2002-45-Resolution No. 2002-005 Recorded 1/25/2002DESCHUTES COUNTY OFFICIAL RECORDS f �0��i}�d�
RE ED Cd
MARY SUE PENHOLLOW, COUNTY CLERK liT
COMMISSIONERS' JOURNAL 01/25/2002 09;05;03 AM
LEGAL UNSEL
For Recording Stamp only
BEFORE THE BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, OREGON
A Resolution of Deschutes County, Oregon *
Authorizing Its Limited Tax Pension * RESOLUTION NO. 2002-005
Pool Bond, Series 2002
WHEREAS, the County is authorized by Chapter 945 of Oregon Laws 2001
(Senate Bill 134 of the 2001 Regular Session of the Oregon Legislative Assembly or the "Act")
to issue limited tax bonds as defined in ORS 288.150 to finance its pension liability; and,
WHEREAS, the Act and ORS 288.150 permit the County to pledge its full faith
and credit and taxing power within the limitations of Sections 11 and l lb of Article XI of the
Oregon Constitution to pay those bonds; and,
WHEREAS, the County has an unfunded pension liability to the Oregon Public
Employees Retirement System ("OPERS") which was estimated to be $4,588,269 as of
December 31, 2000; and,
WHEREAS, OPERS requires the County to pay this unfunded liability over a
period of years with interest at eight percent per annum; and,
WHEREAS, current interest rates in the bond market are below eight percent,
creating the opportunity for the County to refinance its unfunded pension liability and reduce its
costs; and,
WHEREAS, Seattle -Northwest Securities Corporation has developed a pension
bond program which may reduce costs for participating governments; and,
WHEREAS, the pension bond program does not require the County to pay any
portion of another government's pension bonds or liabilities to OPERS;
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF DESCHUTES COUNTY, OREGON, as follows:
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Section 1. Definitions.
Unless the context clearly requires otherwise, the following terms shall have the following
meanings:
"Additional Charges" means the fees and other charges of the Program Trustee, as defined in the
Program Trust Agreement and any indemnity payments due under Section 6(3).
"Available General Funds" means: (i) all the County's ad valorem property tax revenues received
from levies under its permanent rate limit; and, (ii) all other unrestricted taxes, fees, charges,
revenues and receipts of the County which Oregon law allows to be spent to make the Bond
Payments.
"Bond Payments" means the principal and interest payments due under the Bond.
"Bond" means the County's Limited Tax Pension Pool Bond, Series 2002, that is authorized by
Section 2 of this Resolution.
"Business Day" means any day except a Saturday, a Sunday, a legal holiday, a day on which the
offices of banks in Oregon or New York are authorized or required by law or executive order to
remain closed, or a day on which the New York Stock Exchange or the Program Trustee is
closed.
"County" means Deschutes County, Oregon.
"County Official" means the Finance Director, or the person designated by the Finance Director
to act as County Official under this Resolution.
"Event of Default" refers to an Event of Default listed in Section 8(1) of this Resolution.
"Government Obligations" means direct noncallable obligations of the United States, or
obligations the principal of and interest on which are fully and unconditionally guaranteed by the
United States, or any other security which the Program Trust Agreement allows to be used as a
defeasance obligation.
"Outstanding" refers to all Bond Payments except Bond Payments that have been made or
defeased pursuant to Section 9 of this Resolution.
"Payment Date" means a date on which Bond principal or interest are due, whether at maturity or
prior prepayment.
"Program" means the pooled pension bond program which was developed by Seattle -Northwest
Securities Corporation and is implemented through the Program Trust Agreement.
"Program Obligations" means the obligations issued by the Program Trustee under the Program
Trust Agreement which are payable from the Bond Payments and similar pension bond payments
issued by other participants in the pension bond program developed by Seattle -Northwest.
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"Program Trust Agreement" means the Trust Agreement between the Program Trustee, the
County and other issuers of pension bonds which are sold to the Program Trustee, in which the
Program Trustee agrees to hold the Bond and distribute the Bond Payments to the owners of
Program Obligations.
