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HomeMy WebLinkAboutResolution 5203-03-2020 RESOLUTION NO. 5203-03-2020 RESOLUTION AUTHORIZING DEFEASANCE OF AD VALOREM TAX SUPPORTED OBLIGATIONS AND WATER AND SEWER SYSTEM REVENUE BONDS WHEREAS, the City of Fort Worth, Texas (the "City") has outstanding the obligations described in Exhibit A attached hereto (the "Defensible Obligations"); and WHEREAS, the laws of the State of Texas permit the City Council to effect a defeasance of the Defeasible Obligations prior to their scheduled maturities; and WHEREAS, City staff has determined and recommended to the City Council that effecting the defeasance of all or a portion of the Defeasible Obligations in the manner described below will be the most beneficial use of available surplus funds in the Interest and Redemption Funds for the ad valorem tax supported obligations described in Exhibit A attached hereto, and the most beneficial use of available water and sewer system revenues for the water and sewer system revenue bonds described in Exhibit A attached hereto, resulting in the reduction of the outstanding indebtedness secured by such taxes and revenues. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: Section 1. That the City Council hereby authorizes the use of available surplus and other funds in the Interest and Redemption Funds for the ad valorem tax supported obligations described in Exhibit A attached hereto for the purpose of effecting the defeasance of all or a portion of such ad valorem tax supported obligations (the "Defeased Tax Supported Obligations"). Section 2. That the City Council hereby authorizes the use of water and sewer system revenues in the Debt Service Fund for the water and sewer system revenue bonds described in Exhibit A attached hereto for the purpose of effecting the defeasance of all or a portion of such water and sewer system revenue bonds (the "Defeased Revenue Obligations"). Section 3. That the Defeased Tax Supported Obligations and the Defeased Revenue Obligations are herein collectively referred to as the "Defeased Obligations." Section 4. That the City Manager is hereby directed to fund the defeasance of Defeased Tax Supported Obligations from available surplus and other funds in the Interest and Redemption Funds for the Defeased Tax Supported Obligations in an amount equal to the principal amount of the Defeased Tax Supported Obligations to be defeased, plus accrued interest on the Defeased Tax Supported Obligations to their maturity date or their date fixed for redemption, as determined by the City Manager. Section 5. That the City Manager is hereby directed to fund the defeasance of Defeased Revenue Obligations from available water and sewer system revenues in the Debt Service Fund for the Defeased Revenue Obligations in an amount equal to the principal amount of the Defeased Obligations to be defeased, plus accrued interest on the Defeased Obligations to their maturity date or their date fixed for redemption, as determined by the City Manager. Section 6. That the City Manager and the City Secretary are hereby directed to execute, attest, seal and deliver the Escrow Agreement, in substantially the form attached to this Resolution as Exhibit B, for the defeasance of the Defeased Obligations. If required by law, the City shall not execute the Escrow Agreement unless the Escrow Agent has confirmed to the City Manager that either it has made disclosure filings to the Texas Ethics Commission in accordance with Section 2252.908, Texas Government Code, or is exempt from making such filings under Section 2252.908(c)(4), Texas Government Code. Within thirty (30) days of receipt of the disclosure filings from the Escrow Agent, the City will acknowledge such disclosure filings in accordance with the rules of the Texas Ethics Commission. Section 7. That the City Manager is hereby directed to cause the Defeased Obligations that are eligible for redemption prior to their stated maturities by their terms to be redeemed prior to their scheduled maturities on the respective Call Dates as shown in Exhibit A. Notice of the redemption of the Defeased Obligations shall be in substantially the form attached to this Resolution as Exhibit C, and shall be given in the manner provided in the proceedings authorizing the issuance of the Defeased Obligations. Section 8. That this Resolution shall become effective immediately upon its adoption, in accordance with the provisions of Section 1201.028, Texas Government Code. Section 9. That this City Council officially finds and determines that the meeting at which this Resolution is adopted was open to the public, and that public notice of the time, place, and purpose of such meeting was given, all as required by Chapter 551, Texas Government Code. PASSED AND APPROVED the 19th day of March 2020. Mayor, Cit rt Worth, Texas ATTES t FOf 7 City Secretary, C. of o 'Wo , Texas �QE APPROVED AS TO FORM AND LEGALITY: U City n�f , City of Foh Worth, Texas Signature Page—Resolution Authorising Defeasance of Obligations EXHIBIT A Defeased Tax Supported Obligations City of Fort Worth, Texas Combination Tax and Revenue Certificates of Obligation, Series 2010 Maturity Date Interest Rate Par Amount($) Call Date March 1, 2029 4.10% 1,490,000 April 24, 2020* March 1, 2031 4.25% 4,815,000 April 24, 2020* City of Fort Worth, Texas General Purpose Refunding and Improvement Bonds, Series 2012 Maturity Interest Rate Par Amount ($) Call Date March 1, 2028 5.00% 3,315,000 March 1, 2022 March 1, 2029 3.00% 4,260,000 March 1, 2022 March 1, 2030 5.00% 4,260,000 March 1, 2022 March 1, 2031 5.00% 4,260,000 March 1, 2022 March 1, 2032 5.00% 4,255,000 March 1, 2022 Defeased Revenue Obligations City of Fort Worth, Texas Water and Sewer System Revenue Bonds, Series 2010C Maturity Date Interest Rate Par Amount($) Call Date February 15, 2027 4.00% 