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An Ordinance amending an ordinance adopted on the 17th day of September, 2008, by the Board of Commissioners of The County of Cook, Illinois. ("Master Bond Ordinance")

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Date Introduced: 6/2/2009
Date Passed:
6/2/2009

Sponsors:
Stroger-Todd, Suffredin
Co-Sponsors:

Summary:

The Master Bond Ordinance provides that one or more series of bonds of the County shall be issued on occassion to help pay certain County expenses.  This ordinance amends the original Master Bond Ordinance in Sections 11.A and 11.E.  Section 11.A allows for the Cheif Financial Officer of the County to elect to designate all or any portion of the several Series of Bonds as Build America Bonds and Qualified Build America Bonds pursuant to the Stimulus Act and have Section 54AA of the Codeapply to same. 

Section 11.E allows for officers of the county to be authorized to execute such documents as necessary to implement the Projects and the Refunding and to effect the issuance and delivery and maintenance of the status of the Bonds.


Full Text of Legislation:

WHEREAS, the Board of Commissioners (the “Board”) of The County of Cook, Illinois (the “County”), heretofore adopted on the 17th day of September, 2008, an ordinance entitled, “An Ordinance providing for the issuance of one or more series of General Obligation Bonds of The County of Cook, Illinois” (the “Master Bond Ordinance”); and

WHEREAS, the Master Bond Ordinance provides that one or more series of general obligation bonds of the County (being, collectively, the “Project Bonds”) shall be issued from time to time to pay the costs of certain County construction, acquisition and equipment projects, being the Public Safety Funds Project, the Health Fund Project, the Corporate Fund Project and the Capital Equipment Project (being, collectively, the “Projects”); and

WHEREAS, the Board has heretofore previously amended the Master Bond Ordinance so as to limit the aggregate amount of Project Bonds to be issued in 2009 for the Projects; and

WHEREAS, since the adoption date of the Master Bond Ordinance, Congress has enacted the American Recovery and Reinvestment Act of 2009 (the “Stimulus Act”), which permits state or local governments to obtain certain tax advantages when issuing certain taxable obligations, referred to as “Build America Bonds,” to finance governmental projects; and

WHEREAS, the Board has heretofore and it is hereby expressly determined that it is advisable and necessary to amend the Master Bond Ordinance to maximize certain of the tax advantages as allowed under the Stimulus Act as follows:

NOW, THEREFORE, BE IT ORDAINED, by the Board of Commissioners of The County of Cook, Illinois, as follows:

Section 1.        Definitions.

A portion of Section 1.B. of the Master Bond Ordinance is hereby supplemented and amended, said supplemented and amended portion of Section 1.B. to read as follows:

“Build America Bonds” means taxable bonds authorized by the Stimulus Act and as so designated pursuant to this Ordinance, the interest on which, but for Section 54AA of the Code, would be excludable from gross income of the owners thereof under the Code for federal income tax purposes.

“Business Day” means any day other than a day on which banks in New York, New York, Chicago, Illinois, or the city in which the applicable Escrow Agent or Trustee maintains an office designated for the purpose, are required or authorized to close.

“Extraordinary Event” means a change that has occurred to Section 54AA or 6431 of the Code (as such sections were added by Section 1531 of the Stimulus Act, pertaining to Build America Bonds) or there is any guidance published by the Internal Revenue Service or the United States Treasury with respect to such sections or any other determination by the Internal Revenue Service or the United States Treasury, pursuant to which the County’s 35% cash subsidy payment from the United States Treasury is reduced or eliminated, and which is not the result of any act or omission by the County to satisfy the requirements to qualify to receive the 35% cash subsidy payment from the United States Treasury.

“Qualified Build America Bonds” means Build America Bonds that are “qualified bonds” within the meaning of Section 54AA(g) of the Code, for which an issuer is entitled to apply to receive payments equal to 35% of the interest payable on such bonds on any interest payment date pursuant to Section 6431 of the Code.

“Stimulus Act” means the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115 (2009), enacted February 17, 2009.

“Tax Exempt” means, with respect to the Bonds, the status of interest paid and received thereon as excludable from the gross income of the owners thereof under the Code for federal income tax purposes, except to the extent that such interest is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations.   For purposes of Sections 13 through 17 herein, the term Tax Exempt shall be deemed to include Bonds issued as Build America Bonds.

