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Ordinance 2009-02

AN ORDINANCE AUTHORIZING BORROWING FUNDS FOR THE
ACQUISITION OF A 1 994 KME LADDER FIRE TRUCK BY ISSUANCE OF
A PROMISSORY NOTE; PROVIDING FOR SECURITY FOR THE
REPAYMENT OF THE PROMISSORY NOTE; PROVIDING FOR THE
PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE NOTE;
DECLARING AN EMERGENCY; AND PRESCRIBING OTHER MATTERS
RELATING THERETO.
WHEREAS, the City Council of the City of Johnson, Arkansas (the "City") has determined
that the City is in need of a 1 994 KME Ladder Fire Truck including all ancillary equipment attached
thereto for use by the Johnson Area Volunteer Fire Department which serves the City (the
"Equipment"); and
WHEREAS, the cost of the Equipment is $230,000.00; and
WHEREAS, the City can obtain the necessary funds for the acquisition of the Equipment by
issuing its Promissory Note in favor of First Security Bank ("Lender") in the principal amount of
5200,000.00 (the "Note").
Now THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF JOHNSON,
ARKANSAS, TO-WIT:
Section 1. The City Council hereby finds that the Equipment to be acquired will have
a useful life of more than one (1) year and that the principal amount of the Note, plus all other
obligations heretofore incurred by the City under Amendment No.78 to the Arkansas Constitution
("Amendment No. 78") does not exceed 5% of the assessed value of taxable property located within
the City as determined by the last tax assessment.
Section 2. Under the authority of the Constitution and laws of the State of Arkansas (the
"State"), including, Amendment No. 78, the Mayor and Recorder-Treasurer are hereby authorized
to execute and deliver, by and on behalf of the City, a Promissory Note in favor of Lender in the
maximum principal amount of $200,000.00 for the purpose of financing the cost of acquiring the
Equipment. The Note shall be dated within sixty (60) days of the date of enactment of this
Ordinance and shall be issuable only as a fully registered Note without coupons. The Note shall bear
interest at an interest rate of 4.95%, and shall be paid in sixty (60) equal monthly installments of
principal and interest, to mature on that date which is sixty months from the date of the Note. As
security for the performance of the obligations of the City pursuant to the Note, coincident with the
execution and del i very of the Note, there is authorized the execution by the Mayor and Recorder-
Treasurer, and delivery of a security agreement granting unto and in favor of the Lender (as secured
party), a prior lien upon the Equipment (the "Security Agreement"). The Lender is authorized to file
one or more financing statements to perfect the lien granted by the Security Agreement.
Section 3. The Note shall be in such form as shall be approved by the Lender and the
Mayor and Recorder-Treasurer.
Section 4. As presided in Amendment No. 78, the debt service payments on the Note
in each fiscal year shall be charged against and paid from the general revenues of the City for such
fiscal year. For the purpose of making the debt service payments, there is hereby, and shall be
appropriated to pay the Note, an amount of general revenues of the City sufficient for such purposes
in each fiscal year of the City. The City covenants that for each fiscal year in which the Note is
outstanding, the general revenues of the City shall exceed the amount of debt service payments due
on the Note in that fiscal year.
Section 5. The City agrees to have its financial statements audited annually by the Joint
Legislative Auditing Committee, Division of Legislative Audit of the State of Arkansas. While the
Note is outstanding, a copy of the audit report shall be furnished to the Lender on request.
Section 6. The City agrees to prepare and adopt a budget for each fiscal year in
accordance with Arkansas law and to furnish the Lender with a copy of the same by January 31 of
each year while the Note is outstanding. Each budget shall make provision for the payment of debt
service due on the Note in that fiscal year.
Section 7. If there be any default in the payment of the principal of or interest on the
Note, or in the performance of any of the other covenants contained in this Ordinance, Lender may,
in addition to any other remedies available to Lender, by proper suit, compel the performance of the
duties of the officials of the City under the laws of Arkansas. No remedy conferred upon or reserved
to Lender is intended to be exclusive of any other remedy or remedies, and every such remedy shall
be cumulative and shall be hi addition to every other remedy given under this Ordinance or by law.
Lender may waive any default which shall have been remedied before the entry of final judgment
or decree in any suit, action or proceeding instituted under the provisions of this Ordinance or before
the completion of the enforcement of any other remedy, but no such waiver shall extend to or affect
any other existing or any subsequent default or defaults or impair any rights or remedies of Lender
with respect thereto. No delay or omission of Lender to exercise any right or power accrued upon
any default shall impair any such right of power of shall be construed to be a waiver of any such
default or an acquiescence therein; and every power and remedy given by this Ordinance to Lender
may be exercised from time to tune and as often as may be deemed expedient. In any proceeding
to enforce the provisions of this Ordinance Lender shall be entitled to recover from the City all costs
of such proceeding, including reasonable attorneys fees.
Section 8. The terms of this Ordinance, the Note and the Security Agreement shall
constitute a contract between the City and the Lender and no variation or change in the undertaking
herein set forth shall be made while the Note is outstanding, except as may be agreed in writing as
between the City and Lender.
Section 9. The City covenants that it shall not take any action or suffer or permit any
action to be taken or conditions to exist which causes or may cause the interest payable on the Note
to be included in gross income for federal income tax purposes, including, without limitation, any
action in violation of the applicable provisions of the Internal Revenue Code of 1986, and the
Regulations thereunder. The City represents that it has not used or permitted the use of, and
covenants that it will not use or permit the use of the Equipment or the proceeds of the Note, in such
manner as to cause the Note to be "private activity bonds" within the meaning of Section 141 of the
Code. The Note is hereby designated as a "qualified tax-exempt obligation" within the meaning of
Section 265(b)(3)(B) of the Code. The City covenants that it will submit to the Secretary of the
Treasury of the United States, not later than the 15th day of the second calendar month after the close
of the calendar quarter in which the Note is issued, a statement as required by Section 149(e) of the
Code.
Section 10. The provisions of this Ordinance are hereby declared to be separable and if
any provision shall for any reason be held illegal or invalid, such holding shall not affect the validity
of the remainder of this Ordinance.
Section 11. All ordinances and resolutions or parts thereof, in conflict herewith are hereby
repealed to the extent of such conflict.
Emergency Clause. The immediate need to acquire the Equipment in order to continue to
provide essential services to the citizens and residents of the City being necessary for the
preservation of the public peace, health, safety and welfare, an emergency is hereby found to exist
and this Ordinance shall be in full force and effect from and after its passage.