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Resolution supplementing Substitute Resolution No. RS2010-1442 to authorize the execution, terms, issuance, sale and payment of water and sewer revenue refunding and improvement bonds in an aggregate principal amount of not to exceed $700,000,000.
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WHEREAS, pursuant to the Act and the Charter (as such terms are hereafter defined), the Metropolitan Government of Nashville and Davidson County (the “Metropolitan Government”) owns and operates a water and sewer system (the “System”); and
WHEREAS, the Metropolitan Government is authorized under the Act and the Charter to issue its water and sewer revenue bonds for the purposes of (i) retiring its outstanding water and sewer bond anticipation notes, (ii) funding capital improvements to the System; and (iii) refunding previously-issued water and sewer revenue bonds; and
WHEREAS, the Metropolitan County Council (the “Metropolitan Council”) on November 16, 2010, adopted Substitute Resolution No. RS2010-1442 (as subsequently supplemented and amended, the “Water and Sewer Bond Resolution”), authorizing the issuance from time to time of water and sewer revenue bonds upon the adoption by the Metropolitan Council of a supplemental resolution, providing for the terms of such water and sewer revenue bonds; and
WHEREAS, the Metropolitan Council on November 16, 2010, adopted Substitute Resolution No. RS2010-1443 (the “First Supplemental Resolution”), authorizing the issuance of water and sewer revenue bonds in multiple series; and
WHEREAS, pursuant to the First Supplemental Resolution, the Metropolitan Government issued its Water and Sewer Revenue Refunding Bonds, Series 2010A, Water and Sewer Revenue Bonds Federally Taxable, Series 2010B (Build America Bonds - Direct Payment), Water and Sewer Revenue Bonds Federally Taxable, Series 2010C (Recovery Zone Economic Development Bonds) and Water and Sewer Revenue Refunding Bonds Federally Taxable, Series 2010D (collectively, the “Series 2010 Bonds”); and
WHEREAS, the Water and Sewer Bond Resolution was further supplemented and amended by Resolution No. RS2011-114 (the “Second Supplemental Resolution”) adopted by the Metropolitan Government on December 20, 2011, for the purpose, in part, of amending certain provisions of the Water and Sewer Bond Resolution; and
WHEREAS, the Second Supplemental Resolution also authorized the issuance from time to time of subordinate lien water and sewer revenue bonds upon the adoption by the Metropolitan Council of a supplemental resolution, providing for the terms of such subordinate lien water and sewer revenue bonds; and
WHEREAS, the Metropolitan Council on December 20, 2011, adopted Resolution No. RS2011-115 (the “Subordinate Lien Supplemental Resolution”), authorizing the issuance of subordinate lien water and sewer revenue bonds; and
WHEREAS, pursuant to the Subordinate Lien Supplemental Resolution, the Metropolitan Government issued its Subordinate Lien Water and Sewer Revenue Refunding Bonds, Series 2012 (the “Series 2012 Subordinate Lien Bonds”); and
WHEREAS, the Metropolitan Council on March 19, 2013, adopted Resolution No. RS2013-621 (the “Third Supplemental Resolution”), authorizing the issuance of water and sewer revenue bonds; and
WHEREAS, pursuant to the Third Supplemental Resolution, the Metropolitan Government issued its Water and Sewer Revenue Bonds, Series 2013 (the “Series 2013 Bonds”); and
WHEREAS, the Metropolitan Council on October 3, 2017, adopted Resolution No. RS2017-902 (the “Fourth Supplemental Resolution”), authorizing the issuance of water and sewer revenue bonds; and
WHEREAS, pursuant to the Fourth Supplemental Resolution, the Metropolitan Government issued its Water and Sewer Revenue Bonds, Series 2017A (Green Bonds) and Water and Sewer Revenue Bonds, Series 2017B (collectively, the “Series 2017 Bonds”); and
WHEREAS, the Metropolitan Council on March 17, 2020, adopted Resolution No. RS2020-215 (the “Fifth Supplemental Resolution”), authorizing the issuance of water and sewer revenue bonds; and
WHEREAS, pursuant to the Fifth Supplemental Resolution, the Metropolitan Government issued its Water and Sewer Revenue Bonds, Series 2020A and Water and Sewer Revenue Bonds, Series 2020B (collectively, the “Series 2020 Bonds”), the proceeds of which, among other things, refunded the Water and Sewer Revenue Refunding Bonds, Series 2010A described above; and
WHEREAS, the Metropolitan Council on April 7, 2020, adopted Resolution Nos. RS2020-262, -263 and -264 (together, the “Sixth Supplemental Resolution”), authorizing the issuance of water and sewer revenue bonds in the form of state revolving fund loan agreements; and
WHEREAS, pursuant to the Sixth Supplemental Resolution, the Metropolitan Government incurred State Revolving Fund Loans Nos. 2020-223, 2020-224 and 2020-446 (collectively, the “2020 SRF Loans”); and
WHEREAS, the Metropolitan Council on September 21, 2021, adopted Resolution No. RS2021-1148 (the “Seventh Supplemental Resolution”), authorizing the issuance of water and sewer revenue bonds and the defeasance of the Series 2012 Subordinate Lien Bonds from available System funds; and
