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Legislation #: 081030 Introduction Date: 10/9/2008
Type: Ordinance Effective Date: 10/26/2008
Sponsor: None
Title: Approving the termination of a swap agreement relating to certain bonds previously issued by The Industrial Development Authority of the City of Kansas City, Missouri and the entering into of one or more substitute and replacement swap agreements by such Issuer relating to certain bonds previously issued by such Issuer; approving and authorizing certain documents and actions relating to the swap agreement relating to such bonds.

Legislation History
DateMinutesDescription
10/8/2008 Filed by the Clerk's office
10/9/2008 Referred to Finance and Audit Committee
10/15/2008 Advance and Do Pass, Debate
10/16/2008 Passed

View Attachments
FileTypeSizeDescription
081030.pdf Authenticated 164K Authenticated
Lehman ordinance fact sheet v1 (revised).xls Fact Sheet 52K revised Fact Sheet
Fiscal notes-swap termination approval ordinance v1.xls Fiscal Note 61K Fiscal Note
Lehman ordinance fact sheet v1.xls Fact Sheet 52K Fact Sheet

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ORDINANCE NO. 081030

 

Approving the termination of a swap agreement relating to certain bonds previously issued by The Industrial Development Authority of the City of Kansas City, Missouri and the entering into of one or more substitute and replacement swap agreements by such Issuer relating to certain bonds previously issued by such Issuer; approving and authorizing certain documents and actions relating to the swap agreement relating to such bonds.

 

WHEREAS, The Industrial Development Authority of the City of Kansas City, Missouri (the "Issuer") is a public corporation duly organized and existing under Chapter 349, Revised Statutes of Missouri, as amended (the Act); and

WHEREAS, at the request of the City of Kansas City, Missouri (the City), pursuant to the Indenture of Trust, dated as of March 1, 2005 (the Original Indenture) between the Issuer and UMB Bank, N.A., as Trustee, as amended and supplemented by a First Supplemental Indenture of Trust, dated as of July 1, 2006 (the First Supplemental Indenture), the Issuer has previously issued its $115,015,000 Variable Rate Demand Tax‑Exempt Revenue Bonds (Kansas City Downtown Redevelopment District), Series 2005A (the Series 2005A Bonds), its $64,985,000 Variable Rate Demand Tax‑Exempt Revenue Bonds (Kansas City Downtown Redevelopment District) Series 2005B (the Series 2005B Bonds and with the Series 2005A Bonds, the Series 2005 Bonds), its $69,500,000 Variable Rate Demand Tax‑Exempt Revenue Bonds (Kansas City Downtown Redevelopment District), Series 2006A (the Series 2006A Bonds) and its $45,500,000 Variable Rate Demand Tax‑Exempt Revenue Bonds (Kansas City Downtown Redevelopment District) Series 2006B (the Series 2006B Bonds and with the Series 2006A Bonds, the Series 2006 Bonds) (collectively, the Bonds) to finance certain costs associated with the Kansas City Downtown Redevelopment Project (the Project); and

WHEREAS, pursuant to the Amended and Restated Indenture of Trust dated as of June 1, 2007 and the Series 2005A Series Supplement dated June 6, 2007 (collectively, the Indenture), the Issuer facilitated a restructuring of the Bonds for the purpose of converting the interest rate on the Series 2005A Bonds to a fixed rate of interest and entering a swap agreement with respect to the Series 2005B Bonds and the Series 2006A Bonds; and

WHEREAS, at the request of the City, the Issuer entered into an ISDA Master Agreement, including a Schedule, a Credit Support Annex and a Confirmation relating to the Transaction described therein (collectively, the Swap Agreement) relating to a portion of the Series 2005B Bonds and Series 2006A Bonds (collectively, the Hedged Bonds), swapping the floating interest rate thereon to a fixed rate (subject to the conditions set forth in the Swap Agreement), for which a guarantee was provided by Lehman Brothers Holdings Inc. (Holdings); and

WHEREAS, Holdings has filed for bankruptcy, which constitutes an Event of Default under the Swap Agreement for which termination by the Issuer is an available remedy, and the City wishes to authorize the termination of the Swap Agreement, or if appropriate, the assignment of the Swap Agreement to a different swap provider, and to authorize the execution and delivery of one or more replacement or substitute swap agreements relating to the Hedged Bonds; and

WHEREAS, in order to accomplish the foregoing, it is necessary and desirable that the City approve the transactions described in this Ordinance and certain other matters in connection with the transactions, as herein provided; NOW, THEREFORE,

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

Section 1. Approval of Termination of Swap Agreement. The City hereby requests, directs and instructs the Issuer to, and consents to and approves the termination of the Swap Agreement. In lieu of a termination of the Swap Agreement, if directed by the Director of Finance, the Swap Agreement may be assigned to a different swap provider. The City agrees to make any payment to the Swap Provider required under the Swap Agreement as a result of the termination or assignment of the Swap Agreement to a different swap provider.

Section 2. Approval of Substitute or Replacement Swap Agreement. The City hereby approves the Issuers execution of a substitute or replacement swap agreement, replacing the Swap Agreement upon its termination, to effect a floating-to-fixed rate swap relating to the Hedged Bonds (subject to the conditions set forth in the swap agreement) and the Director of Finance is hereby authorized and directed to execute, enter into and deliver on behalf of the City any documents, certificates and instruments with respect thereto as the Director of Finance determines to be in the best interest of the City. The Director of Finance is delegated the power, in consultation with the Citys financial advisor, to negotiate the price and other terms and conditions of the swap transaction with the replacement swap provider. The term of the swap as to a series of Bonds shall not exceed the term of the Hedged Bonds as set out in the Swap Agreement and the notional amount of the swap shall not exceed the principal amount of the Hedged Bonds as set out in the Swap Agreement. The Director of Finance is authorized to modify the swap transaction, provided that the modifications do not extend the average life of the term of the swap, increase the overall risk to the City resulting from the swap or increase the notional amount of the swap beyond parameters stated herein. The Director of Finance is authorized in such Directors discretion to divide the swap agreement and award portions of the notional amount of the swap agreement to more than one replacement swap provider so long as the divided awards have the same economic effect as a single swap agreement. The Director of Finance is further authorized to terminate any swap agreement so entered upon any event of default thereunder.


Section 3. Further Authority. The officials of the City are further authorized and directed to execute such documents, instruments and certificates and to take such further actions on behalf of the City as shall be necessary or desirable to effect the terms and provisions of this Ordinance.

_____________________________________________________

Approved as to form and legality:

 

 

_______________________________

Heather A. Brown

Assistant City Attorney