“Treasury Rate” means as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available on the Determination Date (excluding inflation indexed securities) (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to (i) the remaining average life of the Bonds to be redeemed, or (ii) the period from the redemption date to the Stated Maturity of the Bonds to be redeemed, as shall be determined by the Chief Financial Officer and set forth in the relevant Bond Order or Indenture; provided, however, that if the period from the redemption date to such Stated Maturity is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.  “Determination Date” means the date which is that number of Business Days prior to the redemption date as shall be set forth in the relevant Bond Order or Indenture.

Section 2.        Maximum Maturity Date of Bonds.

A portion of Section 3. of the Master Bond Ordinance is hereby amended, said amended portion of Section 3. to read as follows:

All Bonds shall become due and payable as provided in the relevant Bond Order, provided, however, that no Bond shall have a Stated Maturity which is later than the date which is thirty (30) years after its Dated Date.

Section 3.        Addition of Available Redemption Provisions for the Bonds.

Section 5. of the Master Bond Ordinance is hereby amended and restated, said amended and restated Section 5. to read as follows:

            A.        Mandatory Redemption.  If so provided in the relevant Bond Order or Indenture, any Bonds may be issued as Term Bonds and be subject to mandatory redemption by operation of the Bond Fund, in the case of Current Interest Bonds or Variable Rate Bonds, at a price of par, without premium, plus accrued interest to the date fixed for redemption, and in the case of Capital Appreciation Bonds at a price of Compound Accreted Value calculated to the date fixed for redemption, on November 15 (or such other date as may be provided in the relevant Bond Order) of the years and in the amounts and subject to such provisions as shall be set forth in the relevant Bond Order.  The County covenants that it will redeem Term Bonds pursuant to the mandatory redemption requirement for such Term Bonds and provide Pledged Taxes accordingly.

In connection with any mandatory redemption of Bonds as authorized above, the principal amounts of such Bonds to be mandatorily redeemed in each year may be reduced through the earlier optional redemption thereof, with any partial optional redemptions of such Bonds credited against future mandatory redemption requirements in such order of the mandatory redemption dates as the Chief Financial Officer may determine.  In the absence of such determination, partial optional redemptions of such Bonds shall be credited against future mandatory redemption requirements in inverse chronological order of such payments beginning with the amount scheduled to become due at Stated Maturity, then the amount subject to mandatory redemption in the year preceding Stated Maturity, and so on.  In addition, on or prior to the sixtieth (60th) day preceding any mandatory redemption date, the Trustee may, and if directed by the Chief Financial Officer shall, purchase Bonds of such maturities in an amount not exceeding the amount of such Bonds required to be retired on such mandatory redemption date and at a price not exceeding par plus accrued interest.  Any such Bonds so purchased shall be cancelled and the principal amount thereof shall be credited against the payment required on such next mandatory redemption date.

The County shall provide the Trustee with written notice of such reduction, which notice shall be given within thirty (30) days after such redemption or purchase, and the Trustee shall promptly give written notice of the same to the Bondholders, in the manner hereinafter provided.

            B.         Optional Redemption.  If so provided in the relevant Bond Order or Indenture, any Bonds may be redeemable prior to maturity at the option of the County, in whole or in part on any date, at such times and at such optional redemption prices as shall be determined by the Chief Financial Officer at the time of the sale thereof.  Such optional redemption prices shall be expressed as (i) a percentage of the principal amount of Current Interest Bonds or Variable Rate Bonds to be redeemed or as a percentage of the Compound Accreted Value of Capital Appreciation Bonds to be redeemed, provided that such percentage shall not exceed one hundred three percent (103.00%), plus, in the case of Current Interest Bonds or Variable Rate Bonds, accrued interest to the date of redemption, or (ii) the “Make-Whole Redemption Price” hereinafter provided, or (iii) the “Extraordinary Optional Redemption Price” hereinafter provided.  If less than all of the Outstanding Bonds of a Series are to be optionally redeemed, the Bonds to be called shall be called from such Series, in such principal amounts and from such maturities as may be determined by the County and within any maturity by in the manner hereinafter provided.  The terms and provisions for any redemption of Variable Rate Bonds shall be as determined by the Chief Financial Officer at the time of sale of the Bonds and as set forth in a relevant Indenture, provided that such terms shall be within the limitations set forth in this Section.

            C.         Make-Whole Redemption.  If so provided in the relevant Bond Order or Indenture, any Bonds may be redeemable prior to maturity at the option of the County, in whole or in part, on any Business Day, at the “Make-Whole Redemption Price,” which is the greater of (i) one hundred percent (100%) of the principal amount of the Bonds to be redeemed and (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the Stated Maturity of the Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Bonds are to be redeemed, discounted to the date on which the Bonds are to be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at a rate which is equal to or in excess of the adjusted Treasury Rate, plus, in each case, accrued and unpaid interest on the Bonds to be redeemed on the redemption date.  The Chief Financial Officer shall confirm and transmit the Make-Whole Redemption Price on such dates and to such parties as shall be necessary to effectuate such make-whole redemption.