WHEREAS, pursuant to the Seventh Supplemental Resolution, the Metropolitan Government (i) issued its Water and Sewer Revenue Bonds, Series 2021A (Green Bonds) and Federally Taxable Water and Sewer Revenue Refunding Bonds, Series 2021B (Green Bonds) (collectively, the “Series 2021 Bonds”), the proceeds of which, among other things, refunded a portion of the Series 2013 Bonds, and (ii) defeased the remaining outstanding maturities of the Series 2012 Subordinate Lien Bonds using available System funds; and
WHEREAS, the Metropolitan Council on September 6, 2022, adopted Resolution No. RS2022-1695 (the “Eighth Supplemental Resolution”), authorizing the issuance of a water and sewer revenue bond to evidence a loan from the United States Environmental Protection Agency made under its Water Infrastructure Finance and Innovation Act (or “WIFIA”) Program; and
WHEREAS, pursuant to the Eighth Supplemental Resolution, the Metropolitan Government issued its Water and Sewer Revenue Bond, Series 2022 (WIFIA Bond) (the “WIFIA Bond”), the proceeds of which, when and as drawn by the Metropolitan Government, will be used to fund capital improvements to the System; and
WHEREAS, pursuant to the Eighth Supplemental Resolution, the Metropolitan Government also repealed those provisions of the Second Supplemental Resolution authorizing the issuance of subordinate lien water and sewer revenue bonds; and
WHEREAS, the Metropolitan Council hereby finds that it is in the best interest of the citizens of the Metropolitan Government to adopt a ninth supplemental resolution to the Water and Sewer Bond Resolution for the purpose of issuing bonds on parity with the Series 2010 Bonds, the Series 2013 Bonds, the Series 2017 Bonds, the Series 2020 Bonds, the 2020 SRF Loans, the Series 2021 Bonds, and the WIFIA Bond to provide funds to:
(a) retire all or a portion of the Metropolitan Government's outstanding water and sewer commercial paper bond anticipation notes (the "Commercial Paper") which were issued pursuant to (i) Resolution No. RS2022-1845, adopted by the Metropolitan Council on November 15, 2022, as amended, and (ii) Resolution No. RS2015-1417, adopted by the Metropolitan Council on April 7, 2015, as amended by Resolution No. RS2018-1253, adopted by the Metropolitan Council on July 3, 2018, Resolution No. RS2021-906, adopted by the Metropolitan Council on May 4, 2021, and Resolution No. RS2021-1281, adopted by the Metropolitan Council on December 21, 2021;
(b) refund all or a portion of the Series 2017 Bonds and Series 2021 Bonds (the “Refunding Candidates”) through a bondholder invitation to tender process; and
(c) pay the costs of issuing said bonds; and
WHEREAS, as required by Tennessee Code Annotated Sections 9-21-301 et seq., the Metropolitan Council on October 20, 2009, adopted Resolution No. RS2009-994 (the “First Initial Resolution”), preliminarily authorizing the issuance of up to $500,000,000 of water and sewer revenue bonds; and
WHEREAS, as required by Tennessee Code Annotated Sections 9-21-301 et seq., the Metropolitan Council on March 19, 2013, adopted Resolution No. RS2013-620 (the “Second Initial Resolution”), preliminarily authorizing the issuance of up to $500,000,000 of additional water and sewer revenue bonds; and
WHEREAS, as required by Tennessee Code Annotated Sections 9-21-301 et seq., the Metropolitan Council on March 17, 2020, adopted an initial resolution (the “Third Initial Resolution”), preliminarily authorizing the issuance of up to $500,000,000 of additional water and sewer revenue bonds; and
WHEREAS, as required by Tennessee Code Annotated Sections 9-21-301 et seq., the Metropolitan Council on September 21, 2021, adopted an initial resolution (the “Fourth Initial Resolution”), preliminarily authorizing the issuance of up to $500,000,000 of additional water and sewer revenue bonds; and
WHEREAS, as required by Tennessee Code Annotated Sections 9-21-301 et seq., the Metropolitan Council on September 6, 2022, adopted an initial resolution (the “Fifth Initial Resolution” and, together with the First, Second, Third and Fourth Initial Resolutions, the “Initial Resolutions”), preliminarily authorizing the issuance of up to $315,000,000 of additional water and sewer revenue bonds; and
WHEREAS, a plan of refunding for the Refunding Candidates has been filed with the Director of the Division of Local Government Finance (the “State Director”) as required by Section 9-21-1003, Tennessee Code Annotated, as amended, and the State Director has submitted to the Metropolitan Government a report thereon, a copy of which has been made available to the members of the Metropolitan Council; and
WHEREAS, as required by applicable law, the Tennessee Local Development Authority has consented to the issuance of the bonds authorized herein on parity with the 2020 SRF Loans.
NOW THEREFORE, BE IT RESOLVED BY THE METROPOLITAN COUNTY COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY AS FOLLOWS:
ARTICLE I.
AUTHORITY; FINDINGS; DEFINITIONS
Section 1.1. Resolution Supplemental to the Water and Sewer Bond Resolution. This Ninth Supplemental Resolution is a Supplemental Resolution, as defined in the Water and Sewer Bond Resolution, providing for the issuance of an additional series of Bonds thereunder.
Section 1.2. Findings.
(a) The Metropolitan Council hereby finds that retiring the Commercial Paper is advisable at this time because the Metropolitan Government has limited additional Commercial Paper capacity. The Metropolitan Council further hereby finds that refunding all or a portion of the Refunding Candidates is advisable insofar as the refunding will result in debt service savings for the System.