2,080,000 April 24, 2020* February 15, 2028 4.00% 3,065,000 April 24, 2020* February 15, 2029 4.00% 3,220,000 April 24, 2020* February 15, 2030 4.00% 3,385,000 April 24, 2020* *Or such later date as determined by the City Manager All Defeased Obligations shall defeased at par plus accrued interest to the respective Call Dates. ESCROW AGREEMENT CITY OF FORT WORTH, TEXAS 2020 ESCROW THIS ESCROW AGREEMENT, dated as of March _, 2020 (herein, together with any amendments or supplements hereto, called the "Agreement") is entered into by and between the City of Fort Worth, Texas (herein called the "Issuer") and BOKF, NA, as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The addresses of the Issuer and the Escrow Agent are shown on Exhibit "A" attached hereto and made a part hereof. WITNESSETH: WHEREAS, the Issuer heretofore issued and there presently remain outstanding the obligations (the "Defeased Bonds") described in the Verification Report of Public Finance Partners LLC, a true and correct copy of which is attached hereto as Exhibit "B" and made a part hereof(the "Report"), relating to the Defeased Bonds; and WHEREAS, the Defeased Bonds are scheduled to mature on such dates, bear interest at such rates, and be payable at such times and in such amounts as are set forth in the Report; and WHEREAS, when firm banking arrangements have been made for the payment of principal and interest to the maturity or redemption date of the Defeased Bonds, then the Defeased Bonds shall no longer be regarded as outstanding except for the purpose of receiving payment from the funds provided for such purpose; and WHEREAS, Chapter 1207, Texas Government Code ("Chapter 1207"), authorizes the Issuer to deposit available funds of the Issuer directly with any place of payment (paying agent) for any of the Defeased Bonds, and such deposit, if made before such payment dates and in suffi- cient amounts, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Defeased Bonds; and WHEREAS, Chapter 1207 further authorizes the Issuer to enter into an escrow agreement with any such paying agent for any of the Defeased Bonds with respect to the safekeeping, investment, administration and disposition of any such deposit, upon such terms and conditions as the Issuer and such paying agent may agree, provided that such deposits may be invested in direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and which may be in book entry form, and which shall mature and/or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment of principal and interest on the Defeased Bonds when due; and WHEREAS, the Escrow Agent is the paying agent for the Defeased Bonds, and this Agreement constitutes an escrow agreement of the kind authorized and required by Chapter 1207; and WHEREAS, Chapter 1207 makes it the duty of the Escrow Agent to comply with the terms of this Agreement and timely make available the amounts required to provide for the payment of the principal of and interest on such obligations when due, and in accordance with their terms, but solely from the funds, in the manner, and to the extent provided in this Agreement; and WHEREAS, the Issuer has determined to fund with cash the deposit to the Escrow Fund created pursuant to the terms of this Agreement for the payment of the principal of the Defeased Bonds at their respective dates of maturity or date of redemption and the interest thereon to such dates; and WHEREAS, the Issuer desires that the cash deposited to the credit of such Escrow Fund shall be applied to purchase certain direct obligations of the United States of America hereinafter defined as the "Escrowed Securities" for deposit to the credit of the Escrow Fund created pursuant to the terms of this Agreement and to establish a beginning cash balance (if needed) in such Escrow Fund; and WHEREAS, the Escrowed Securities shall mature and the interest thereon shall be payable at such times and in such amounts so as to provide moneys which, together with any cash balances from time to time on deposit in the Escrow Fund, will be sufficient to pay interest on the Defeased Bonds as it accrues and becomes payable and the principal of the Defeased Bonds on their respective dates of maturity or date of redemption; and WHEREAS, to facilitate the receipt and transfer of proceeds of the Escrowed Securities, particularly those in book entry form, the Issuer desires to establish the Escrow Fund at the designated corporate trust office of the Escrow Agent; and WHEREAS, the Escrow Agent is herein also referred to as the "Paying Agent", and in such capacity as paying agent for the Defeased Bonds, acting through the Escrow Agent, is also a party to this Agreement, as the sole Paying Agent for the Defeased Bonds, to acknowledge its acceptance of the terms and provisions of this Agreement in such capacity. NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained, the sufficiency of which hereby are acknowledged, and to secure the full and timely payment of principal of and the interest on the Defeased Bonds, the Issuer and the Escrow Agent mutually undertake, promise, and agree for themselves and their respective representatives and successors, as follows: ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1.01. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: "Code" means the Internal Revenue Code of 1986, as amended, or to the extent applicable the Internal Revenue Code of 1954, together with any other applicable provisions of any successor federal income tax laws. "Escrow Fund" means the fund created by this Agreement to be administered by the Escrow Agent pursuant to the provisions of this Agreement. "Escrowed Securities" means the direct noncallable, non-prepayable United States Treasury obligations and obligations the due timely payment of which is unconditionally guaranteed by the United States of America described in the Report or cash or other direct obligations of the United States of America substituted therefor pursuant to Article IV of this Agreement. 