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HomeMy WebLinkAbout215-10 RESOLUTIONRESOLUTION NO. 215-10 A RESOLUTION TO RATIFY THE RESOLUTION OF THE FAYETTEVILLE PUBLIC FACILITIES BOARD APPROVING REFUNDING REVENUE BONDS (BUTTERFIELD TRAIL VILLAGE PROJECT), SERIES 2010 IN A PRINCIPAL AMOUNT OF NOT TO EXCEED NINETEEN MILLION DOLLARS ($19,000,000.00) WHEREAS, the Fayetteville Public Facilities Board, is a public body politic and corporate with the power of perpetual succession created by Ordinance No. 2485, as amended and codified as §33.065 through §33.071 of the Code of Fayetteville; and WHEREAS, the Public Facilities Board is authorized by A.C.A. 14-137-101 et seq. and the Fayetteville Code to issue and sell its revenue bonds and to use the proceeds thereof for the purpose of financing housing and health care facilities in the City, to secure payment of such revenue bonds as therein provided (including bond insurance or letters of credit) and to issue refunding bonds; and WHEREAS, the Public Facilities Board has determined that the economic interest and public purpose of the Public Facilities Board are served by issuing Fixed Rate Refunding Revenue Bonds, Series 2010 (the "Bonds" for the Butterfield Trail Village Project) in an aggregate principal amount of not to exceed Nineteen Million Dollars ($19,000,000.00) for the purpose of providing moneys to refund prior bonds, pay the costs of issuing the Bonds and for other purposes related thereto; and WHEREAS, pursuant to A.C.A. §14-137-120(a) the Public Facilities Bonds are not a debt of or pledge of the credit of the City of Fayetteville and the City of Fayetteville is not obligated to pay the Bonds; and WHEREAS, A.C.A. § 14-137-104 provides that none of the powers granted to the Public Facilities Board shall be subject to the supervision or regulations or require the approval or consent of the State or of any municipality, except as provided in Ordinance No. 2485 as amended; and WHEREAS, pursuant to the provisions of the Fayetteville Code, a Resolution adopted by the Public Facilities Board which authorizes the approval of bonds for financing or refinancing for residential housing, health care and related facilities for the elderly which are owned by non-profit corporations must be ratified by the City Council before the bonds may be issued; and WHEREAS, the Public Facilities Board adopted a resolution on November 23, 2010 to approve the Bonds subject to the ratification by the City and subsequent approval by the Public Facilities Board of final financing terms; and Page 2 Resolution No. 215-10 WHEREAS, such resolution adopted by the Public Facilities Board on November 23, 2010, authorized the Chairman and Secretary of the Public Facilities Board to execute documents to effect the issuance of the Bonds; and; WHEREAS, the City Council may ratify the Public Facilities Board's Resolution for the issuance of the bonds and provided further that the City Council has determined to ratify the Resolution adopted by the Public Facilities Board on November 23, 2010. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS Section 1: Recognition of Public Facilities Board's Authority. That the City Council of the City of Fayetteville, Arkansas hereby finds that the Public Facilities Board is authorized by A.C.A. §14-137-101 et seq. and the Fayetteville Code to approve the issuance of its not to exceed Nineteen Million Dollars ($19,000,000.00) Fixed Rate Refunding Revenue Bonds, Series 2010 (Butterfield Trial Village Project) for the purpose of providing moneys to refund prior bonds, pay the costs of issuing the bonds and for other purposes related thereto. The Bonds by statute and intent of this City Council are not a debt of or pledge of the credit of the City of Fayetteville, and the City is not obligated to pay any debt service or principal on the bonds whether or not said bonds have been properly issued. Section 2: Ratification of Public Facilities Board's Resolution. That the City Council of the City of Fayetteville, Arkansas hereby ratifies the Public Facilities Board's Resolution approved November 23, 2010, a copy of which is filed with the Fayetteville City Clerk. Section 3: Severability. That the City Council of the City of Fayetteville, Arkansas hereby determines that if any provision of this Resolution shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever. PASSED and APPROVED this 7th day of December, 2010. APPROVED: ATTEST: \,®aa®a s oma ate; SONDRA E. SMITH, City lerk/Trea u kr ETTEVILLE° o®.N. 9s,(,°.11kAN °J o®'Ole i�a°a O°°a a� ®ems' AGENDA REQUEST FOR: COUNCIL MEETING OF DECEMBER 7, 2010 FROM: KIT WILLIAMS, CITY ATTORNEY ORDINANCE OR RESOLUTION TITLE AND SUBJECT: A Resolution To Ratify The Resolution Of The Fayetteville Public Facilities Board Approving Refunding Revenue Bonds (Butterfield Trail Village Project), Series 2010 In A Principal Amount Of Not To Exceed Nineteen Million Dollars ($19,000,000.00) APPROVED FOR AGENDA: City Attorney Date 'Jo -v Finance Director Date /4101,_ Chief of Staff t0 11-19-10P0 �d✓J 21- ,2o/e) 11-19-10PO4:06 RCVD Date I//Ay/D Date rarde Departmental Correspondence ARKANSAS www.accessfayetteville.org LEGAL DEPARTMENT TO: Mayor Jordan City Council CC: Don Marr, Chief of Staff Paul Becker, Finance Director FROM: Kit Williams, City Attorney DATE: November 18, 2010 RE: Ratifying a refinancing bond issue for Butterfield Trail Village Kit Williams City Attorney Jason B. Kelley Assistant City Attorney The Fayetteville Public Facilities Board was established pursuant to state law (A.C.A. §14-137-101 et seq.) by the Fayetteville Board of Directors by Ordinance No. 2485 on November 21, 1978, primarily as a way to finance low income housing. On March 10, 