(b) The Series 2025 Bonds may constitute “balloon indebtedness” as defined by Tennessee Code Annotated Section 9-21-133 and, as required thereby, the Metropolitan Government has obtained the consent of the State Director of Local Government Finance to the proposed amortization structure of the Series 2025 Bonds. The Series 2025 Bonds will only constitute balloon indebtedness because the principal amount of the Refunding Candidates varies materially from year to year, and the principal amount of, and resulting debt service on, the Series 2025 Bonds will be generally structured to mirror, and not extend, the principal structure of and debt service on the refunded bonds. None of the Refunding Candidates were issued as a part of series of bonds that constituted balloon indebtedness. In light of the foregoing, the Metropolitan Council finds that it is unnecessary to consider any balloon debt mitigating strategies that might be applicable if the Metropolitan Council were considering either (i) structuring a new issuance of bonds which deferred the repayment of principal as prohibited by Tennessee Code Annotated Section 9-21-133 without the State’s consent, or (ii) perpetuating, by refunding, bonds which themselves were issued in a manner that would have constituted balloon indebtedness.
Section 1.3. Definition of Terms. Capitalized terms not otherwise defined herein shall have the meaning ascribed in the Water and Sewer Bond Resolution. The following words and terms as used herein, whether or not capitalized, shall have the following meanings, unless the context or use indicates another or different meaning or intent, and such definitions shall be equally applicable to both the singular and plural forms of any of the words and terms herein defined:
Act means Tennessee Code Annotated Sections 7-34-101 et seq. and 9-21-101 et seq.
Bond Purchase Agreement means the bond purchase agreement providing for the purchase and sale of the Series 2025 Bonds, by and between the Underwriters and the Metropolitan Government, in substantially the form attached hereto as Exhibit B, with such modifications thereto as may be approved by the Metropolitan Mayor.
Commercial Paper has the meaning ascribed in the preamble.
Dealer Manager means BofA Securities, Inc.
Debt Management Policy means the debt management policy of the Metropolitan Government adopted by ordinance of the Metropolitan Council on May 1, 2023, as may hereafter be amended.
Debt Service Reserve Requirement means, with respect to the Series 2025 Bonds, an amount of $0, because the Series 2025 Bonds will not be an Additionally Secured Series.
DTC means The Depository Trust Company, a limited purpose company organized under the laws of the State of New York, and its successors and assigns.
DTC Participant(s) means securities brokers and dealers, banks, trust companies and clearing corporations that have access to the DTC system.
Financial Advisor means Hilltop Securities Inc.
Information and Tender Agent means Globic Advisors Inc.
Initial Resolutions has the meaning ascribed in the preamble.
Letter of Representation means the Blanket Issuer Letter of Representations to DTC of the Metropolitan Government, dated April 27, 1995.
Ninth Supplemental Resolution means this resolution, which is the ninth supplement to the Water and Sewer Bond Resolution.
Official Statement and Preliminary Official Statement mean the Official Statement and Preliminary Official Statement described herein pertaining to the sale of the Series 2025 Bonds.
Paying Agent means U.S. Bank Trust Company, National Association, or its successor.
Refunding Candidates has the meaning ascribed in the preamble.
Series 2025 Bonds shall mean the water and sewer bonds authorized to be issued pursuant to this Nonth Supplemental Resolution.
Tender Offer Materials means, collectively, the invitation to tender bonds under which certain holders may tender for purchase their Refunding Candidates, along with any bondholder letters, pricing notices, and acceptance notices.
Underwriters means, collectively, BofA Securities, Inc., Morgan Stanley & Co. LLC, Ramirez & Co., Inc., Bancroft Capital, LLC, Blaylock Van, LLC, D.A. Davidson & Co., Fifth Third Securities, Inc. and Raymond James & Associates, Inc.
Water and Sewer Bond Resolution has the meaning ascribed in the preamble.
ARTICLE II.
AUTHORITY, PLEDGE OF TRUST ESTATE, SERIES 2025 BONDS NOT ADDITIONALLY SECURED OBLIGATIONS
Section 2.1. Authority. For the purposes of (i) retiring the Commercial Paper at maturity; (ii) refunding all or a portion of the Refunding Candidates; and (iii) paying costs incident to the sale and issuance of the Series 2025 Bonds, there shall be issued pursuant to, and in accordance with, the provisions of the Act, the Charter, the Initial Resolutions, the Water and Sewer Bond Resolution and other applicable provisions of law, water and sewer revenue bonds of the Metropolitan Government in an aggregate principal amount of not to exceed $700,000,000.
Section 2.2. Pledge of Trust Estate. The Series 2025 Bonds shall be payable from and secured by the Trust Estate, as set forth in the Water and Sewer Bond Resolution.
Section 2.3. Series 2025 Bonds Not Additionally Secured Obligations. The Series 2025 Bonds shall not be an Additionally Secured Series.
ARTICLE III.
FORM AND TERMS OF SERIES 2020 BONDS
Section 3.1. Authorized Bonds. The aggregate principal amount of Series 2025 Bonds that may be issued under this Ninth Supplemental Resolution shall not exceed $700,000,000. The Series 2025 Bonds may be issued in one or more series, as designated by the Metropolitan Mayor and set forth in the Bond Purchase Agreement.
