2522 AUTHORIZING ORDINANCE NO.
OF THE CITY OF WEST MEMPHIS, ARKANSAS (the "City")
(Municipal Buildings Project)
The following Ordinance is adopted at a duly convened meeting of the West Memphis,
Arkansas City Council as of 4c-fo( #_r- ('7 , 2019.
Whereas, the City desires to acquire and construct a municipal courthouse facility, two
fire department stations, and a police sub-station and related appurtenances that will benefit the
residents of the City (the "Municipal Building Project"); and
Whereas, the City in connection with the development of the Project desires to
additionally refinance at a lessened rate of interest the principal outstanding under that certain
$1,745,000 City of West Memphis, Arkansas Capital Improvement Revenue Bonds, Series 2006
(the "2006 Bonds") (the "Refunding Project") and to pay costs of issuance of the below defined
Agreement (the "Costs of Issuance")(the Municipal Building Project and the Refunding Project,
collectively, the "Project"); and
Whereas, the City desires to enter into a Lease-Purchase Agreement (the "Agreement")
with West Memphis Public Buildings Development Company, LLC (together with its assigns,
"Lessor") in substantially that form that is attached hereto as Exhibit A pursuant to which funds
will be raised therefrom in order to finance the Project; and
Whereas, the City desires to pledge and grant a security interest to Lessor in certain
franchise fee revenues and certain court fines and forfeitures as more fully described below in
order to secure and collateralize the City's obligations as set forth in the Agreement; and
Whereas, this Ordinance and the Agreement are being executed in accordance with the
provisions of and pursuant to Amendment 65 to the Constitution of the State of Arkansas, the
Revenue Bond Act of 1987, as codified as Arkansas Code Annotated Sections 19-9-601 et seq.
and the Local Government Capital Improvement Revenue Bond Act of 1985, as codified as
Arkansas Code Annotated Sections 14-164-401 et seq. (the "Authorizing Legislation");
NOW,THEREFORE, BE IT ORDAINED AND RESOLVED by the City Council of the City of West
Memphis, Arkansas that:
1. Project Approval. The Project is hereby approved and the following matters are
hereby acknowledged and approved:
a. Execution and delivery of the Agreement subject to any final modifications
thereto that are not inconsistent with the provisions of this Ordinance as
approved by the Mayor of the City;
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b. Construction and development of the Municipal Building Project in
accordance with those design specifications that have been previously
submitted to the City and are on file with the City Clerk for inspection by
the public at any time;
c. Execution of any and all other documents in furtherance of the goals and
intentions of this Ordinance and the Agreement; and
d. Refinancing of the 2006 Bonds at lessened rates of interest.
2. Designated Signatory; General Financing Terms. Marco McClendon, Mayor of the
City, be and hereby is authorized and empowered to execute and deliver the Agreement and all
other agreements related thereto on behalf of the City, and Joyce Gray, City Clerk, is hereby
authorized and empowered to attest the Mayor's signatures on such documents, so long as the
maximum principal balance set forth within the Agreement does not exceed $11,500,000, the
non-default interest rate set forth within the Agreement does not exceed 3.44% per annum, and
the term over which the principal and interest set forth within the Agreement shall be repaid
does not exceed 25 years. It is recognized, agreed and understood that proceeds derived from
the execution of the Agreement will be utilized (a) to fund the engineering, development and
construction of the Project along with related furnishings, fixtures and equipment, all of which is
more fully described in the Agreement, (b) to refinance the 2006 Bonds and (c) to pay Costs of
Issuance.
3. Authority to Execute Additional Documents. The Mayor on behalf of the City is
authorized to execute any and all other documents necessary to fulfill the goals and intentions
of this Ordinance or which may be reasonably requested by Lessor including, without limitation,
the Project Disbursement Agreement, an Incumbency Certificate, and IRS Form 8038-G.
4. Useful Life Designation. The City Council hereby finds and declares that the period
of usefulness of the Project after the completion of construction thereof will be more than 25
years, which is longer than the term of the Agreement.
