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HomeMy WebLinkAbout2001-12-26 02-60 ORDERItem No. 02-60 Date: 12-26-01 Item/Subject: ORDER - AUTHORIZING THE ISSUANCE OF $35,000,000 AGGREGATE PRINCIPAL AMOUNT OF GENERAL OBLIGATION PENSION BONDS, NOTES IN ANTICIPATION THEREOF AND A TAX LEVY THEREFOR Responsible Department: Finance Commentary: By way of background, prior W the creation of the Maine State Retirement System's (MSRS) Consolidated Plan, the City was considered a participating local district (PLO). Upon conversion W the consolidated plan each PLD receivetl an accounting that compared the actuarial value of benefits earned W the actuarially adjusted value of the investments held to pay such benefits. In the City's case, the value of the benefits exceeded the value of the investments resulting in an Initial Unpooled Unfunded Actuarial Liability (IUUAL). It is important to note that the City played no active role in the resulting ]DUAL. All payments were made In accordance with MSRS requirements. The IUUAL Is a result of actuarial assumptions varying from reality. The City is required W make monthly payments on the IUUAL increasing at a rate of 3% per year until 2026. For H02, the total contribution for the IUUAL is $2,202,693. The repayment schedule is based upon an 8% interest rate. In light of cul finandal madcet opportunities, the City proposes W issue general obligation pension bonds W payoff the MSRS IUUAL We estimate that the City can obtaln external financing at approximately 6.5%, resulting in significant annual savings compared to the current MSRS repayment schedule. In addition, as the City provides a significant amount of annual support to the Bangor Public library, any action that could be taken to reduce their fixed expenses would be to our benefit Therefore, this order will aumonze the issuance of general obligation pension bonds to extinguish both the City of Bangor's and the Bangor Public Library's IUUAL with MSRS. Department Head Manager's Comments: A Public Heanng is required prior to a vote on this item. Recommend Approval./ nn F•r'rV'r`cL.utArr'*v.^�,p aeeuroi ��Cl Cry Manager Associated Information: Order, Public Notice Budget Approval ALL,2i France Director Passage X First Reading Page _of Referral 02-60 lJ; AsaigiRd to Cooncilw SYemhle- Dec®ber 26, 2001 to ;: CITY OF BANGOR (TITLE.) ORDER, AUTHOREEING THE ISSUANCE OF $35,000,000 AGGREGATE PRINCIPAL AMOUNT OF GENERAL OBLIGATION PENSION BONDS, NOTES IN ANTICIPATION THEREOF AND AT" LEVY THEREFOR By the oty Counol ofthe O'ry &&ngon ORDERED, THAT WHEREAS, the Ory of Bangor cumently has an unfunded pension obligation of appmdmately $32,000,000 W the Maine Sate Retirement System as its initial, unpooled, unfunded actuarial liability; and WHEREAS the Bangor Public library currently has an unfunded pension obligation W appmximately $918,000 to the Maim Slade Retirement System as its initial, unpooled, unfunded actuarial liability, which obligation is paid annually in part through the Otys annual appropriation to the Bangor Public Library and which payments are found W serve a valid pudic purpose of the City of Bangor; and WHEREAS, the Ory could achieve significant annual debt service savings through the Issuance of Its general obligation person bonds, the proceeds of which would be used W Pay the City s and the Bangor Public Ubmr/s initial, unpooled, unfunded actuarial liability; NOW, THEREFORE, BE IT HEREBY ORDERED by the City Council of the City of Bangor: THAT pursuant to 30-A M.R.S.A §5772, Section 13 of Article W of the City Charter (Private and Special laws of 1931, Chapter 54) and all amendments thereof and ads additional thereto, and all other authority thereto enabling, there is hereby authorized the Issue and sale at one time and from tlme to tlme up to Thirty-five Million Dollars ($35,000,0110) aggregate principal amount of general obligation pension bonds of the City of Bangor. The proceeds derived from the sale of said bonds, including premium, V any, shall be used and are hereby appropriated to fund the Otis and the Bangor Public Library's aide, unpooled, unfunded actuarial pension liability under the Maine Sate Retirement System and all other cost (as defined herein) related and ancillary thereto (the "Project'). THAT the date, maturities (rout to exceed 30 years from the issue dalm), denominations, Interest rate or rates (rot W exceed 8.00% per annum), place of payment, and other details of each issue of said bands, including the timing and provision for their sale and award, shall be determined by the Finance Director with the approval of the Finance Committee. 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M pm e'Am aq jo lem aq qlm plan'Ipwwo 140 aqp ueuule4o aq Aq wu51 Wnm'jojza!O mueuy aq Aq pau6!s aq IIns WAN pin IVU 02-60 THAT the bonds or notes heretofore authorizetl shall be transferable only on the registration books of the City kept by the Transfer Agent, and said principal amount of the bonds of the same maturity (but not of other maturity) in minimum denominations of $5,0110 and any integral multiple in excess thereof (or such other minimum denomination as the Director of Finanxe shall approve from time to time) upon surrender thereof at the principal office of the transfer agent, with a written instrument of transfer satisfactory to the transfer agent duly executed by the registered owner or his attorney duly authorized in writing. Upon each exchange or transfer of a bond the City and the Transfer Agent shall make a charge sufficient to cover any tax, fee or any other governmental charge required to be payable with respect to such exchange or transfer, and with respect In such exchange or transfer, and subsequent to the first exchange or transfer, the cast of preparing new bonds upon exchanges or transfer thereof to be paid by the person requesting the same. THAT the Finance Director be