to pay accrued interest under this Agreement is unconditional. The City hereby pledges its full faith and credit and taxing power within the limitations of Section 11 and 11 b of Article XI of the Oregon Constitution, and any and all of the City's legally available funds, including the proceeds of the Loan, to the punctual payment of amounts due under this Agreement. 6. Use of Loan Proceeds The proceeds of the Loan shall be expended by the City for Project Costs in accordance with the Resolution. 7. Default If an Event of Default occurs, the Bank may exercise any remedy available at law or in equity, including, without limitation, increasing the interest rate of the Loan by three percent (3.00%). No remedy shall be exclusive. The Bank may waive any Event of Default, but no such waiver shall extend to a subsequent Event of Default. 8. Fees, Costs, and Expenses 8.1 The City shall pay an origination fee of $5,040.00 to the Bank no later than the date of this Agreement. 8.2 If, due to the City's actions or failure to act, the Bank incurs any expenses in connection with enforcing this Agreement, or if the Bank takes collection action under this Agreement, the City shall pay to the Bank, on demand, the Bank's reasonable costs and attorneys' fees, whether at trial, on appeal or otherwise, including any allocated costs of in-house counsel. 8.3 The City shall pay the fees and costs of Special Counsel, and any other expenses and costs which the City incurs in connection with this Agreement. The Bank shall pay all of the out- of-pocket expenses of the Bank and Bank's counsel, including travel and other expenses. 9. Representations, Warranties, and Agreements of the City By executing this Agreement in the space provided below, the City represents and warrants to, and agrees with the Bank that: 9.1 The City is duly created and existing under the laws of the State of Oregon, has all necessary power and authority to enter into this Agreement and perform its duties under the Resolution and this Agreement, and that the Resolution and this Agreement will constitute legal, valid, and binding obligations of the City which are enforceable in accordance with their terms, except to the extent that enforceability may be limited by or rendered ineffective by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors' rights generally; (ii) the application of equitable principles and the Taxable Loan Agreement - Page 3 exercise of judicial discretion in appropriate cases; (iii) common law and statutes affecting the enforceability of contractual obligations generally; and (iv) principles of public policy concerning, affecting or limiting the enforcement of rights or remedies against governmental entities such as the City. 9.2 The acceptance of this Agreement and the adoption of the Resolution will not conflict in any material respect with, or constitute a material breach of or default under, any law, charter provision, court decree, administrative regulation, resolution, ordinance, or other agreement to which the City is a party or by which it is bound. 9.3 There is no action, suit, proceeding, or investigation at law or in equity before or by any court or government, city or body pending or, to the best of the knowledge of the City, threatened against the City to restrain or enjoin the acceptance of this Agreement, the adoption of the Resolution, or the collection and application of the funds as contemplated by the Resolution and this Agreement, which, in the reasonable judgment of the City, would have a material and adverse effect on the ability of the City to pay amounts due under this Agreement. 9.4 To the extent permitted by law, the City agrees to indemnify and hold harmless the Bank and all of its agents and employees against any and all losses, claims, damages, liabilities, and expenses arising out of any statement made by the City to the Bank, its agents or employees, which relates to this Agreement, and which is untrue and incorrect in any material respect. 10. Financial Statements; Budgets; Notice of Adverse Developments 10.1 Within 180 days after the end of each of its fiscal years, the City shall provide the Bank with a copy of each of the City's final, annual audited financial statements while this Agreement is in effect. 10.2 While this Agreement is in effect, the City shall provide the Bank with all adopted budgets within 30 days of publication. 10.3 The City shall notify the Bank promptly of any development which is likely to have a material, adverse effect on the ability of the City to pay amounts due under this Agreement or on the financial condition of the City generally. 11. Conditions to the Obligations of the Bank The Bank may refuse to lend the Loan Amount under this Agreement unless, on or prior to the date of this Agreement, the Bank shall have received: 11.1 a certified copy of the duly authorized Resolution, and a signed original of this Agreement; 11.2 an opinion of Special Counsel to the effect that the Resolution and this Agreement are valid and legally binding obligations of the City, enforceable against the City in accordance with their terms, except to the extent that enforceability may be limited by or rendered ineffective by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Taxable Loan Agreement - Page 4 laws affecting creditors' rights generally; (ii) the application of equitable principles and the exercise of judicial discretion in appropriate cases; (iii) common law and statutes affecting the enforceability of contractual obligations generally; and (iv) principles of public policy concerning, affecting or limiting the enforcement of rights or remedies against governmental entities such as the City; 11.3 the certificate of a duly Authorized Representative of the City to the effect that: 11.3.1 there is no action, suit, proceeding, or investigation at law or in equity before or by any court or