5. Funding Through Collection of Franchise Fees. The City's financial obligations
under the Agreement shall solely and exclusively be funded through (a)the collection of franchise
fees collected by the City from public utilities for the privilege of using the streets, highways and
other public areas in the City pursuant to the authority contained in Arkansas Code Annotated
Section 14-200-101 et seq., including any payments in lieu of franchise fees by the Utility
Department of the City of West Memphis or any such public utility; (b) the collection of all fines
and forfeitures collected from the operations of the district court operating within the City of
West Memphis or otherwise collected by the City of West Memphis (clauses (a) and (b) are
collectively referred to as the "Pledged Revenues"); (c) the Disbursement Account and all funds
and proceeds held therein; (d) the Pledged Revenue Account (as defined below); and (e) all
additions, attachments, accessions and substitutions thereto or applicable thereto (clauses "a"
through "e" above, collectively, the "Security").
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6. Authority to Pledge Franchise Fees. The City does hereby authorize the pledging
and granting of a security interest in and to the Security to and in favor of Lessor and its assignee.
7. Special Funds; No Pledging of Taxes or Assessments. The Pledged Revenues are
derived from special funds and sources that do not constitute and are not comprised of
assessments for local improvements and taxes. Except for the pledging and granting of a security
interest in the Pledged Revenues, the Disbursement Account and the Pledged Revenue Account
by the City to and in favor of Lessor, and the use of the Pledged Revenues to fund the obligations
set forth in this Agreement, the City shall possess no further financial obligation of any nature
under and with respect to the Agreement. It is expressly agreed and understood that neither the
full faith and credit of the City, Crittenden County, or the State of Arkansas, nor any other political
subdivision or entity of the foregoing is pledged to the repayment of the financial obligations as
set forth in the Agreement.
8. Covenant to Maintain Franchise Fee and Court Fines and Forfeiture Collection
Rates. The City covenants and agrees that, so long as it possesses financial obligations
outstanding under the Agreement, it shall never reduce franchise fees collected by the City in
connection with the use of the City's rights of way and municipally-owned property by third party
utility and other companies. The adoption and enforcement of said franchise fees are hereby
ratified, confirmed and continued. In the event that the payment in lieu of franchise fees
arrangement with the Utility Department of the City of West Memphis is terminated, the City
covenants to enter into a replacement franchise agreement and collect franchise fees from the
Utility Department or any successor thereto in an amount which is not less than the payments in
lieu of franchise fees which are currently being received by the City and such franchise fees shall
be pledged to repayment of the Lease Payments under the Agreement. The City covenants and
agrees not to reduce the collection rate at which court fines and forfeitures are charged so long
as it has financial obligations outstanding under the Agreement.
9. Continuous Operations of Project. The City covenants and agrees that it shall
continuously operate the Project as contemplated as of the date hereof for the benefit of the
City's residents.
10. Construction Fund; Disbursements. Proceeds realized from the City's execution
of the Agreement are authorized to be initially deposited into the Disbursement Account (as
defined in the Agreement) to be held and maintained by a third-party financial institution.
Construction draws therefrom are authorized to be withdrawn upon the presentation of
requisition requests, current invoices, mechanics and materialmen's lien waivers, and those
other conditions precedent to a release of construction funds as that disbursement agreement
associated with the administration of the construction funds might specify as set forth in the
Agreement and the Disbursement Agreement. Draws therefrom are additionally authorized to
be withdrawn in order to pay off and redeem in full the principal of all outstanding 2006 Bonds.
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11. Pledged Revenue Account. Proceeds realized from the collection of the Pledged
Revenues shall be deposited by the City in an account within its General Fund and earmarked as
pledged to the payment of the indebtedness approved by this Ordinance (the "Pledged Revenue
Account"). The City agrees that it shall always maintain an accounting of the receipt of Pledged
Revenues and the expenditures thereof, and that an audit of such receipts and expenditures will
be performed on an annual basis by the Legislative Audit of the State of Arkansas. The City agrees
that the Pledged Revenues maintained in the General Fund of the City shall be utilized first to
repay the principal of, premium, if any, and interest on the indebtedness approved hereby, and
after payment of such indebtedness the City may use such Pledged Revenues for other municipal
purposes. The City agrees that its General Fund shall be maintained in a depository institution
designated by the City from time to time, so long as said institution is insured by the FDIC or any
successor entity.
12. Grant of Security Interests. In order to secure the payment of the Lease Payments
as set forth and defined within the Agreement, the City does hereby grant to Lessor and Lessor's
successors and assigns forever, a security interest in and to and a pledge of the Security.