D.        Extraordinary Optional Redemption. If so provided in the relevant Bond Order or Indenture, the Bonds may be redeemable prior to maturity at the option of the County, in whole or in part, upon the occurrence of an Extraordinary Event, at the “Extraordinary Optional Redemption Price,” which is the greater of: (i) one hundred percent (100%) of the principal amount of the Bonds to be redeemed and (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the Stated Maturity of the Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Bonds are to be redeemed, discounted to the date on which the Bonds are to be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at a rate which is equal to or in excess of the adjusted Treasury Rate, plus, in each case, accrued and unpaid interest on the Bonds to be redeemed on the redemption date.  The Chief Financial Officer shall confirm and transmit the Extraordinary Optional Redemption Price on such dates and to such parties as shall be necessary to effectuate such extraordinary optional redemption.

            E.         Redemption Procedure.   The Bonds subject to redemption shall be identified, notice given, and paid and redeemed pursuant to the procedures as follows.

1.         Redemption Notice.   For a mandatory redemption of Term Bonds, unless otherwise notified by the County, the Trustee shall proceed to redeem the Term Bonds without any further order or direction from the County hereunder or otherwise.   For an optional redemption, the County shall, at least forty-five (45) days prior to any optional redemption date (unless a shorter time period shall be satisfactory to the Trustee), notify the Trustee of such redemption date and of the principal amount and maturities of Bonds to be redeemed.

2.         Selection of Bonds within a Maturity.  Current Interest Bonds shall be redeemed only in the principal amount of $5,000 each and integral multiples thereof, and Capital Appreciation Bonds shall be redeemed only in amounts representing $5,000 Maturity Amount and integral multiples thereof.  For purposes of any redemption of less than all of the Bonds of a single maturity, the particular Bonds or portions of Bonds to be redeemed shall be selected by lot by the Trustee for the Bonds of such maturity by such method of lottery as the Trustee shall deem fair and appropriate; provided, that such lottery shall provide for the selection for redemption of Bonds or portions thereof so that each $5,000 principal amount or Maturity Amount (as appropriate) of such Bond shall be as likely to be called for redemption as any other such $5,000 Bond or $5,000 portion.  The Trustee shall make such selection (a) upon or prior to the time of the giving of official notice of redemption, or (b) in the event of a refunding or defeasance, upon advice from the County that certain Bonds have been refunded or defeased and are no longer Outstanding as defined.

Alternatively, if so provided in the relevant Bond Order or Indenture, for purposes of any redemption of less than all of the Bonds of a single maturity, the particular Bonds or portions of Bonds to be redeemed shall be selected by the Trustee pro-rata based upon the aggregate principal amount thereof then Outstanding; provided, however, that the portion of any Bond of a denomination of more than the minimum Authorized Denomination to be redeemed shall be in the principal amount of an Authorized Denomination and that, in selecting portions of such Bonds for redemption, the Trustee shall treat each such Bond as representing that number of Bonds of said minimum Authorized Denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by said minimum Authorized Denomination.  If the Bonds are held in Book Entry Form at the time of such redemption, the County shall direct the Trustee to instruct the Depository to select the specific Bonds within such maturity for redemption pro-rata among such Bonds.  The County and the Trustee shall have no responsibility or obligation to insure that the Depository properly selects such Bonds for redemption.

3.         Official Notice of Redemption.  The Trustee shall promptly notify the County in writing of the Bonds or portions of Bonds selected for redemption and, in the case of any Bond selected for partial redemption, the principal amount thereof to be redeemed.  Unless waived by the registered owner of Bonds to be redeemed, official notice of any such redemption shall be given by the Trustee on behalf of the County by mailing the redemption notice by first class U.S. mail not less than thirty (30) days and not more than sixty (60) days prior to the date fixed for redemption to each registered owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such registered owner to the Trustee.  All official notices of redemption shall include the name of the Bonds and at least the information as follows:

            (a)        the redemption date;

(b)        the redemption price, or in the case of a make-whole or extraordinary optional redemption, a description of the formula by which the redemption price shall be determined;

(c)        if less than all of the outstanding Bonds of a Series and of a particular maturity are to be redeemed, the identification (and, in the case of partial redemption of Bonds of a Series within such maturity, the respective principal amounts) of the Bonds to be redeemed;

(d)        a statement that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption and that interest thereon shall cease to accrue from and after said date; and

(e)        the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the office designated for that purpose of the Trustee.