2 Section 1.02. Other Definitions. The terms "Agreement", "Defeased Bonds", "Escrow Agent", "Issuer", "Paying Agent" and 'Report", when they are used in this Agreement, shall have the meanings assigned to them in the preamble to this Agreement. Section 1.03. Interpretations. The titles and headings of the articles and sections of this Agreement have been inserted for convenience and reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the intended purpose of providing for the defeasance of the Defeased Bonds in accordance with applicable law. ARTICLE II DEPOSIT OF FUNDS AND ESCROWED SECURITIES The Issuer shall deposit, or cause to be deposited, with the Escrow Agent, for deposit in the Escrow Fund, the funds and Escrowed Securities described in the Report, and the Escrow Agent shall, upon the receipt thereof, acknowledge such receipt to the Issuer in writing. ARTICLE III CREATION AND OPERATION OF ESCROW FUND Section 3.01. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the City of Fort Worth, Texas Water and Sewer System Revenue Bonds 2020 Defeasance Escrow Fund (the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will irrevocably deposit to the credit of the Escrow Fund the funds and the Escrowed Securities described in the Report. Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow Fund, (b) shall be applied only in strict conformity with the terms and conditions of this Agreement, and (c) are hereby irrevocably pledged to the payment of the principal of and interest on the Defeased Bonds, which payment shall be made by timely transfers of such amounts at such times as are provided for in Section 3.02 hereof. When the final transfers have been made for the payment of such principal of and interest on the Defeased Bonds, any balance then remaining in the Escrow Fund shall be transferred to the Issuer, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 3.02. Payment of Principal and Interest. The Escrow Agent is hereby irrevocably instructed to transfer from the cash balances from time to time on deposit in the Escrow Fund, the amounts required to pay the principal of the Defeased Bonds and interest thereon in the amounts and on the date shown in the Report. Section 3.03. Sufficiency of Escrow Fund. The Issuer represents that the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balances on deposit from time to time in the Escrow Fund will be at all times sufficient to provide moneys for transfer to the Paying Agent at the times and in the amounts required to pay the interest on the Defeased Bonds as such interest comes due and the principal of the Defeased Bonds as the Defeased Bonds mature, all as more fully set forth in the Report. If, for any reason, at any time, the cash balances on deposit or scheduled to be on deposit in the Escrow Fund shall 3 be insufficient to transfer the amounts required by each place of payment (paying agent) for the Defeased Bonds to make the payments set forth in Section 3.02 hereof, the Issuer shall timely deposit in the Escrow Fund, from any funds that are lawfully available therefor, additional funds in the amounts required to make such payments. Notice of any such insufficiency shall be given as promptly as practicable as hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the Issuer's failure to make additional deposits thereto. Section 3.04. Trust Fund. The Escrow Agent shall hold at all times the Escrow Fund, the Escrowed Securities and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust funds for the benefit of the owners of the Defeased Bonds; and a special account thereof shall at all times be maintained on the books of the Escrow Agent. The owners of the Defeased Bonds shall be entitled to the same preferred claim and first lien upon the Escrowed Securities, the proceeds thereof, and all other assets of the Escrow Fund to which they are entitled as owners of the Defeased Bonds. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the Issuer, and the Escrow Agent shall have no right to title with respect thereto except as a constructive trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants, drafts or checks drawn by the Issuer or, except to the extent expressly herein provided, by the Paying Agent. Section 3.05. Security for Cash Balances. Cash balances from time to time on deposit in the Escrow Fund shall, to the extent not insured by the Federal Deposit Insurance Corporation or its successor, be continuously collateralized by securities or obligations which qualify and are eligible under both the laws of the State of Texas and the laws of the United States of America, having a market value at least equal to such cash balances. ARTICLE IV LIMITATION ON INVESTMENTS Section 4.01. Duty of Escrow Agent to Investment Funds. Except as provided in Sections 3.02, 4.02 and 4.03 hereof, the Escrow Agent shall not have any power or duty to invest or reinvest any money held hereunder, or to make substitutions of the Escrowed Securities, or to sell, transfer or otherwise dispose of the Escrowed Securities. Section 4.02. Substitutions and Reinvestments. At the direction of the Issuer, the Escrow Agent shall reinvest cash balances representing receipts from the Escrowed Securities, make substitutions of the Escrowed Securities or redeem the Escrowed Securities and reinvest the proceeds thereof in other Escrowed Securities or hold such proceeds as cash, together with other moneys or securities held in the Escrow Fund, provided that the Issuer delivers to the Escrow Agent the following: (1) an opinion by an independent certified public accountant that after such substitution or reinvestment the principal amount of the securities in the Escrow Fund, together with the interest thereon