government, city or body pending or, to the best of the knowledge of the City, threatened against the City to restrain or enjoin the adoption of the Resolution or the execution and delivery of this Agreement, or the collection and application of funds as contemplated by this Agreement, which in the reasonable judgment of the City, would have a material and adverse effect on the ability of the City to pay amounts due under this Agreement, and 11.3.2 the adoption of the Resolution and the execution and delivery of this Agreement do not and will not conflict in any material respect with or constitute on the part of the City a breach of or default under any law, charter provision, court decree, administrative regulation, resolution, ordinance, or other agreement or instrument to which the City is a party or by which it is bound; 11.4 a copy of the City's audited financial statements for the past three years, and a copy of the City's adopted budget for the fiscal year beginning July 1, 2002; and 11.5 such additional legal opinions, certificates, proceedings, instruments, or other documents as the Bank or the City's Special Counsel may reasonably request to evidence compliance by the City with the legal requirements for execution of this Agreement and the due performance or satisfaction by the City of all agreements then to be performed and all conditions then to be satisfied by the City. 12. Notices Any notices required to be given pursuant to this Agreement shall be given to the following addresses: City: City of Ashland 20 E. Main Street Ashland, Oregon 97520 Attention: Finance Director Taxable Loan Agreement - Page 5 Bank: KeyBank National Association OR-20-21-0444 1211 S. W. Fifth Avenue, Suite 400 Portland, Oregon 97204 Attention: Public Sector Division 13. Assignment; Survival; Financing Agreement Constitutes Contract 13.1 This Agreement shall be binding upon and shall inure to the benefit of the City and the Bank and their respective successors and assigns. The City agrees that it may not assign this Agreement without the Bank's prior consent. The Bank may sell participations in this Agreement, and may exchange financial information about the City with actual or potential participants or assignees. 13.2 The agreement of the City contained in Section 9.4 of this Agreement shall survive the payment of the Loan Payments and the termination of this Agreement. 13.3 This Agreement shall constitute a contract between the City and the Bank. The Bank's loan made hereunder is made expressly in reliance on such contract. 14. Applicable Law This Agreement shall be governed and interpreted in accordance with the laws of the State of Oregon. 15. Severability and Waivers If any part of this Agreement is not enforceable, the rest of this Agreement may be enforced. The Bank retains all rights, even if the Bank makes a loan after default. If the Bank waives a default, it may enforce a later default. Any consent or waiver under this Agreement must be in writing. 16. Counterparts This Agreement may be executed simultaneously in several counterparts, each of which shall be an original and all of which shall constitute one and the same agreement. 17. Written Agreements Under Oregon law, most agreements, promises and commitments made by the Bank after October 3, 1989, concerning loans and other credit extensions which are not for personal, family or household purposes or secured solely by the borrower's residence must be in writing, express consideration and be signed by the Bank to be enforceable. Taxable Loan Agreement - Page 6 DATED this 27th day of June, 2002. KEYBANK NATIONAL ASSOCIATION By: Mark M. Farrell Vice President CITY OF ASHLAND, JACKSON COUNTY, OREGON By: D. Lee Tuneberg Finance Director Taxable Loan Agreement - Page 7 GENERAL CERTIFICATE $2,520,000 City of Ashland Jackson County, Oregon Taxable Loan Agreement On behalf of the City of Ashland, Jackson County, Oregon (the "City"), I hereby certify as follows regarding the $2,520,000 Taxable Loan Agreement between the City and KeyBank National Association ("KeyBank") which is dated as of June 27, 2002 (the "Loan Agreement"): 1. I, D.L. Tuneberg, certify that I am the Director of Finance and a "City Official" as defined in Resolution No. 2002-18 of the City authorizing the Loan Agreement (the "Resolution"), which was adopted by the City Council on June 18, 2002, and that I am authorized to execute all documents on behalf of the City pertaining to the Loan Agreement. 2. Pursuant to the Resolution, I have accepted the proposal of KeyBank to fund the Loan Agreement, negotiated the terms of the Loan Agreement, and execute and delivered the Loan Agreement. 3. There is no action, suit, proceeding, or investigation at law or in equity before or by any court or government, city or body pending or, to the best of the knowledge of the City, . threatened against the City to restrain or enjoin the adoption of the Resolution or the execution and delivery of the Loan Agreement, or the collection and application of funds as contemplated by the Loan Agreement, which in the reasonable judgment of the City, would have a material and adverse effect on the ability of the City to pay amounts due under the Loan Agreement, and 4. The adoption of the Resolution and the execution and delivery of the Loan Agreement do not and will not conflict in any material respect with or constitute on the part of the City a breach of or default under any law, charter provision, court decree, administrative regulation, resolution, ordinance, or other agreement or instrument to which the City is a party or by which it is bound; 5. The City Council meets in regular session each month. The meetings have been established in due and proper form pursuant to Oregon State Statutes and the Charter of the City. A quorum, as defined by ORS 332.055, was present throughout the meeting of the City Council at which the Resolution was adopted. The City Council has adopted policies to implement the provisions of ORS 192.640 regarding public meeting notice, and has complied with those policies for all meetings related to the Bonds. Dated as of this 27th day of June, 2002. City of Ashland Jackson County, Oregon By: ,GQ D.L. Tuneberg, Fin irector J:\HWR\CITIES\ASHLAND\Fiber Network Financing\dddoc RECEIPT FOR LOAN PROCEEDS $2,520,000 City of Ashland Jackson County, Oregon Taxable Loan Agreement I, D.L. Tuneberg, Finance Director of the City of Ashland, Jackson County, Oregon (the "City"), hereby certify that the City has received the following amount of Loan proceeds: Principal amount of Bonds $2,520,000.00 Less loan fee (5,040.00) Total Loan proceeds $2,514,960.00 Dated as of this 27th day of June, 2002. City of Ashland Jackson County, Oregon By: b~ D.L. Tuneberg, Fin Director P..