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Ordinance 2011-02

ORDINANCE NO. 2011-02
AN ORDINANCE AUTHORIZING BORROWING FUNDS FOR THE
CONSTRUCTION OF CERTAIN IMPROVEMENTS AND MAKING
CERTAIN REPAIRS TO REAL PROPERTY OF THE CITY BY ISSUANCE OF
A 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 a retaining wall located on City Hall property is in need of certain repairs and improvements
(the "Improvements"); and
WHEREAS, the estimated cost of the Improvements is $75,000.00; and
WHEREAS, the City can obtain the necessary funds for the construction of the
Improvements by issuing a Promissory Note in favor of First Security Bank ("Lender") in the
principal amount of $75,000.00 (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 Improvements to be constructed
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 City Clerk 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 $75,000.00 for the purpose of financing the cost of the improvements. 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 4.93%, 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.
Section 3. The Note shall be in such form as shall be approved by the Lender and the
Mayor and City Clerk.
Section 4. As provided in Amendment No. 78, the debt service payments on the Note
in each fiscal year shall be charged against and paid from the general revenues of the City for
such fiscal year. For the purpose of making the debt service payments, there is hereby, and shall
be appropriated to pay the Note, an amount of general revenues of the City sufficient for such
purposes 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 reviewed 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 reviewed 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 in 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 or 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 time 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 attorney's fees.
Section 8. The terms of this Ordinance and the Note 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 Improvements 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
2
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 construct the Improvements in order to
maintain the integrity of the City Hall and 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, constitutes an emergency; and said emergency is hereby found to exist, and this
Ordinance shall be in full force and effect from and after its passage.
PASSED AND ADOPTED THIS 8th day of March, 2011.
CITY OF JOHNSON, ARKANSAS
Lonnie Barron, Mayor