Section 3.2. Form of Bonds. The Series 2025 Bonds are issuable only as fully registered bonds, without coupons, in the denomination of $5,000 or any integral multiple thereof. The Series 2025 Bonds shall be substantially in the form set forth in Exhibit A attached hereto, with such appropriate variations, omissions, and insertions as are permitted or required by this Ninth Supplemental Resolution, the blanks therein to be appropriately completed when the Series 2025 Bonds are prepared, and may have endorsed thereon such legends or text as may be necessary or appropriate to conform to any applicable rules and regulations of any governmental authority or any usage or requirement of law with respect thereto or as otherwise desired by the Metropolitan Government.
Section 3.3. Maturities, Interest Rates, Book-Entry Bond.
(a) Each series of Series 2025 Bonds shall be designated "Water and Sewer Revenue Refunding and Improvement Bonds, Series 2025". Each series of Series 2025 Bonds may also bear such other designation as may identify the series of Series 2025 Bonds being issued and shall be dated the Date of Issuance. Each series of the Series 2025 Bonds shall bear interest from the date thereof at fixed rates not exceeding 6.00%, such interest being payable semi-annually on the first day of January and July of each year, commencing on January 1, 2026. The Series 2025 Bonds shall mature, subject to prior redemption as hereinafter provided, either serially or through mandatory redemption, from no earlier than July 1, 2026 through no later than July 1, 2055, in such amounts as shall be provided in the Bond Purchase Agreement, and as established pursuant to Section 6.1.
(b) The Series 2025 Bonds will be Book Entry Bonds, registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the Bonds. Transfers of beneficial ownership will be effected on the records of DTC and the DTC Participants pursuant to rules and procedures established by DTC. Payments of principal, interest, and redemption premium, if any, with respect to the Series 2025 Bonds, so long as DTC is the only owner of the Series 2025 Bonds, shall be paid by the Paying Agent directly to DTC or its nominee, Cede & Co., as provided in the Letter of Representation.
(c) The Paying Agent appointed herein is hereby authorized to take such actions as may be necessary from time to time to qualify and maintain the Series 2025 Bonds for deposit with DTC, including but not limited to, wire transfers of interest and principal payments with respect to the Series 2025 Bonds, utilization of electronic book entry data received from DTC in place of actual delivery of Series 2025 Bonds and provision of notices with respect to Series 2025 Bonds registered by DTC (or any of its designees identified to the Paying Agent) by overnight delivery, courier service, telegram, telecopy or other similar means of communication. No such arrangements with DTC may adversely affect the interest of any of the owners of the Series 2025 Bonds, provided, however, that the Paying Agent shall not be liable with respect to any such arrangements it may make pursuant to this section.
Section 3.4. Designation of Series 2025 Bonds as Green Bonds. The Metropolitan Mayor is hereby authorized to determine whether or not to designate one or more series of the Series 2025 Bonds as “Green Bonds” in accordance with the most recent edition of the Green Bond Principles published by the International Capital Market Association. Any designation of a series of Series 2025 Bonds as Green Bonds shall be set forth in the Bond Purchase Agreement, and the designation of such series of Bonds shall include a reference to “Green Bonds”. The officers of the Metropolitan Government are hereby authorized to take such steps and enter into such reporting and monitoring agreements as may be necessary to designate and maintain the designation of such series of bonds as Green Bonds.
ARTICLE IV.
REDEMPTION OF BONDS PRIOR TO MATURITY
Section 4.1. Redemption Dates and Prices.
(a) Subject to the adjustments permitted pursuant to Section 6.1 hereof, the Series 2025 Bonds may be subject to redemption prior to maturity at the option of the Metropolitan Government on July 1, 2035, and thereafter, as a whole or in part at any time at the redemption price of par plus accrued interest to the redemption date.
(b) Subject to the adjustments permitted pursuant to Section 6.1 hereof, if less than all the Series 2025 Bonds shall be called for redemption, the maturities to be redeemed shall be selected by the Metropolitan Council in its discretion. If less than all of the Series 2025 Bonds within a single maturity shall be called for redemption, the interests within the maturity to be redeemed shall be selected as follows:
(i) if the Series 2025 Bonds are being held under a Book-Entry System by DTC, or a successor Depository, the Series 2025 Bonds to be redeemed shall be determined by DTC, or such successor Depository, by lot or such other manner as DTC, or such successor Depository, shall determine; or
(ii) if the Series 2025 Bonds are not being held under a Book-Entry System by DTC, or a successor Depository, the Series 2025 Bonds within the maturity to be redeemed shall be selected by the Paying Agent by lot or such other random manner as the Paying Agent in its discretion shall determine.
(c) Pursuant to Section 6.1 hereof, the Metropolitan Mayor is authorized to sell the Series 2025 Bonds, or any maturities thereof, as term bonds ("Term Bonds") with mandatory redemption requirements corresponding to the maturities established pursuant to the terms hereof. In the event any or all the Series 2025 Bonds are sold as Term Bonds, the Metropolitan Government shall redeem Term Bonds on redemption dates corresponding to the maturity dates set forth herein, in aggregate principal amounts equal to the amounts provided in the Bond Purchase Agreement for each redemption date at a price of par plus accrued interest thereon to the date of redemption. The interest of each DTC Participant in the Term Bonds to be so redeemed shall be selected by DTC, or such person as shall then be serving as Depository for the Series 2025 Bonds, using its procedures generally in use at that time. If DTC, or another Depository is no longer serving as securities depository for the Series 2025 Bonds, the Term Bonds to be so redeemed shall be selected by the Paying Agent by lot or such other random manner as the Paying Agent in its discretion shall select.