and other available moneys, will be sufficient to pay, without further investment or reinvestment, as the same become due in accordance with 4 the Report, the principal of, interest on and premium, if any, on the Defeased Bonds which have not previously been paid, and (2) an unqualified opinion of nationally recognized municipal bond counsel to the effect that (a) such substitution or reinvestment will not cause the Defeased Bonds to be "arbitrage bonds" within the meaning of section 103 of the Code or the regulations thereunder in effect on the date of such substitution or reinvestment, or otherwise make the interest on the Defeased Bonds subject to federal income taxation, and (b) such substitution or reinvestment complies with the Constitution and laws of the State of Texas and with all relevant documents relating to the issuance of the Defeased Bonds. The Escrow Agent shall have no responsibility or liability for loss or otherwise with respect to investments made at the direction of the Issuer. Section 4.03. Substitution for Escrowed Securities. Concurrently with the initial deposit by the Issuer with the Escrow Agent, but not thereafter, the Issuer, at its option, may substitute cash or non-interest bearing direct noncallable, non-prepayable obligations of the United States Treasury (i.e., Treasury obligations which mature and are payable in a stated amount on the maturity date thereof, and for which there are no payments other than the payment made on the maturity date) (the "Substitute Obligations") for non-interest bearing Escrowed Securities, if any, but only if such Substitute Obligations (a) are in an amount, and/or mature in an amount, which is equal to or greater than the amount payable on the maturity date of the obligation listed in the Report for which such Substitute Obligation is substituted, (b) mature on or before the maturity date of the obligation listed in the Report for which such Substitute Obligation is substituted, and (c) produce the amount necessary to pay the interest on and principal of the Defeased Bonds, as set forth in the Report, as verified by a certified public accountant or a firm of certified public accountants. If, concurrently with the initial deposit by the Issuer with the Escrow Agent, any such Substitute Obligations are so substituted for any Escrowed Securities, the Issuer may, at any time thereafter, substitute for such Substitute Obligations the same Escrowed Securities for which such Substitute Obligations originally were substituted. Section 4.04. Arbitrage. The Issuer hereby covenants and agrees that it shall never request the Escrow Agent to exercise any power hereunder or permit any part of the money in the Escrow Fund or proceeds from the sale of Escrowed Securities to be used directly or indirectly to acquire any securities or obligations if the exercise of such power or the acquisition of such securities or obligations would cause any Defeased Bonds to be an "arbitrage bond" within the meaning of the Code. 5 ARTICLE V APPLICATION OF CASH BALANCES Except as provided in Sections 3.01, 3.02, 4.02 and 4.03 hereof, no withdrawals, transfers, or reinvestment shall be made of cash balances in the Escrow Fund. ARTICLE VI RECORDS AND REPORTS Section 6.01. Records. The Escrow Agent will keep books of record and account in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such books shall be available for inspection at reasonable hours and under reasonable conditions by the Issuer and the owners of the Defeased Bonds. Section 6.02. Reports. While this Agreement remains in effect, the Escrow Agent annually shall prepare and send to the Issuer a written report summarizing all transactions relating to the Escrow Fund during the preceding year, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from the Escrow Fund for payments on the Defeased Bonds or otherwise, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. ARTICLE VII CONCERNING THE PAYING AGENTS AND ESCROW AGENT Section 7.01. Representations. The Escrow Agent hereby represents that it is the duly acting Paying Agent for the Defeased Bonds, it has all necessary power and authority to enter into this Agreement and undertake the obligations and responsibilities imposed upon it herein, and that it will carry out all of its obligations hereunder. Pursuant to Section 2271, Texas Government Code, the Escrow Agent hereby represents that as a "Company", as defined in Section 808.001, Texas Government Code, the Escrow Agent, or any wholly owned subsidiary, majority-owned subsidiary, parent company or affiliate of the Escrow Agent, does not Boycott Israel and, subject to or as otherwise required by applicable Federal law, including, without limitation, 50 U.S.C. Section 4607, the Escrow Agent, as a "Company", as defined in Section 808.001, Texas Government Code, or any wholly owned subsidiary, majority-owned subsidiary, parent company or affiliate of the Escrow Agent, agrees not to Boycott Israel during the term of this Agreement. For purposes of this Section, "Boycott Israel" shall have the meaning given such term in Section 808.001, Texas Government Code, and the Escrow Agent understands "affiliate" to mean any entity that controls, is controlled by, or is under common control with the Escrow Agent and exists to make a profit. 