"Program Trustee" means Wells Fargo Bank Northwest, National Association, as trustee under
the Program Trust Agreement, or its successors.
"Qualified Consultant" means an independent auditor, an independent financial advisor, or
similar independent professional consultant of recognized standing and having experience and
expertise in the analysis of defeasance escrows, who is selected by the County.
"Resolution" means this Resolution, including any amendments made in accordance with
Section 7 of this Resolution.
"Security Payments" means the payments described in Section 4.2 of this Resolution.
"Seattle -Northwest" means Seattle -Northwest Securities Corporation, the developer of the
Program.
Section 2. Bond Authorized.
2.1 The County hereby authorizes the issuance, sale and delivery of its
Limited Tax Pension Pool Bond, Series 2002, in accordance with this Resolution and in an
amount which is sufficient to produce net proceeds which do not exceed the most recent estimate
of the County's unfunded pension liability to OPERS which the County receives from OPERS
prior to selling the Bond, plus the costs of issuing and selling the Bond, including any costs of
the Program Trustee. The Bond shall not be issued in an amount that exceeds the amount which
is required to make a payment to OPERS which exceeds the most recent estimate of that liability
which the County receives from OPERS prior to issuing the Bond, plus costs of issuing the Bond
are participating in the Program.
2.2 The issuance of the Bond and the participation in the Program shall not
obligate the County to pay any portion of another government's pension bonds or liabilities to
OPERS.
2.3 Bond proceeds shall be used to pay the County's unfunded pension
liability to OPERS and to pay costs of issuing and selling the Bond, including any costs of the
Program Trustee.
2.4 The Bond shall be a "federally taxable bond" which bears interest that is
not excludable from gross income under Section 103(a) of the Internal Revenue Code of 1986, as
amended. Interest will, however, be exempt from Oregon personal income taxation.
2.5 OPERS requires the County to pay this unfunded liability over a period of
years with interest at a minimum of eight percent per annum. Refinancing that liability at a lower
rate of interest should, therefore, produce savings for the County. To insure that the rate of
interest on the Bond will be less than the rate of interest which OPERS is charging the County on
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its unfunded pension liability, the Bond shall not be sold at a true interest cost of more than
7.20% per annum.
2.6 The County has not authorized or issued any obligations under the Act
except the Bond. As provided in Section 24 of the Act, the Bond shall not be issued in an
amount which exceeds five percent of the real market value of the County.
Section 3. Delegation.
If the County Official determines to issue the Bond, the County Official is hereby directed, on
behalf of the County and without further action by the Board, to:
3.1 Participate in the preparation of, authorize the distribution of, and deem
final any official statement or other disclosure documents relating to the Bond or the Program
Obligations.
3.2 Establish the Bond Payments and the estimated annual and total savings
which result from issuing the Bond.
3.3 Establish the final principal amounts, maturity schedules, interest rates,
sale prices and discount, prepayment terms, payment terms and dates, Security Payment terms,
and other terms of the Bond.
3.4 Negotiate the terms of, and enter into a bond purchase agreement with
Seattle -Northwest Securities Corporation which provides for the acquisition of the Bond by the
Program Trustee.
3.5 Execute and deliver an intergovernmental agreement and the Program
Trust Agreement, or an intergovernmental agreement which is combined with the Program Trust
Agreement, which permits the Program Trustee to issue the Program Obligations and provides
for the administration of funds held by the Program Trustee, and any other agreements or
documents which may be required for participation in the pension bond program developed by
Seattle -Northwest Securities Corporation. However, delivery of the Bond to the Program Trustee
shall constitute execution of the Program Trust Agreement by the County, and the County shall
be bound by the Program Trust Agreement upon delivery of the Bond to the Program Trustee.
3.6 Undertake to provide continuing disclosure for the Bond in accordance
with Rule 15c2-12 of the United States Securities and Exchange Commission.