\HWR\CITIES\ASHLANU\Fiber Network Financing\cld.doc Preston IGates IEllis up June 27, 2002 City of Ashland KeyBank National Association 20 East Main Street Public Sector Division OR-20-21-0444 Ashland, OR 97520 1211 S.W. Fifth Ave., Suite 400 Ashland, Oregon 97204 Subject: $2,520,000 City of Ashland, Oregon Taxable Loan Agreement We have acted as Loan Agreement counsel in connection with the issuance by the City of Ashland, in Jackson County, Oregon (the "City") of its taxable Loan Agreement which is in the principal amount of $2,520,000 and is dated as of June 27, 2002 (the "Loan Agreement"). The Loan Agreement is delivered pursuant to the authority of ORS 271.390 and City Resolution No. 2002-18 (the "Resolution"). We have examined the law, a duly certified transcript of proceedings of the City, prepared in part by us, relating to the delivery of the Loan Agreement, and other documents which we deem necessary to render this opinion. . We have relied on the certified proceedings and other certifications of public officials regarding questions of fact material to our opinion and have not undertaken to verify the same by independent investigation. We have not reviewed any financial disclosure documents relating to the Loan Agreement, and express no opinion regarding any financial disclosure associated with the Loan Agreement. Based on our examination, we are of the opinion, under existing law, as follows: 1. The Loan Agreement has been legally authorized, executed and delivered under and pursuant to the Constitution and Statutes of the State of Oregon and the Charter and Resolution of the City, and constitutes a valid and legally binding obligation of the City which is enforceable against the City in accordance with its terms. 2. The City has pledged its full faith and credit and taxing power within the limitations of Section 11 and l lb of Article Xl of the Oregon Constitution, and any and all of the City's legally available funds, including the proceeds of the Loan Agreement, to the punctual payment of amounts due under the Loan Agreement, as provided in the Resolution. 3. The interest on the Loan Agreement is not excludable from gross income under Section 103(a) of the Internal Revenue Code of 1986. 4. The interest on the Loan Agreement is exempt from State of Oregon personal income taxes. A LAW FIRM ( A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES 222 SW COLUMBIA STREET, SUITE 1400 PORTLAND, OR 97201-6632 TEL: (503jt3~~(~(~f}r~Q~S, ctHXkfXBpSIHblBates.eom Anchorage Coeur d'Alene Hong Kong Los Angeles Orange County Palo Alto Portland San Francisco Seattle Spokane Washington, DC Preston I Gates l Ellis L!P Legal Opinion June 27, 2002 Page 2 Except as stated herein, we express no opinion regarding any federal, state or local tax consequences arising with respect to ownership of the Loan Agreement. The opinions set forth above are qualified only to the extent that enforceability of the Loan Agreement may be limited by or rendered ineffective by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors' rights generally; (ii) the application of equitable principles and the exercise of judicial discretion in appropriate cases; (iii) common law and statutes affecting the enforceability of contractual obligations generally; (iv) principles of public policy concerning, affecting or limiting the enforcement of rights or remedies against governmental entities such as the City. Our opinion is limited to matters of Oregon law and applicable federal law, and we assume no responsibility as to the applicability of laws of other jurisdictions. Respectfully submitted, PRESTON GATES & ELLIS LLP C*VW By: Harvey W. Rogers JAHWR\CMESW SHLAND\F1ber Network Financtn&pn-finaLdoc LEGAL CLOSING MEMORANDUM $2,520,000 City of Ashland Jackson County, Oregon Taxable Loan Agreement Closing will be held at the offices of Preston Gates & Ellis LLP, Bond Counsel, 222 S.W. Columbia Street, Suite 1400, Ashland, Oregon, on Thursday, June 27, 2002, at 10:00 a.m. There will be no preclosing. Listed below are the required closing documents. Beside each document is the name of the party responsible for providing that document to Bond Counsel by the closing date. If a party will not send a person who is authorized to sign documents to the closing, the party must deliver final, signed documents to Bond Counsel not later than Closing. All documents should be originals or true copies of originals. The following abbreviations are used to indicate parties responsible for providing documents: CofA City of Ashland, Issuer KB KeyBank National Association, Lender PG&E Preston Gates & Ellis LLP, Bond Counsel DOCUMENTS PG&E 1. Transcript Certification. CofA 2. Minutes of the June 18, 2002 City Council meeting at which Resolution No. 2002-18 was adopted, or excerpt. CofA 3. Resolution No. 2002-18. KB 4. Taxable Loan Agreement. PG&E 5. General Certificate. PG&E 6. Receipt for Loan Proceeds- PG&E 7. Opinion of Bond Counsel. PG&E 8. Legal Closing Memorandum. j:Uiwr\cities\ashland\fiber nctwork fmancingkim.doc