13. Additional Parity Indebtedness Issuance. The City will not enter into, execute
and/or issue subsequent lease purchase agreements, bonds, notes or other evidences of
indebtedness (collectively, "Additional Parity Indebtedness") that will enjoy and realize, pari
passu, a parity first lien on Pledged Revenues that is shared with the Lessor unless no Event of
Default Account (as defined in the Agreement) has occurred and is continuing and the annual
Pledged Revenues for the City's fiscal year immediately preceding the issuance of such Additional
Parity Indebtedness are not less than 1.5 times the maximum annual Lease Payments under the
Agreement and the maximum annual debt service of the proposed Additional Parity
Indebtedness, as evidenced by a certificate issued by the City's external accountant.
The City may issue Additional Parity Indebtedness that is secured by a lien on the Pledged
Revenues that is subordinate to the liens granted on Pledged Revenues as set forth herein or
within any Additional Parity Indebtedness upon the written consent of Lessor, which consent
shall not be unreasonably withheld.
14. Prohibition Against Private Business Use. The City shall assure that (i) not in excess
of 10% of the proceeds of the Agreement is used for Private Business Use if, in addition, the
payment of more than 10% of the principal or 10% of the interest due on the Agreement during
the term thereof is, under the terms of the Agreement or any underlying arrangement, directly
or indirectly secured by any interest in property used or to be used for a Private Business Use or
in payments in respect of property used or to be used for a Private Business Use or is to be derived
from payments, whether or not to the City, in respect of property or borrowed moneys used or
to be used for a Private Business Use; and (ii) that, in the event that both (A) in excess of 5% of
the proceeds of the Agreement are used for a Private Business Use, and (B) an amount in excess
of 5% of the principal or 5% of the interest due on the Agreement during the term thereof is,
under the terms of the Agreement or any underlying arrangement, directly or indirectly, secured
by any interest in property used or to be used for said Private Business Use or in payments in
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respect of property used or to be used for said Private Business Use or is to be derived from
payments, whether or not to the City, in respect of property or borrowed money used or to be
used for said Private Business Use, then said excess over said 5% of proceeds of the Agreement
used for a Private Business Use shall be used for a Private Business Use related to the
governmental use of the Improvements. The City shall assure that not in excess of 5% of the
proceeds of the Agreement are used, directly or indirectly, to make or finance a loan to persons
other than state or local governmental units. As used in this Section, "Private Business Use"
means use directly or indirectly in a trade or business carried on by a natural person or in any
activity carried on by a person other than a natural person, excluding, however, use by a state or
local governmental unit and use as a member of the general public.
15. Non-arbitrage. The City covenants that it shall not take any action or suffer or
permit any action to be taken or condition to exist which causes or may cause the interest payable
under the Agreement to be subject to federal income taxation. Without limiting the generality
of the foregoing, the City covenants that no monies held in any fund in connection with the
Agreement will be used directly or indirectly in such manner as to cause the agreement to be
treated as an "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code.
16. Ordinance Constitutes Contract. The terms of this Ordinance shall constitute a
contract among the City and the Lessor and its assignees and no modifications or amendments
of this Ordinance or the Agreement shall occur absent the express prior written consent of the
Lessor or its assignee.
17. Severability. The provisions of this Ordinance are hereby declared to be
separable, and if any provision shall for any reason be held illegal or invalid, it shall not affect the
validity of the remainder of this Ordinance. All Ordinances and parts thereof in conflict herewith
are hereby repealed to the extent of such conflict.
(Signature Page Follows)
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This Ordinance was adopted at a duly convened meeting of the City Council of the City of
West Memphis, Arkansas as of the date referenced above.
Marco McClendon, Mayor
h
Jo ay, City Clerk
Approved As t orm:
Micha Stephenson, C y Atrney
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CITY CLERK CERTIFICATION
I, duly serving City Clerk of the City of West Memphis, Arkansas, do hereby certify and
attest that the following Ordinance was duly adopted at a meeting of the City and continues to
remain in full force and effect and unmodified by any amendments thereto.
Joyce Gray, City Clerk
City Council Members Voting
in Favor of Ordnance:
ell
City Council Members Voting Against
Ordinance:
City Council Members Abstaining or Not Present:
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