4.         Conditional Redemption.  Unless moneys sufficient to pay the redemption price of the Bonds to be redeemed shall have been received by the Trustee prior to the giving of such notice of redemption, such notice may, at the option of the County, state that said redemption shall be conditional upon the receipt of such moneys by the Trustee on or prior to the date fixed for redemption.  If such moneys are not received, such notice shall be of no force and effect, the County shall not redeem such Bonds, and the Trustee shall give notice, in the same manner in which the notice of redemption was given, that such moneys were not so received and that such Bonds will not be redeemed.

5.         Bonds Shall Become Due.  Official notice of redemption having been given as described, the Bonds or portions of Bonds so to be redeemed shall, subject to the stated condition in paragraph 4. immediately preceding, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the County shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest.  Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Trustee at the redemption price.  The procedure for the payment of interest due as part of the redemption price shall be as herein provided for payment of interest otherwise due.

6.         Insufficiency in Notice Not Affecting Other Bonds; Failure to Receive Notice; Waiver.  Neither the failure to mail such redemption notice, nor any defect in any notice so mailed, to any particular registered owner of a Bond, shall affect the sufficiency of such notice with respect to other registered owners.  Notice having been properly given, failure of a registered owner of a Bond to receive such notice shall not be deemed to invalidate, limit or delay the effect of the notice or redemption action described in the notice.  Such notice may be waived in writing by a registered owner of a Bond entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by registered owners shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.  In lieu of the foregoing official notice, so long as the Bonds are held in book entry form, notice may be given as provided in the Representation Letter, and the giving of such notice shall constitute a waiver by the Depository and the book entry owner, as registered owner, of the foregoing notice.  After giving proper notification of redemption to the Trustee, as applicable, the County shall not be liable for any failure to give or defect in notice.

7.         New Bond in Amount Not Redeemed.  Upon surrender for any partial redemption of any Bond, there shall be prepared for the registered owner a new Bond or Bonds of like Series and tenor, of Authorized Denominations, of the same maturity, and bearing the same rate of interest in the amount of the unpaid principal.

8.         Effect of Nonpayment upon Redemption.  If any Bond or portion of Bond called for redemption shall not be so paid upon surrender thereof for redemption, in the case of Current Interest Bonds, the principal shall, until paid, bear interest from the redemption date at the rate borne by the Bond or portion of Bond so called for redemption; in the case of Variable Rate Bonds, the principal shall, until paid, bear interest as provided in a relevant Indenture; and, in the case of Capital Appreciation Bonds, the Compound Accreted Value at such redemption date shall continue to accrue interest from such redemption date at the Yield to Maturity borne by such Capital Appreciation Bond, or portion thereof, so called for redemption.

9.         Bonds to Be Cancelled; Payment to Identify Bonds.  All Bonds which have been redeemed shall be cancelled and destroyed by the Trustee and shall not be reissued.  Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.

10.       Additional Notice.  The County agrees to provide such additional notice of redemption as it may deem advisable at such time as it determines to redeem Bonds, taking into account any requirements or guidance of the Securities and Exchange Commission, the Municipal Securities Rulemaking Board, the Government Accounting Standards Board, or any other federal or state agency having jurisdiction or authority in such matters; provided, however, that such additional notice shall be (a) advisory in nature, (b) solely in the discretion of the County (unless a separate agreement shall be made), (c) not be a condition precedent of a valid redemption or a part of the Bond contract, and (d) any failure or defect in such notice shall not delay or invalidate the redemption of Bonds for which proper official notice shall have been given.  Reference is also made to the provisions of the Continuing Disclosure Undertaking of the County with respect to the Bonds, which may contain other provisions relating to notice of redemption of Bonds.

11.       Trustee to Advise County.  As part of its duties hereunder, the Trustee shall prepare and forward to the County a statement as to notices given with respect to each redemption together with copies of the notices as mailed.

Section 4.        Authority to Designate Bonds as Build America Bonds.

