HomeMy WebLinkAbout1999-53 Loan Agreement - AFN.SSO UT,O..0. 5
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ASHLAND, JACKSON COUNTY, OREGON, AUTHORIZING
A LOAN AGREEMENT.
BE IT RESOLVED by the City Council of the City of Ashland that
1. Findings
The City Council finds as follows:
1.1. The City is building the Ashland Fiber Network (the "AFN"), which is a high-speed hybrid
fiber optic/coaxial data network.
1.2. 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.
1.3. The AFN will offer high-speed internet, high-speed data services, and cable TV to
schools, business and citizens who subscribe to the services; the AFN is therefore needed by
the City and its citizens.
1.4. It appears that the cost of the financing to the City and its taxpayers may be minimized if
the City enters into a financing agreement with a commercial bank, because commercial banks
are currently offering favorable interest rates, and a financing with a bank avoids the expense of
preparing an official statement and hiring a paying agent.
2. Loan Agreement Authorized
The City is hereby authorized to enter into a loan agreement in a principal amount of not more
than $5,800,000 (the "Loan"). Loan proceeds shall be used to finance the AFN and related
expenses and pay costs of entering into the Loan. The Director of Finance, the City
Administrator or the designee of the Director of Finance or the City Administrator (any one of
which is described as the "City Official"), on behalf of the City and without further action by the
City Council, may:
2.1. negotiate and execute the Loan with U.S. Bank National Association or its affiliates in
accordance with this resolution;
2.2. establish the interest rate or rates, maturity schedule, rights of redemption and other
terms of the Loan, including the conditions for additional borrowings, within the limitations of this
resolution; and
:Z.3. execute any documents, including a note evidencing payments due under the Loan, and
take any other action which is desirable to carry out this resolution.
3. Security
The City Official may pledge the net operating revenues of the AFN system and the net
operating revenues of its electric system to pay the amounts due under the Loan. The Loan
shall not be a borrowing upon the credit of the city which is subject to the limitations of Sections
5 05 6 of Article IX of the City Charter.
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4. Maintenance of Tax-Exempt Status.
4.1. The City covenants for the benefit of the holder of the Loan to comply with all provisions
of the Internal Revenue Code of 1986, as amended (the "Code") which are required for Loan
interest to be excluded from gross income for federal income tax purposes. The City makes the
following specific covenants with respect to the Code:
(a) The City shall not take any action or omit any action, if it would cause the Loan
to become an "arbitrage bond" under Section 148 of the Code.
(b) The City shall operate the AFN and related improvements financed with the Loan
so that the Loan is not a "private activity bond" within the meaning of Section 141 of the Code.
4.2. The covenants contained in this Section and any covenants in the closing documents for
the Loan shall constitute contracts with the holder of the Loan, and shall be enforceable by the
holder of the Loan.
5. Bank Designation
The City hereby designates the Loan as a "qualified tax-exempt obligation" pursuant to Section
265(b)(3) of the Code. The City has no subordinate entities. The City does not reasonably
expect to issue more than $10,000,000 of tax-exempt obligations during the current calendar
year.
6. Amendment of Resolution.
After the Loan is executed, the City may amend this resolution only with the consent of the
holder of the Loan.
This resolution was by title only in accordance with Ashland
§2.04.090 and was duly PASSED and ADOPTED this 17th day of August, 1999.
Bra~ba~n, City Recorder
SIGNED and APPROVED this /7 day of August, 1999.
Reviewed as to form:
,/---,,
Pall N~te, City"~,ttorney
Don Laws, Council ChairpeLson
Municipal Code
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