and hereby is authorized to undertake all acts necessary to provide for the issuance and transfer of such bonds or rwtes heretofore authorized in book - entry form pursuant to the Deposibry Trust Company Book -Entry Only System, as an alterative N the provisions of the foregoing vote regarding physical transfer of bonds or notes, and lire Finance Director be and hereby is authorized and empoweretl to enter into a Letter of Representation or any other contract, agreement or understanding necessary on, in his opinion, appropriate in order to qualify the bonds or notes for and participate in the Deyositary Trust Company Book -Entry Only Systmn, T T the France Director and Chairman of the City Council from time to time shall execute such bonds or notes as may be required to provide for exchanges or transfers of bonds or notes as heretofore authorized, all such bonds or notes to bear the original signature of the Finance Director and Chairman of the City Council, and In case any officer of the City whose signature appears on any bond or note shall cease N be such officer before the deliver of said bond or note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office undl delivery thereof. THAT the officers executing the bonds or nates be and hereby are Individually authorized to covenant, certify and agree, on behalf of the City, for the benefit of the holders of won bonds or notes, that the City will file any required reports, make any annual finandal or material event disclosure, and take arry other action that may be necessary to insure that the disclosure requirements Imposed! by Rule 15c2-12 of the Sewrlbes and Exchange Commission, N applicable, are met THAT the tern "cost" on "costs" as used herein and applied to the Project, or any potion thereof, includes, but is not limited to the cost of financing charges and Issuance mss, including premiums for insurance, capitalized interest for a period not m exceed three years from the Issue date of the Bonds, underwriters' fees and costs, legal and accounting fees and costs, application fees, and other necessary fees and expenses relating to the financing transaction. THAT the investment earnings on the proceeds of the bonds, H any, and the excess proceeds of the bonds, if any, be and hereby are appropriatetl for the following purposes, such proceeds to be held and applied in the following order of priority: 1. To any cases of the Projects in excess of the prinnpal amount of the bonds; 2. If the bonds or notes: are issued on a tax exempt basis, in accordance with applicable tarns and provisions of the Arbitrage and Use of Proceeds Cero'ficate delivered in connection with the sale of the bonds or notes including, to Me extent permitted thereunder, to the City's General Fond. THAT the Finance Director, Chairman of the City Council, perk, and other proper officials of the City be, and hereby are, authorized and empowered in its name and on its behalf to do or cause to be done all such aces and things as may be necmary or desirable in order to effect the issuance, sale, and delivery of the bonds and notes as hereinbefore authorized. THAT If any of the officers or aficials of the City who have signed or coaled Me bonds or notes shall cease to be such officers or officials before the bonds or notes m signed and sealed shall have been actually authenticated or delivered by the City, such bonds or notes nevertheless may be authenticated, issued, and delivered with the same force and effect as though the person or perwns who signed or sealed such bonds or notes had not ceased to be such officer or official; and aim any such bonds or notes may be signed and sealed on behalf of the City by those persons who, at Me actual data of the owAon of such bonds or notes, shall be the proper officers and officials of the City, although at the nominal date of such bonds or notes any such person shall not have been such officer or official T1 WT if the Finance Director, Chairman of Me City Council, car Clerk are for any reason unavailable to approve and execute the bonds or any related financing documents, the person or persons Men acting in any such capacity, whether as an assistant, a deputy, on otherwise, is authorized to act for such official with the same force and effect as if such official had himself or herself performed such ad, THAT in each of the years during which any of the bonds are outstanding, there shall be levied a tax In an amount that, with other revenues, if any, available for that purpose, shall be sufficient m pay the Interest on said bonds, payable in such years, and the principal of such bonds maturing in such years. IN CITY COMCIL December 26, 2001 First Reading Referred to Pirsom Co®Sttee MIMMAMMAR IN I= Comm January 16, 2002 Patios, Meda and seconded to Cpm Public Nearing. Public nearing opined. No one from the Public cans Forward. Motion Made and Seconded to Close Public Hearing. Public Hearing Closed. Notion Made and Seconded for Passage WM A R ITITLE,) Authorizing the Issuance of i35,000.00 AAgBgBregatecepa ligation Pension RoudsNotes in Anticipation Thereof o2-eo PUBLIC HEARING CITY OF BANGOR GENERAL OBLIGATION PENSION BONDS The Bangor City Council will hold a public hearing at its regular meeting at 7:30 p.m. on Monday, January 14, 2002 in the City Council Chambers on the 3b Floor of City Hall, 73 Harlow Street, Bangor, Maine, for the purpose of hearing public comment on a proposed issuance of genial obligation pension bonds in the principal amount not to exceed $35,000,000. Proceeds will be used to extinguish the City's and the Bangor Public Li al Initial Unpooled Unfunded Actuarial Uability with the Maine State Retirement System. A copy of the entire Order is available to the public in the City Clerk's Office at Bangor City Hall. The public is invited to address the Council on this proposed bond issue. December 31, 2001 Gail Campbell City Clerk