Section 11.A. and Section 11.E. of the Master Bond Ordinance are hereby supplemented and amended, said supplemented and amended Section 11.A. and Section 11.E. to read as follows:

A.        Sale of the Bonds.  The Chief Financial Officer is hereby authorized to sell all or any portion of the several Series of the Bonds to the respective Underwriters from time to time on such terms as she may deem to be in the best interests of the County and may elect to designate all or any portion of the several Series of the Bonds as Build America Bonds and Qualified Build America Bonds pursuant to the Stimulus Act and have Section 54AA of the Code (and Section 54AA(g) of the Code if such bonds are designated as Qualified Build America Bonds) apply to same; provided that (i) in each case the Purchase Price shall be at least ninety-eight percent (98%) of the proceeds of the Bonds (exclusive of any net original issue discount used in the marketing of the Bonds, not to exceed 10% of the principal amount thereof), plus accrued interest, if any, on the Bonds from their Dated Date to the date of their issuance,  (ii) the aggregate amount of principal of and interest on and Maturity Amount of the Bonds (based, for Variable Rate Bonds, on the reasonable estimate of the Chief Financial Officer as hereinabove provided) in any year shall not exceed the aggregate amount levied therefore pursuant hereto plus capitalized interest, if any, (iii) the aggregate par amount of Bonds to be sold pursuant to this Ordinance shall be limited as follows: (a) for the Public Safety Funds Project, the Health Fund Project and the Corporate Fund Project, collectively, the aggregate par amount shall not exceed the sum of $ 242,943,365 (b) for the Capital Equipment Project related to the Duran Consent Decree, the aggregate par amount shall not exceed the sum of $8,466,741, and (c) for the balance of the Capital Equipment Project, the aggregate par amount shall not exceed that amount expressly authorized by the Corporate Authorities, and (iv) as an additional limitation on the sale of the Refunding Bonds, each such certificate or report (as hereinabove described) must set forth that the Refunding will provide a present value debt service savings to the County resulting from the issuance of Refunding Bonds to refund each maturity, or part of a maturity, of the Refunded Bonds which are chosen to be refunded, which report shall demonstrate that the County will realize a minimum net present value savings of three percent (3.00%) of the debt service on the Refunded Bonds being refunded.  The Bonds may be sold from time to time as the Chief Financial Officer shall determine that the proceeds of such sales are needed.  Nothing contained in this Ordinance shall limit the sale of the Bonds or any maturity or maturities thereof at a price or prices in excess of the principal amount thereof.  Incidental to each sale of the several Series of Bonds the Chief Financial Officer shall provide the Corporate Authorities a written notification of the sale of such Bonds, which notification shall describe such Series of Bonds in detail.

E.         Execution of Documents Authorized.  Any Designated Officer and such other officers and officials of the County as may be necessary are hereby authorized to execute such other documents, as may be necessary to implement the Projects and the Refunding and to effect the issuance and delivery and maintenance of the status of the Bonds, including but not limited to:

            (i)         those certain contracts of purchase (each, a “Purchase Contract”) by and between the County and the Underwriters, which Purchase Contracts shall be in form acceptable to the Chief Financial Officer and as customarily entered into by the County;

            (ii)        as necessary in connection with any Refunding, those certain Escrow Agreements by and between the County and the Escrow Agent or Escrow Agents, such agreements to be provided by Bond Counsel, which Escrow Agreements shall be in form acceptable to the Chief Financial Officer and as customarily entered into by the County;

            (iii)       as necessary in connection with the issuance of any Series of Variable Rate Bonds, one or more Indentures, which Indentures shall be in form acceptable to the Chief Financial Officer and as customarily entered into by the County;

            (iv)       those certain Continuing Disclosure Undertakings, each as approved by the Chief Financial Officer and each in form customarily used by the County, to effect compliance with Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934;

            (v)        such certification, tax returns and documentation as may be required by Bond Counsel, including, specifically, a tax agreement, to render their opinions as to the Tax Exempt status of the interest on any Tax Exempt Bonds or the qualification of a portion of the Bonds as Qualified Build America Bonds pursuant to the Code;

            (vi)       such certification, tax returns and documentation as may be advised by Bond Counsel as appropriate, to establish and maintain the Tax Exempt status of the interest on any Tax Exempt Bonds and the qualification of a portion of the Bonds as Qualified Build America Bonds pursuant to the Code;

            (vii)      such certification, tax returns and documentation as may be advised by Bond Counsel as appropriate, to apply for and obtain any tax credits that may be available to the County as a result of any of the Bonds qualifying as Qualified Build America Bonds pursuant to the Code;

and execution thereof by such Designated Officers, officers and officials is hereby deemed conclusive evidence of approval thereof with such changes, additions, insertions, omissions or deletions as such officers may determine, with no further official action of or direction by the Corporate Authorities.


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