6 For purposes of Subchapter F of Chapter 2252 of the Texas Government Code, that at the time of execution of this Agreement, the Escrow Agent hereby represents and warrants that as a "Company", as defined in Section 808.001, Texas Government Code, the Escrow Agent, or any wholly owned subsidiary, majority-owned subsidiary, parent company or affiliate of the Escrow Agent, (i) does not engage in business with Iran, Sudan or any foreign terrorist organization as described in Chapters 808 or 2270 of the Texas Government Code, or Subchapter F of Chapter 2252 of the Texas Government Code, and (ii) is not a company listed by the Texas Comptroller of Public Accounts under Sections 808.051 or 2252.153 of the Texas Government Code. The term "foreign terrorist organization" shall have the meaning given such term in Section 2252.151, Texas Government Code. The Escrow Agent understands "affiliate" to mean any entity that controls, is controlled by, or is under common control with the Escrow Agent and exists to make a profit. Section 7.02. Limitation on Liability. The liability of the Escrow Agent to transfer funds for the payment of the principal of and interest on the Defeased Bonds shall be limited to the proceeds of the Escrowed Securities and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the contrary, neither the Escrow Agent nor the Paying Agent shall have any liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligors of the Escrowed Securities to make timely payment thereon, except for the obligation to notify the Issuer as promptly as practicable of any such occurrence. The recitals herein shall be taken as the statements of the Issuer and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. The Escrow Agent is not a party to the proceedings authorizing the Defeased Bonds and is not responsible for nor bound by any of the provisions thereof (except as a place of payment and paying agent and/or a Paying Agent/Registrar therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Agreement. The Escrow Agent makes no representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the Issuer thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such matters. It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for its own action, neglect or default, nor for any loss unless the same shall have been through its negligence or willful misconduct. Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the Issuer with respect to arrangements or contracts 7 with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund, to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination the Escrow Agent shall be liable only for its own willful misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the Issuer or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this connection may make inquiries of, and consult with, among others, the Issuer at any time. The Escrow Agent may conclusively rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it in good faith and in accordance therewith. Section 7.03. Compensation. (a) Concurrently with the deposit of cash to the credit of the Escrow Fund by the Issuer, the Issuer shall pay to the Escrow Agent, as a fee for performing the services hereunder and for all expenses incurred or to be incurred by the Escrow Agent in the administration of this Agreement, and for all future paying agency services as Paying Agent for certain of the Defeased Bonds, $2,000, the sufficiency of which is hereby acknowledged by the Escrow Agent. In the event that the Escrow Agent is requested to perform any extraordinary services hereunder, the Issuer hereby agrees to pay reasonable fees to the Escrow Agent for such extraordinary services and to reimburse the Escrow Agent for all expenses incurred by the Escrow Agent in performing such extraordinary services, and the Escrow Agent hereby agrees to look only to the Issuer for the payment of such fees and reimbursement of such expenses. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees for its services, whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses. (b) Upon receipt of the aforesaid specific sums stated in subsection (a) of this Section 7.03 for Escrow Agent and paying agency fees, expenses, and services, the Escrow Agent shall acknowledge such receipt to the Issuer in writing. Section 7.04. Successor Escrow Agents. If at any time the Escrow Agent or its legal successor or successors should become unable, through operation or law or otherwise, to act as escrow agent hereunder, or if its property and affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the Issuer, by appropriate action, promptly shall appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been appointed by the Issuer within 60 days, a successor may be appointed by the owners of a majority in principal amount of the Defeased Bonds then outstanding by an instrument or instruments in writing filed with the Issuer, signed by such owners or by their duly authorized attorneys-in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the Escrow Agent may appoint a successor or petition any court of competent jurisdiction for the appointment of a successor 8 Escrow Agent or for other appropriate relief. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent. Any successor Escrow Agent shall be a corporation organized and doing business under the laws of the United States or the State of Texas, authorized under such laws to exercise corporate trust powers, authorized under Texas law to act as an escrow agent, having its principal office and place of business in the State of Texas, having a combined capital and surplus of at least $50,000,000 and subject to the supervision or examination by Federal or State authority. Any successor Escrow Agent shall execute, acknowledge and deliver to the Issuer and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Agreement, all the rights, powers and trusts of the Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights,powers and duties. The Escrow Agent at the time acting hereunder may at any time resign and be discharged from the trust hereby created by giving not less than sixty (60) days' written notice to the Issuer and publishing notice thereof, specifying the date when such resignation will take effect, in a newspaper printed in the English language and with general circulation in New York, New York, such publication to be made once at least three (3) weeks