(d) At its option, to be exercised on or before the forty-fifth (45th) day next preceding any such redemption date, the Metropolitan Government may (i) deliver to the Paying Agent for cancellation Series 2025 Bonds to be redeemed, in any aggregate principal amount desired, and/or (ii) receive a credit in respect of its redemption obligation under the mandatory redemption provisions set forth in (c) above for any Series 2025 Bonds of the maturity to be redeemed which prior to said date have been purchased or redeemed (otherwise than through the operation of this mandatory sinking fund redemption provision) and canceled by the Paying Agent and not theretofore applied as a credit against any redemption obligation under this mandatory sinking fund provision. Each Bond so delivered or previously purchased or redeemed shall be credited by the Paying Agent at 100% of the principal amount thereof on the obligation of the Metropolitan Government on such payment date and any excess shall be credited on future redemption obligations in chronological order, and the principal amount of Series 2025 Bonds to be redeemed by operation of this mandatory sinking fund provision shall be accordingly reduced. The Metropolitan Government shall on or before the forty-fifth (45th) day next preceding each payment date furnish the Paying Agent with its certificate indicating whether or not and to what extent the provisions of clauses (i) and (ii) of this subsection are to be availed of with respect to such payment and confirm that funds for the balance of the next succeeding prescribed payment will be paid on or before the next succeeding payment date.
Section 4.2. Notice of Redemption. Notice of call for redemption, whether optional or mandatory, shall be given by the Paying Agent on behalf of the Metropolitan Government not less than twenty (20) nor more than sixty (60) days prior to the date fixed for redemption by sending an appropriate notice to the registered owners of the Series 2025 Bonds to be redeemed by first-class mail, postage prepaid, at the addresses shown on the Series 2025 Bond registration records of the Paying Agent as of the date of the notice; but neither failure to mail such notice nor any defect in any such notice so mailed shall affect the sufficiency of the proceedings for redemption of any of the Series 2025 Bonds for which proper notice was given. If at the time of the giving of the notice of optional or mandatory redemption there shall not be on deposit with the Paying Agent moneys sufficient to redeem all the Series 2025 Bonds of a series called for redemption, the notice of redemption shall state that the redemption of such Series 2025 Bonds of such series is conditional upon and subject to deposit of moneys with the Paying Agent sufficient to redeem all such Series 2025 Bonds not later than the opening of business on the redemption date and that such notice shall be of no effect if such moneys are not on deposit (A “Conditional Redemption”). The Paying Agent shall mail said notices, in the case of mandatory redemption of Term Bonds, as and when provided herein and in the Series 2025 Bonds, and, in the case of optional redemption, as and when directed by the Metropolitan Government pursuant to written instructions from an Authorized Officer of the Metropolitan Government given at least forty-five (45) days prior to the redemption date (unless a shorter notice period shall be satisfactory to the Paying Agent). In the case of a Conditional Redemption, the failure of the Metropolitan Government to make funds available in part or in whole on or before the redemption date shall not constitute an event of default, and the Paying Agent shall give immediate notice to the Depository, if applicable, or the affected Bondholders that the redemption did not occur and that the Bonds called for redemption and not so paid remain outstanding.
Section 4.3. Payment of Redeemed Bonds.
(a) If notice of redemption shall have been given in the manner and under the conditions provided in Section 4.2 hereof and if on the date so designated for redemption the Paying Agent shall hold sufficient monies to pay the redemption price of, and interest to the redemption date on, the Series 2025 Bonds to be redeemed as provided in this Ninth Supplemental Resolution, then: (1) the Series 2025 Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such Series 2025 Bonds on such date; (2) interest on the Series 2025 Bonds so called for redemption shall cease to accrue; and, (3) such Series 2025 Bonds shall no longer be Outstanding or secured by, or be entitled to, the benefits of this Ninth Supplemental Resolution, except to receive payment of the redemption price thereof and interest thereon from monies then held by the Paying Agent.
(b) If on the redemption date, monies for the redemption of all Series 2025 Bonds or portions thereof to be redeemed, together with interest thereon to the redemption date, shall not be held by the Paying Agent so as to be available therefor on such date, the Series 2025 Bonds or portions thereof so called for redemption shall continue to bear interest until paid at the same rate as they would have borne had they not been called for redemption and shall continue to be secured by and be entitled to the benefits of this Ninth Supplemental Resolution.
ARTICLE V.