3.7 Apply for ratings on the Bond or the Program Obligations and purchase
municipal bond insurance or other obtain other forms of credit enhancements for the Bond or the
Program Obligations, enter into agreements with the providers of credit enhancement, and
execute and deliver related documents.
3.8 Execute and deliver the Bond to the Program Trustee.
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3.9 Execute and deliver any agreements or certificates and take any other
action in connection with the Bond which the County Official finds is desirable to permit the sale
and issuance of the Bond in accordance with this Resolution.
Section 4. Security for Bond.
4.1 The County hereby pledges its full faith and credit and taxing power
within the limitations of Sections 11 and l lb of Article XI of the Oregon Constitution to pay the
Bond. The Bond shall be a limited tax bond of the County as defined in ORS 288.150, and the
County shall pay the Bond from its Available General Funds. The County is not authorized to
levy additional taxes to pay the Bond.
4.2 The County shall, in addition, make the Security Payments as provided in
the Bond.
4.3 This Resolution shall constitute a contract with the Trustee, and the
owners of the Program Obligations shall be third -party beneficiaries of this contract.
Section 5. Prepayment.
The principal component of Bond Payments shall be subject to prepayment on the
dates and at the prices established by the County Official pursuant to Section 3(2). To prepay
any principal component of the Bond Payments the County must notify the Program Trustee in
writing not less than 50 days prior to the prepayment date, and must deposit with the Program
Trustee an amount sufficient to pay all Bond principal which is to be prepay, plus accrued
interest to the prepayment date, not less than 45 days before the prepayment date. The accrued
interest payment shall be credited against the Security Payment due on that date. The Program
Trustee may treat any amounts which are credited to a defeasance escrow and held by the
Program Trustee to prepay Bond Payments as being deposited with the Program Trustee when
the Bond Payments are defeased in accordance with Section 9(1)(A)(ii) of this Resolution.
Section 6. Covenants.
The County hereby covenants and agrees with the Owner of the Bond as follows:
6.1 The County shall promptly cause Security Payments and the principal,
premium, if any, and interest on the Bond to be paid as they become due in accordance with the
provisions of this Resolution and the Bond.
6.2 The County covenants for the benefit of the Program Trustee to pay the
Additional Charges reasonably allocated to it by the Program Trustee, in accordance with the
invoices for such Additional Charges which are provided by the Program Trustee pursuant to the
Program Trust Agreement.
6.3 To the extent permitted by law, the County covenants and agrees to
indemnify and save the Program Trustee harmless against any loss, expense or liability which is
reasonably allocable to the County and which the Program Trustee may incur arising out of or in
the exercise or performance of its duties and powers under the Program Trust Agreement relating
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to the Bond, including the costs and expenses of defending against any claim or liability, or
enforcing any of the rights or remedies granted to it under the terms of the Program Trust
Agreement in connection with the Bond, excluding any losses or expenses which are due to the
Trustee's breach of fiduciary duties, negligence or willful misconduct. The obligations of the
County under this Section 6(3) shall survive the resignation or removal of the Program Trustee
under the Program Trust Agreement and the payment of the Program Obligations and discharge
under the Program Trust Agreement. The damages claimed against the County shall not exceed
the damages which may be allowed under the Oregon Tort Claims Act, Oregon Revised Statutes
Section 30.260, et seq., unless the provisions and limitations of such act are preempted by federal
law, including, but not limited to the federal securities laws.
Section 7. Amendment of Resolution.
The County may amend this Resolution only with the consent of the Program Trustee.
Section 8. Default and Remedies.