prior to the date when the resignation is to take effect. No such resignation shall take effect unless a successor Escrow Agent shall have been appointed by the owners of the Defeased Bonds or by the Issuer as herein provided and such successor Escrow Agent shall be a paying agent for the Defeased Bonds and shall have accepted such appointment, in which event such resignation shall take effect immediately upon the appointment and acceptance of a successor Escrow Agent. If the sixty (60) day notice period expires and no successor has been appointed, the Escrow Agent, at the expense of the Issuer, has the right to petition a court of competent jurisdiction to appoint a successor under this Agreement. Under any circumstances, the Escrow Agent shall pay over to its successor Escrow Agent proportional parts of the Escrow Agent's fee and, if applicable, its Paying Agent's fee hereunder. Section 7.05. Indemnity. To the extent permitted by law, the Issuer agrees to indemnify and save harmless the Escrow Agent from all losses, liabilities, costs and expenses, including reasonable attorney's fees and expenses, which may be incurred by the Escrow Agent as a result of its acceptance of the Escrow Fund or arising from the performance of its duties hereunder, unless such losses, liabilities, costs and expenses have resulted from the bad faith or negligence of the Escrow Agent, and such indemnification shall survive the resignation by or removal of the Escrow Agent, or the termination of this Agreement. 9 ARTICLE VIII MISCELLANEOUS Section 8.01. Notice. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid addressed to the Issuer or the Escrow Agent at the address shown on Exhibit "A" attached hereto. The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten (10) days prior notice thereof. Prior written notice of any amendment to this Agreement contemplated pursuant to Section 8.08 and immediate written notice of any incidence of a severance pursuant to Section 8.04 shall be sent to Moody's Investors Service, Attn: Public Finance Rating Desk/Defeased Bonds, 99 Church Street, New York, New York 10007; Standard & Poor's Corporation, Attn: Municipal Bond Department, 25 Broadway, New York, New York 10004; and Fitch Ratings, Attn: Municipal Structured Finance, One State Street Plaza, New York, New York 10004. Section 8.02. Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have no further obligations or responsibilities hereunder to the Issuer, the owners of the Defeased Bonds or to any other person or persons in connection with this Agreement. Section 8.03. Binding Agreement. This Agreement shall be binding upon the Issuer and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the owners of the Defeased Bonds, the Issuer, the Escrow Agent and their respective successors and legal representatives. Section 8.04. Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 8.05. Texas Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Texas. Section 8.06. Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Agreement. Section 8.07. Effective Date of Agreement. This Agreement shall be effective upon receipt by the Escrow Agent of the funds described in the Report and the Escrowed Securities, together with the specific sums stated in subsection (a) of Section 7.03 for Escrow Agent and paying agency fees, expenses, and services. Section 8.08. Amendments. This Agreement shall not be amended except to cure any ambiguity or formal defect or omission in this Agreement. No amendment shall be effective unless the same shall be in writing and signed by the parties thereto. No such amendment shall adversely affect the rights of the holders of the Defeased Bonds. 10 Section 8.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same instrument. [EXECUTION PAGE FOLLOWS] 11 EXECUTED as of the date first written above. CITY OF FORT WORTH, TEXAS By City Manager ATTEST: City Secretary (CITY SEAL) BOKF,NA, Escrow Agent By Title: 12 INDEX TO EXHIBITS Exhibit "A" Addresses of the Issuer and the Escrow Agent Exhibit "B" Verification Report of Public Finance Partners LLC EXHIBIT "A" ADDRESSES OF THE ISSUER AND ESCROW AGENT ISSUER City of Fort Worth, Texas 200 Texas Street Fort Worth, Texas 76102 Attention: City Manager ESCROW AGENT BOKF, NA 5956 Sherry Lane, Suite 1201 Dallas, Texas 75225 Attention: Financial Services EXHIBIT "B" VERIFICATION REPORT OF THE ARBITRAGE GROUP, INC. NOTICE OF REDEMPTION CITY OF FORT WORTH,TEXAS Notice is hereby given that the following obligations issued by the City of Fort Worth,Texas(the"City")are called for redemption prior to their scheduled maturities on the dates and at the redemption price of par plus accrued interest to the redemption date: CITY OF FORT WORTH, TEXAS COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2010, obligations maturing on March 1 in each of the years 2029 and 2031, aggregating$6,305,000 in principal amount;REDEMPTION DATE:April 24,2020. Maturity Date Principal Amount Interest Rate CUSIP 03/1/2029 1,490,000 4.10% 349425N46 03/1/2031 4,815,000 4.25% 349425N61 CITY OF FORT WORTH, TEXAS GENERAL PURPOSE REFUNDING AND IMPROVEMENT BONDS, SERIES 2012, obligations maturing on March 1 in each of the years 2028 through 2032, aggregating$20,610,000 in principal amount;REDEMPTION DATE:March 1,2022. Maturity Date Principal Amount Interest Rate CUSIP 03/1/2028 3,315,000 5.00% 349425Z50 03/l/2029 4,260,000 3.00% 349425Z68 03/1/2030 4,260,000 5.00% 349425Z76 03/1/2031 4,260,000 5.00% 349425Z84 03/1/2032 4,255,000 5.00% 349425Z92 CITY OF FORT WORTH, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 2010C, obligations maturing on February 15 in each of the years 2027 through 2030, inclusive, aggregating $11,735,000 in principal amount;REDEMPTION DATE:April 24,2020. Maturity Date Principal Amount Interest Rate CUSIP 02/15/2027 $2,080,000 4.00% 349515NY8 02/15/2028 $3,065,000 