PAYING AGENT AND BOND REGISTRAR
The Metropolitan Government hereby appoints U.S. Bank Trust Company, National Association to serve as the Paying Agent and Bond Registrar for the Series 2025 Bonds, and authorizes and directs the Paying Agent to maintain registration records with respect to the Series 2025 Bonds, to authenticate and deliver the Series 2025 Bonds at original issuance, upon transfer, or as otherwise directed by the Metropolitan Government, to effect transfers of the Series 2025 Bonds, to give all notices of redemption as required herein, to make all payments of principal and interest with respect to the Series 2025 Bonds as provided herein, to cancel and destroy Series 2025 Bonds which have been paid at maturity or upon earlier redemption or submitted for exchange or transfer, to furnish the Metropolitan Government at least annually a certificate of destruction with respect to Series 2025 Bonds canceled and destroyed, and to furnish the Metropolitan Government at least annually an audit confirmation of Series 2025 Bonds paid, Series 2025 Bonds Outstanding and payments made with respect to interest on the Series 2025 Bonds. The Metropolitan Mayor, the Director of Finance, or either of them, is hereby authorized to execute and the Metropolitan Clerk is hereby authorized to attest such written agreement between the Metropolitan Government and the Paying Agent as they shall deem necessary or proper with respect to the obligations, duties and rights of the Paying Agent and Bond Registrar. The payment of all reasonable fees and expenses of the Paying Agent for the discharge of its duties and obligations hereunder or under any such agreement is hereby authorized and directed. The Metropolitan Mayor, the Director of Finance, or either of them, is hereby authorized to enter into agreements with the Paying Agent for the performance of these duties on terms consistent with this Ninth Supplemental Resolution.
ARTICLE VI.
SALE OF BONDS AND APPLICATION OF PROCEEDS
Section 6.1. Sale of Series 2025 Bonds.
(a) The Series 2025 Bonds shall be sold at a negotiated sale by the Metropolitan Mayor, in one or more series, at a price of not less than 98% of par, without regard to any original issue discount, as a whole or in part from time to time as shall be determined by the Metropolitan Mayor and the Director of Finance, in consultation with the Financial Advisor. The Metropolitan Mayor is authorized to execute and Metropolitan Clerk to attest the Bond Purchase Agreement with the Underwriters, providing the details of the terms of sale. The sale of the Series 2025 Bonds to the Underwriters shall be binding on the Metropolitan Government, and no further action of the Metropolitan Council with respect thereto shall be required.
(b) The Metropolitan Mayor is further authorized with respect to the Series 2025 Bonds to:
(1) change the dated date to a date other than the Date of Issuance;
(2) change the series designation;
(3) change the first interest payment date to a date other than January 1, 2026, provided that such date is not later than twelve months from the Date of Issuance;
(4) determine whether to solicit the tender of any Refunding Candidates, select the maturities of the Refunding Candidates to be solicited for tender, and establish the purchase price to be paid for any Refunding Candidates submitted by bondholders for redemption (the Refunding Candidates solicited and submitted by bondholders for tender being hereafter referred to as the “Refunded Bonds”), all in consultation with the Director of Finance, the Financial Advisor and the Dealer Manager; provided that the resulting refunding shall satisfy the debt service savings criteria set forth in the Debt Management Policy;
(5) establish the principal and interest payment dates and determine maturity or mandatory redemption amounts of the Series 2025 Bonds, provided that (A) the total principal amount of the Series 2025 Bonds does not exceed the total amount of Series 2025 Bonds authorized herein, (B) the final maturity date for the portion of Series 2025 Bonds attributable to the refinancing of Commercial Paper shall be not later than July 1, 2055, (C) no portion of the principal amortization of the Series 2025 Bonds attributable to the refinancing of Commercial Paper shall be structured in a manner that constitutes “balloon indebtedness” as defined by Tennessee Code Annotated Section 9-21-133, and (D) the principal amortization of the Series 2025 Bonds attributable to the refunding of the Refunded Bonds shall be structured in a manner that does not result in an extension of the weighted average maturity of the Refunded Bonds by more than one year;
(6) adjust the optional redemption provisions for the Series 2025 Bonds;
(7) sell the Series 2025 Bonds, or any maturities thereof, as Term Bonds with mandatory redemption requirements as determined by the Metropolitan Mayor to be most advantageous to the Metropolitan Government; and
(8) designate one or more series of the Series 2025 Bonds as Green Bonds.
(c) The form of the Series 2025 Bonds set forth in Exhibit A hereto shall be conformed to reflect any changes made pursuant to this Section 6.1 hereof.
(e) The Metropolitan Mayor and the Metropolitan Clerk are authorized to cause the Series 2025 Bonds to be authenticated and delivered by the Paying Agent to the Underwriters, and the Metropolitan Mayor, the Director of Finance, the Metropolitan Clerk and Director of Law, or any of them, are authorized to execute, publish, and deliver all certificates and documents, including the Official Statement, and closing certificates and documents, as they shall deem necessary in connection with the sale and delivery of the Series 2025 Bonds.
Section 6.2. Official Statement. The Metropolitan Mayor, Director of Finance, or either of them, working with the Financial Advisor, are hereby authorized and directed to provide for the preparation and distribution, which may include electronic distribution, of a Preliminary Official Statement describing the Series 2025 Bonds in the form of the Preliminary Official Statement attached hereto as Exhibit C and by this reference made a part hereof (the "Preliminary Official Statement"), with such completions, omissions, insertions and changes as shall be necessary to cause the Preliminary Official Statement to accurately describe the Series 2025 Bonds and the financial condition of the Metropolitan Government. After the Series 2025 Bonds have been sold, the Metropolitan Mayor, the Director of Finance, or either of them, shall make such completions, omissions, insertions and changes in the Preliminary Official Statement not inconsistent herewith as are necessary or desirable to complete it as a final Official Statement for the Series 2025 Bonds for purposes of Rule 15c2-12(e)(3) of the Securities and Exchange Commission. The Metropolitan Mayor, the Director of Finance, or either of them, shall arrange for the delivery to the Underwriters of a reasonable number of copies of the Official Statement within seven business days after the Series 2025 Bonds have been sold.
