§ 2.40.20. Promissory note.

A.

The city council hereby finds that the police equipment will have a useful life of more than one-year and that the aggregate principal amount of the note and any other outstanding indebtedness of the city issued pursuant to Amendment No. 78 and the authorizing legislation does not exceed five percent of the assessed value of taxable property located within the city as determined by the last tax assessment.

B.

The issuance of the note in the principal amount of one million three hundred thousand dollars ($1,300,000.00) is hereby authorized under Amendment No. 78 and the authorizing legislation in order to finance the costs of the acquisition of the police equipment. The note shall be dated the date of issuance (the "closing date") and shall bear interest on the outstanding principal amount at the rate of 1.70 percent per annum. The note shall be subject to prepayment in whole or in part at any time.

C.

The note shall be sold to the purchaser for the purchase price of one hundred percent (100) percent of par. The purchase price shall be paid in multiple advances as follows:

1.

Six hundred thousand dollars ($600,000.00) on the closing date;

2.

Four hundred thousand dollars ($400,000.00) on May 14, 2012; and

3.

Three hundred thousand dollars ($300,000.00) on June 15, 2012.

The note shall be repaid in four annual amortized installments of principal and interest, commencing one-year from the closing date and on the same day of each year thereafter, with the final payment due not later than forty-eight (48) months after the closing date.

D.

As provided in Amendment No. 78, the debt service payments on the note in each fiscal year shall be charged against and paid from the general revenues of the city for such fiscal year. For the purpose of making the debt service payments there is hereby, and shall be, appropriated to pay the note, an amount of general revenues of the city sufficient for such purposes. The finance director is hereby authorized and directed to withdraw general revenues in the amounts and at the times necessary to make the debt service payments on the note.

E.

1. The city covenants with the purchaser 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 on the note to be included in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the city covenants with the purchaser that the proceeds of the sale of the note will not be used directly or indirectly in such manner as to cause the note to be treated as an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code").

2.

The city covenants with the purchaser that it will not use or permit the use of the police equipment or the proceeds of the note in such manner as to cause the note to be a "private activity bond" within the meaning of Section 141 of the Code. In this regard, the city covenants with the purchaser:

i.

That it will not use (directly or indirectly) the proceeds of the note to make or finance loans to any person, and

ii.

That while the note is outstanding the police equipment will only be used by state and local governmental entities and by other persons on a basis as members of the general public.

3.

The note is hereby designated as a "qualified tax-exempt obligation" (bank qualified) within the meaning of the Code. The city represents to the purchaser that the aggregate principal amount of its qualified tax-exempt obligations (excluding "private activity bonds" within the meaning of Section 141 of the Code which are not "qualified 501(c)(3) bonds" within the meaning of Section 145 of the Code), including those of its subordinate entities, issued in calendar year 2012 is not expected to exceed ten million dollars ($10,000,000.00).

4.

The city expects to spend all proceeds of the note within six months of the closing date to acquire the police equipment.

5.

The city covenants with the purchaser that it will not reimburse itself from note proceeds for any costs paid prior to the date the note is issued except in compliance with United States Treasury Regulation No. 1.150-2 (the "regulation"). The ordinance from which this section is derived shall constitute an "official intent" for purposes of the regulation.

6.

The city covenants with the purchaser that it will submit to the Secretary of the Treasury of the United States, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the note is issued, a statement concerning the note which contains the information required by Section 149(e) of the Code.

F.

The city covenants with the purchaser that it will provide the purchaser with the following information while the note is outstanding:

1.

Not later than ninety (90) days after the end of each fiscal year, financial statements of the city for such fiscal year; and

2.

Not later than December 31 of each year, a budget for the next fiscal year.

G.

The note may be secured by a lien on and security interest in all or a portion of the police equipment.

H.

The mayor and city clerk, for and on behalf of the city, are hereby authorized and directed to do any and all things necessary to evidence and grant a lien on and security interest in the police equipment to secure the note and to effect the issuance, execution, sale and delivery of the note and the performance of all acts of whatever nature necessary to effect and carry out the authority conferred by this section. The mayor and city clerk are hereby further authorized and directed, for and on behalf of the city, to execute all papers, documents, agreements, certificates and other instruments that may be required for the carrying out of such authority or to evidence the exercise thereof.

( Ord. No. 2012-07, §§ 1—8, 3-1-2012 )