4.00% 349515NZ5 02/15/2029 $3,220,000 4.00% 349515PA8 02/15/2030 $3,385,000 4.00% 349515PB6 Due provision for the payment of the above-described obligations has been made with BOKF, NA ('BOKF"),the paying agent for said obligations,and said obligations shall be presented for payment either in person or by mail,at the following addresses: Mail Overnight Del iverY BOKF,NA BOKF,NA P.O.Box 64106 Corporate Trust Services St.Paul,MN 55164-0106 111 Fillmore Avenue E St.Paul,MN 55017 Interest on the redeemed obligations shall cease to accrue thereon after the redemption date. CUSIP numbers have been assigned to this issue by the CUSIP Service Bureau and are included solely for the convenience of the Bondholder. The City and BOKF are not responsible for the selection or correctness of the CUSIP numbers on the obligations or as indicated in any redemption notice. IMPORTANT NOTICE: Under the provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act"),paying agents making payments of interest or principal on municipal securities may be obligated to withhold a 28%tax from remittance to individuals who have failed to furnish the paying agent with a valid taxpayer identification number.Owners of the Bonds who wish to avoid the imposition of the tax should submit certified taxpayer identification numbers when presenting the Bonds for payment. THIS NOTICE is given under authority of a resolution adopted by the City Council of the City on March 19,2020. City of Fort Worth,Texas Mayor and Council Communication DATE: 03/19/20 M&C FILE NUMBER: M&C 20-0186 LOG NAME: 13PARTIAL CASH DEFEASANCE: CO2010,G02012,WSS2010C SUBJECT Adopt Resolution Authorizing Partial Cash Defeasance of Ad Valorem Tax Supported Obligations and Water and Sewer System Revenue Bonds; and Adopt Appropriation Ordinances(ALL COUNCIL DISTRICTS) RECOMMENDATION: It is recommended that the City Council: 1.Adopt the attached resolution authorizing partial cash defeasances, including principal,accrued interest,and transaction costs,of(i)City of Fort Worth,Texas General Purpose Refunding and Improvement Bonds,Series 2012; (ii)City of Fort Worth,Texas Combination Tax and Limited Surplus Revenue Certificates of Obligation, Series 2010;and (iii)City of Fort Worth,Texas Water and Sewer System Revenue Bonds,Series 2010C. 2.Adopt the attached supplemental appropriation ordinance increasing appropriations in the General Debt Service Fund in the amount of $15,779,353.00 from available fund balance,with such amount subject to reduction to conform to final figures at the time of defeasance,for use, together with$6,184,032.00 of previously appropriated current-year revenue budgeted for debt service,for partial defeasance of Series 2012 GO bonds; 3.Adopt the attached supplemental appropriation ordinance increasing appropriations in the Culture and Tourism Debt Service Fund in the amount of$6,356,423.00,from available fund balance,with such amount subject to reduction to conform to final figures at the time of defeasance, for partial defeasance of Series 2010 COs;and 4.Adopt the attached supplemental appropriation ordinance increasing appropriations in the Water and Sewer Priority Lien Debt Service Fund in the amount of$11,854,518.00,from available fund balance,with such amount subject to reduction to conform to final figures at the time of defeasance,for partial defeasance of Series 2010C Water and Sewer revenue bonds. DISCUSSION: The purpose of this Mayor and Council Communication(M&C)is to take actions associated with partial cash defeasance of three different series of outstanding debt obligations-(i)City of Fort Worth,Texas General Purpose Refunding and Improvement Bonds,Series 2012; (ii)City of Fort Worth,Texas Combination Tax and Limited Surplus Revenue Certificates of Obligation,Series 2010;and(iii)City of Fort Worth,Texas Water and Sewer System Revenue Bonds,Series 2010C. Payment of the costs for each defeasance will primarily come from available fund balance in the appropriate debt service fund. Each year,the Financial Management Services Department,in conjunction with the City's financial advisors, HilltopSecurities and Estrada Hinojosa&Company,evaluates the City's financial position and its debt portfolio to identify opportunities to refund (refinance)and/or defease outstanding debt obligations to achieve net savings and/or free up capacity for future debt-funded projects. This strategy supports the City's initiative of being good stewards of the public's money. The attached resolution authorizes the recommended partial cash defeasances further described below: Cily of Fort Worth,Texas.General Purpose Refunding and Improvement Bonds("GOs").Series 2012 These bonds were issued for an initial principal amount of$135,485,000.00,for the purpose of constructing permanent street and storm sewer improvements.This debt is callable on or after March 1,2022.The cash defeasance would be for all or a portion of the principal amount of $20,350,000.00,which represents$3,315,000.00 in principal of the GOs maturing March 1,2028,all remaining maturities beginning March 1, 2029,plus accrued interest and transaction costs. Due to current market volatility,the attached resolution allows the City Manager to determine what portion of the bonds to defease. At least thirty days'notice of the redemption must be given. Therefore,staff anticipated redeeming the debt between thirty and forty days after the date City Council acts on this M&C.At that time,the City can repay a significant amount of the remaining outstanding principal in the amount of $20,350,000.00 plus accrued interest in the estimated amount of$1,864,600.00 and transaction costs estimated in the amount of$15,500.00 and achieve savings by avoiding future principal and interest payments. In recent years, non-restricted interest revenue has been directed toward the General Debt Service Fund to help