The Metropolitan Mayor, the Director of Finance, or either of them, are authorized, on behalf of the Metropolitan Government, to deem the Preliminary Official Statement and the Official Statement in final form, each to be final as of its date within the meaning of Rule 15c2-12(b)(1), except for the omission in the Preliminary Official Statement of certain pricing and other information allowed to be omitted pursuant to such Rule 15c2-12(b)(1). The distribution of the Preliminary Official Statement and the Official Statement in final form shall be conclusive evidence that each has been deemed in final form as of its date by the Metropolitan Government except for the omission in the Preliminary Official Statement of such pricing and other information.
Section 6.3. Disposition of Bond Proceeds. The proceeds of the sale of the Series 2025 Bonds shall be disbursed as follows:
(a) An amount sufficient, together with such other System funds as may be identified by the Metropolitan Mayor and, if applicable, investment earnings on the foregoing, to purchase the Refunded Bonds shall be deposited with the Information and Tender Agent and applied immediately to the purchase and retirement of the Refunded Bonds.
(b) An amount which, together with such other System funds as may be identified by the Metropolitan Mayor, will be sufficient to retire the Commercial Paper at maturity shall be deposited to the Commercial Paper Fund established by the Issuing and Paying Agency Agreements related thereto, between the Metropolitan Government and U.S. Bank Trust Company National Association (the "Issuing and Paying Agent"), and invested by the Issuing and Paying Agent as directed by the Director Finance until needed to retire the Commercial Paper. Any amounts remaining with the Issuing and Paying Agent after the retirement of the Commercial Paper shall be transferred to the Debt Service Fund and applied to the payment of interest on the Series 2025 Bonds.
(c) The balance of the proceeds of the Series 2025 Bonds shall be used to pay the costs of issuing the Series 2025 Bonds, with any amounts thereafter remaining to be transferred to the Debt Service Fund and applied to the payment of interest on the Series 2025 Bonds.
Section 6.4. Tax Matters. The Metropolitan Government recognizes that the purchasers and owners of the Series 2025 Bonds will have accepted them on, and paid therefor a price that reflects, the understanding that interest thereon is excludable from gross income for purposes of federal income taxation under laws in force on the date of delivery of the Series 2025 Bonds. As such, the Metropolitan Government agrees that it shall take no action which may cause the interest on any of the Series 2025 Bonds to be included in gross income for purposes of federal income taxation. It is the reasonable expectation of the Metropolitan Council that the proceeds of the Series 2025 Bonds will not be used in a manner which will cause the Series 2025 Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, and to this end the said proceeds of the Series 2025 Bonds and other related funds established for the purposes herein set out shall be used and spent expeditiously for the purposes described herein. The Metropolitan Government further covenants and represents that in the event it shall be required by Section 148(f) of the Code to pay any investment proceeds of the Series 2025 Bonds to the United States government, it will make such payments as and when required by said Section 148(f) and will take such other actions as shall be necessary or permitted to prevent the interest on the Series 2025 Bonds from being included in gross income for federal income tax purposes. The Metropolitan Mayor, the Director of Finance, or either of them, are authorized and directed to make such certifications in this regard in connection with the sale of the Series 2025 Bonds as either or both shall deem appropriate, and such certifications shall constitute a representation and certification of the Metropolitan Government.
ARTICLE VII.
SOLICITATION OF REFUNDING CANDIDATES FOR TENDER
Section 7.1. Tender Offer Materials; Dealer Manager Agreement. For the purpose of soliciting the tender of any Refunding Candidates selected pursuant to Section 6.1, the Metropolitan Mayor, the Director of Finance, or either of them, are authorized to cause to be prepared, executed and distributed (as applicable) all Tender Offer Materials, including an invitation to tender in substantially the form attached hereto as Exhibit D, together with purchase price information as may be determined pursuant to Section 6.1 and with such other changes as the Metropolitan Mayor shall approve. The Dealer Manager is hereby appointed to serve in such capacity with respect to the solicitation of the tender of any Refunding Candidates. The Metropolitan Mayor is hereby authorized to execute and the Metropolitan Clerk to attest a dealer manager agreement in substantially the form attached hereto as Exhibit E, together with such changes as the Metropolitan Mayor shall approve.
Section 7.2. Information and Tender Agent Agreement. The Information and Tender Agent is hereby appointed to serve in such capacity with respect to the solicitation of the tender of any Refunding Candidates, as described in the invitation to tender attached hereto as Exhibit D. The Metropolitan Mayor, the Director of Finance, or either of them, is hereby authorized to execute and the Metropolitan Clerk is hereby authorized to attest an information and tender agent agreement between the Metropolitan Government and the Information and Tender Agent as they shall deem necessary or proper with respect to the obligations, duties and rights of the Information and Tender Agent. The payment of all reasonable fees and expenses of the Information and Tender Agent for the discharge of its duties and obligations hereunder or under any such agreement is hereby authorized and directed.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Miscellaneous Acts. The appropriate officers of the Metropolitan Government are hereby authorized, empowered, and directed to do any and all such acts and things, and to execute, acknowledge, deliver, and, if applicable file or record, or cause to be filed or recorded, in any appropriate public offices, all such documents, notices, instruments, and certifications, in addition to those acts, things, documents, instruments, and certifications hereinbefore authorized and approved, as may, in their discretion, be necessary or desirable to implement or comply with the intent of this Ninth Supplemental Resolution, or any of the documents herein authorized and approved, or for the authorization, issuance, and delivery by the Metropolitan Government of the Series 2025 Bonds, the retirement of Commercial Paper or the redemption of the Refunded Bonds.