8.1 The occurrence of one or more of the following shall constitute an Event
of Default under this Resolution:
8.1.1 Failure by the County to pay Bond principal, interest or premium
when due (whether at maturity, or upon prepayment after principal components of Bond
Payments have been properly called for prepayment);
8.1.2 Failure by the County to make any Security Payment within five
Business Days after it is due;
8.1.3 Failure by the County to observe and perform any covenant,
condition or agreement which this Resolution requires the County to observe or perform for the
benefit of Program Trustee, which failure continues for a period of 60 days after written notice to
the County by the Program Trustee specifying such failure and requesting that it be remedied;
provided however, that if the failure stated in the notice cannot be corrected within such 60 day
period, it shall not constitute an Event of Default so long as corrective action is instituted by the
County within the 60 day period and diligently pursued, and the default is corrected as promptly
as practicable after the written notice referred to in this Section 8(l)(C); or,
8.1.4 The County is adjudged insolvent by a court of competent
jurisdiction, admits in writing its inability to pay its debts generally as they become due, files a
petition in bankruptcy, or consents to the appointment of a receiver for the installment payments.
8.2 The Program Trustee may waive any Event of Default and its
consequences, except an Event of Default described in Section 8(l)(A).
8.3 If an Event of Default occurs and is continuing the Program Trustee may
exercise any remedy available at law or in equity; however, the Bond Payments shall not be
subject to acceleration.
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8.4 No remedy in this Resolution conferred upon or reserved to the Program
Trustee is intended to be exclusive and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Resolution or now or hereafter existing at law or
in equity. No delay or omission to exercise any right or power accruing upon any default shall be
construed to be a waiver thereof, but any such right and power may be exercised from time to
time and as often as may be deemed expedient. To entitle the Program Trustee to exercise any
remedy reserved to it, it shall not be necessary to give any notice other than such notice as may
be required by this Resolution or by law.
Section 9. Defeasance.
9.1 The County may defease all or any portion of the Bond Payments in
accordance with this Section 9. The County shall be obligated to pay any Bond Payments that
are defeased in accordance with this Section 9 solely from the money and Government
Obligations which are deposited in escrow agent pursuant to this Section 9, unless the amounts
available in escrow are insufficient to make the Bond Payments. Bond Payments shall be deemed
defeased if the County:
9. 1.1 irrevocably deposits money or noncallable Government Obligations
in escrow:
(i) with an independent trustee or escrow agent which mature
and pay interest in amounts which are calculated to be sufficient, without reinvestment, to
make all the Security Payments associated with the Bond Payments which are to be
defeased on their maturity dates, and to make any prepayments of Bond Payments
described in Section 5 on the dates those prepayments are required to be made if any
principal components of defeased Bond Payments are to be prepaid; or
(ii) with the Program Trustee which mature and pay interest in
amounts which are calculated to be sufficient, without reinvestment, to make all the Bond
Payments which are to be defeased on their maturity or prepayment dates; and,
9.1.2 Provides irrevocable notice of any prepayments which are to occur
in connection with the defeasance to the Program Trustee at least 50 days prior to the
prepayment; and,
9.1.3 files with the escrow agent or trustee an opinion from a Qualified
Consultant to the effect that the money and the principal and interest to be received from the
Government Obligations are calculated to be sufficient, without further reinvestment, to pay the
Security Payments and prepayments of Bond Payments described in Section 9(1)(A).
9.2 The County shall notify the Program Trustee promptly of any defeasance
of Bond Payments.
Section 10. Form.
The Bond shall be issued as a single installment bond in substantially the form attached hereto as
Exhibit A, with such changes as may be approved by the County Official. The Bond shall be
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executed on behalf of the County with the manual signature of the County Finance Director or
another appropriate official of the County.
Section 11. Rules of Construction.
In determining the meaning of provisions of this Resolution, the following rules shall apply
unless the context clearly requires application of a different meaning:
11.1 References to section numbers shall be construed as references to sections
of this Resolution.
11.2 References to one gender shall include all genders.
11.3 References to the singular shall include the plural, and references to the
plural shall include the singular.
Section 12. Effective Date.
This resolution shall take effect on the date of its passage by the Board of County
Commissioners.
DATED this 23rd day of January, 2002.
ATTEST:
0 � E" Mo � �
Recording Secretary
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BOARD OF COUNTY COMMISSIONERS FOR
DESCHUTES COUNTY, OREGON
TOM DeWOLF, Chair
ENNIS R. LUICE, Commissioner
MICHAEL M. DAL/Commissioner