build a balance to take advantage of these types of savings opportunities. As a result of those efforts and sustained improved economic conditions within the General Debt Service Fund, more than$15 million in fund balance is available for use toward defeasing callable debt. In addition,the current year's adopted debt-tax rate and debt-service budget were structured to provide some funds for this type of callable-debt repayment. Staff,therefore, recommends defeasing this debt in order to achieve estimated net present value savings in the estimated amount of $3,308,617.81 or 16.26%percent.As a result of the partial cash defeasance,the City will still be obligated to pay$86,371,000.00 in principal and interest through March 1,2028. City of Fort Worth Texas Combination Tax and Limited Surplus Revenue Certificates of Obligation ("COs") Series 2010 These certificates were issued for an initial principal amount of$34,685,000.00,for the purpose of major improvements related to the Will Rogers Memorial Center.This debt is callable on or after March 1,2020.The cash defeasance would be for all or a portion of the principal amount of $6,305,000.00,which represents$1,490,000.00 in principal of the COs maturing March 1,2029 and all of the COs maturing through March 1, 2031, plus accrued interest and transaction costs. Due to current market volatility,the attached resolution allows the City Manager to determine what portion of the COs to defease. Staff anticipated redeeming the debt between thirty and forty days after the date City Council acts on this M&C.At that time,the City can repay a significant amount of the remaining outstanding principal in the amount of$6,305,000.00 plus accrued interest in the estimated amount of $39,121.00 and transaction costs estimated in the amount of$12,000.00 and achieve savings by avoiding future principal and interest payments. As a result of sustained improved economic conditions within the Culture and Tourism Debt Service Fund,fund balance is available to defease callable debt.Staff,therefore, recommends defeasing this debt utilizing cash balances in order to achieve estimated net present value savings in the estimated amount of$1,249,785.77 or 19.82%percent.As a result of the partial cash defeasance,the City will still be obligated to pay $19,216,820.00 in principal and interest through March 1,2029. The defeasance is being paid wholly out of fund balance/net position available as of the close of FY2019. Adoption of this M&C will not impact the $275,000-plus contribution to fund balance/net position that was identified in the adopted FY2020 budget in the Culture and Tourism Debt Service Fund. City of Fort Worth,Texas.Water and Sewer System Revenue Bonds,Series 2010C These bonds were issued for an initial principal amount of$45,870,000.00,for the purpose of constructing improvements and extensions to the Water and Sewer System.This debt is callable on or after February 15,2020.The cash defeasance would be for all or a portion of the principal amount of$11,750,000.00,which represents$2,080,000.00 in principal of the bonds maturing February 15,2027,all remaining maturities beginning February 15,2028,plus accrued interest and transaction costs. Due to current market volatility,the attached resolution allows the City Manager to determine what portion of the bonds to defease. Staff anticipated redeeming the debt between thirty and forty days after the date City Council acts on this M&C.At that time,the City can repay a significant amount of the remaining outstanding principal in the amount of$11,750,000.00 plus accrued interest in the estimated amount of $90,083.34 and transaction costs estimated in the amount of$12,000.00 and achieve savings by avoiding future principal and interest payments. As a result of sustained improved economic conditions within the Water and Sewer Priority Lien Debt Service Fund and extra FY2019 contributions that were made in anticipation of a debt issuance that got pushed later to accommodate scheduling at the state, net position is available to defease callable debt. Staff,therefore, recommends defeasing this debt utilizing cash balances in order to achieve estimated net present value savings in the estimated amount of$1,810,376.10 or 15.41%percent.As a result of the partial cash defeasance,the City will still be obligated to pay$18,113,787.50 in principal and interest through February 15,2027. The defeasance is being paid wholly out of fund balance/net position available as of the close of FY2019. Adoption of this M&C will not impact the nearly$5 million contribution to fund balance/net position that was identified in the adopted FY2020 budget for the Water and Sewer Priority Lien Debt Service Fund. NOTE ON APPROPRIATIONS-The attached appropriation ordinances reflect the maximum appropriation amount for each defeasance.Their structure accommodates variables in costs that are associated with the transaction date being a couple months away.To the extent numbers at the time of defeasance are less than those reflected in the ordinances,the available appropriation amount will be reduced as needed to reflect final figures to ensure appropriations do not exceed actuals. A Form 1295 is not required because:This M&C does not request approval of a contract with a business entity. FISCAL INFORMATION/CERTIFICATION: The Director of Finance certifies that upon adoption of the attached resolution and supplemental appropriation ordinances,funds for principal, accrued interest,and transaction costs will be available in the General Debt Service Fund,the Culture&Tourism Debt Service Fund,and the Water and Sewer Priority Lien Debt Service Fund to legally defease the above referenced obligations. Submitted for City Manager's Office by: Kevin Gunn 2015 Originating Business Unit Head: Reggie Zeno 8517 Additional Information Contact: Alex Laufer 2268