Section 8.2. Authorization to Appoint Authorized Officers Solely for Purposes of the Water and Sewer Bond Resolution. The Metropolitan Mayor is hereby authorized to designate such persons as he may select to act as Authorized Officers for purposes of the Water and Sewer Bond Resolution.
Section 8.3. No Recourse Under Resolution or on Series 2025 Bonds. All stipulations, promises, agreements, and obligations of the Metropolitan Government contained in the Initial Resolutions, the Water and Sewer Bond Resolution or this Ninth Supplemental Resolution shall be deemed to be the stipulations, promises, agreements, and obligations of the Metropolitan Government and not of any officer, director, or employee of the Metropolitan Government in his or her individual capacity, and no recourse shall be had for the payment of the principal of or interest on the Series 2025 Bonds or for any claim based thereon or on the Initial Resolutions, the Water and Sewer Bond Resolution or this Ninth Supplemental Resolution against any officer, director, or employee of the Metropolitan Government or against any official or individual executing the Series 2025 Bonds.
Section 8.4. Partial Invalidity. If any one or more of the provisions of this Ninth Supplemental Resolution, or of any exhibit or attachment thereto, shall be held invalid, illegal, or unenforceable in any respect, by final decree of any court of lawful jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, or of any exhibit or attachment thereto, but this Ninth Supplemental Resolution, and the exhibits and attachments thereto, shall be construed the same as if such invalid, illegal, or unenforceable provision had never been contained herein, or therein, as the case may be.
Section 8.5. Continuing Disclosure. The Metropolitan Government hereby covenants and agrees that it will provide financial information and event notices as required by Rule 15c2-12 of the Securities Exchange Commission for the Series 2025 Bonds. The Metropolitan Mayor is authorized to execute at the Closing of the sale of the Series 2025 Bonds, an agreement for the benefit of and enforceable by the owners of the Series 2025 Bonds specifying the details of the financial information and event notices to be provided and its obligations relating thereto. Failure of the Metropolitan Government to comply with the undertaking herein described and to be detailed in said closing agreement, shall not be a default hereunder, but any such failure shall entitle the owner or owners of any of the Series 2025 Bonds to take such actions and to initiate such proceedings as shall be necessary and appropriate to cause the Metropolitan Government to comply with its undertaking as set forth herein and in said agreement, including the remedies of mandamus and specific performance.
Section 8.6. Reasonably Expected Economic Life of Projects. The term of the Series 2025 Bonds shall not exceed the reasonably expected economic life of the projects being financed or refinanced with such Series 2025 Bonds.
Section 8.7. Conflicting Resolutions Repealed. All resolutions or parts thereof in conflict herewith are, to the extent of such conflict, hereby repealed.
Section 8.8. Effective Date. This Ninth Supplemental Resolution shall take effect from and after its adoption, the welfare of the Metropolitan Government requiring it.
Agenda Analysis
Analysis
This resolution authorizes the execution, terms, issuance, sale, and payment of water and sewer revenue refunding and improving bonds in an aggregate principal amount not to exceed $700,000,000.
Substitute Resolution RS2010-1442 (the “Bond Resolution”) authorized the issuance from time to time of Metro Water and Sewer (MWS) revenue bonds after adoption of a supplemental Council resolution. This authority has been used eight times since then. The first supplemental resolution authorized the 2010 bonds in four series, collectively known as the Series 2010 bonds. The second supplemental resolution, approved in 2011, amended certain provisions of the Bond Resolution. The third supplemental resolution authorized the 2013 revenue bonds, and the fourth supplemental resolution authorized the 2017 revenue bonds. The fifth supplemental resolution was approved in March 2020 and the sixth supplemental resolution was approved in April 2020 to authorize the financing and construction of several MWS capital projects through the State Revolving Fund Loan. The seventh supplemental resolution authorized the issuance of Series 2021 revenue bonds to retire commercial paper, fund capital improvements to the water and sewer system, refund the Series 2013 Bonds, and to defease the remaining outstanding Series 2012 Subordinate Lien Bonds. The eighth supplemental resolution was approved on September 6, 2022, to fund capital improvements and repeal provisions of the second supplemental resolution that authorized the issuance of subordinate lien water and sewer revenue bonds.
This resolution, which will be the ninth supplemental resolution, authorizes the issuance of Series 2025 water/sewer revenue bonds in an amount not to exceed $700,000,000 to retire commercial paper, refund all or a portion of the Series 2017 Bonds and Series 2021 Bonds, and pay the costs of issuing such bonds. The Series 2025 Bonds will have a final maturity date of July 1, 2035. The plan of financing is consistent with Metro’s debt policy approved by the Council. These bonds will be sold through a negotiated sale. The underwriters on the bonds will be BofA Securities, Inc., Morgan Stanley & Co. LLC, Ramirez & Co., Inc., Bancroft Capital, LLC, Blaylock Van, LLC, D.A. Davidson & Co., Fifth Third Securities, Inc., and Raymond James & Associates, Inc. Only revenues generated by water and sewer customers are used to pay the obligations on these bonds. The bonds do not constitute a debt of the Metropolitan Government that would compel the use of sales or property tax revenues.