1984, Ordinance No. 2991 was enacted by the City Board amending Ordinance No. 2485 to specifically authorize the issuance of bonds for the construction of Butterfield Trail Village. The Butterfield Trail bonds were refinanced by another issue of bonds in 2002 as approved by the Fayetteville City Council by Resolution No. 10-02 on February 5, 2002. Now the Fayetteville Public Facilities Board is requesting another refinancing issue to lock in current low interest rates, to obtain a longer term letter of credit and to gain increased flexibility in the bonds' financing covenants that could allow for the issuance of additional debt for future capital projects. Please see the letter from Dennis Hunt, Senior Vice President of Stephens, who is acting as the Board's financial advisor. A.C.A. §14-137-107(a)(2)(B) allows the City to "place specific limitations on the exercise of the powers granted, including limitations on the board's area of operations, the use of public facilities projects of the board, and the board's authority to issue bonds." This was done by the original and amending ordinances. Therefore, the Fayetteville Public Facilities Board must comply with those terms to obtain the City Council's approval (by ratification of the Fayetteville Public Facilities Board's Resolution authorizing the bonds) before any bonds may be issued. State law makes it crystal clear that Public Facility Bonds are not the financial responsibility of the City of Fayetteville and do not constitute an indebtedness of Fayetteville. "§14-137-120. Bonds; obligations, Liability, etc. "(a) It shall be plainly stated on the face of each bond that it has been issued under the provisions of this chapter, that the bonds are obligations only of the public facilities board, and that in no event shall they constitute an indebtedness for which the faith and credit of the creating municipality or county or any of its revenues are pledged." The Fayetteville City Council has discretion whether or not to agree to the issuance of this Public Facility Refunding Bonds even though these bonds do not "constitute an indebtedness" of the City. The Fayetteville Code states: "The issuance of such revenue bonds shall be accomplished by resolution duly adopted by the City Public Facilities Board and ratified by the City Council." §33.068(2)(B). The Ordinance establishing the Fayetteville Public Facilities Board states: "Prior to issuance of any such bonds, the facilities board must submit to the City Board of Directors (now Council) for its approval the following information:" 33,068(A) of the Fayetteville Code. (emphasis added) It is clear that the Fayetteville City Council has the right to approve the terms of any proposed bond issuance which bonds may not be issued unless the City Council ratifies the Fayetteville Public Facilities Board's Resolution to issue such bonds. I believe Mr. Dennis Hunt will appear at your meeting to explain the advisability of agreeing to the proposed refinancing bonds. RESOLUTION NO. A RESOLUTION TO RATIFY THE RESOLUTION OF THE FAYETTEVILLE PUBLIC FACILITIES BOARD APPROVING REFUNDING REVENUE BONDS (BUTTERFIELD TRAIL VILLAGE PROJECT), SERIES 2010 IN A PRINCIPAL AMOUNT OF NOT TO EXCEED NINETEEN MILLION DOLLARS ($19,000,000.00) WHEREAS, the Fayetteville Public Facilities Board, is a public body politic and corporate with the power of perpetual succession created by Ordinance No. 2485, as amended and codified as §33.065 through §33.071 of the Code of Fayetteville; and WHEREAS, the Public Facilities Board is authorized by A.C.A. 14-137-101 et seq. and the Fayetteville Code to issue and sell its revenue bonds and to use the proceeds thereof for the purpose of financing housing and health care facilities in the City, to secure payment of such revenue bonds as therein provided (including bond insurance or letters of credit) and to issue refunding bonds; and WHEREAS, the Public Facilities Board has determined that the economic interest and public purpose of the Public Facilities Board are served by issuing Fixed Rate Refunding Revenue Bonds, Series 2010 (the "Bonds" for the Butterfield Trail Village Project) in an aggregate principal amount of not to exceed Nineteen Million Dollars ($19,000,000.00) for the purpose of providing moneys to refund prior bonds, pay the costs of issuing the Bonds and for other purposes related thereto; and WHEREAS, pursuant to A.C.A. §14-137-120(a) the Public Facilities Bonds are not a debt of or pledge of the credit of the City of Fayetteville and the City of Fayetteville is not obligated to pay the Bonds; and WHEREAS, A.C.A. §14-137-104 provides that none of the powers granted to the Public Facilities Board shall be subject to the supervision or regulations or require the approval or consent of the State or of any municipality, except as provided in Ordinance No. 2485 as amended; and WHEREAS, pursuant to the provisions of the Fayetteville Code, a Resolution adopted by the Public Facilities Board which authorizes the approval of bonds for financing or refinancing for residential housing, health care and related facilities for the elderly which are owned by non-profit corporations must be ratified by the City Council before the bonds may be issued; and WHEREAS, the Public Facilities Board adopted a resolution on November 23, 2010 to approve the Bonds subject to the ratification by the City and subsequent approval by the Public Facilities Board of final financing terms; and WHEREAS, such resolution adopted by the Public Facilities Board on November 23, 2010, authorized the Chairman and Secretary of the Public Facilities Board to execute documents to effect the issuance of the Bonds; and; WHEREAS, the City Council may ratify the Public Facilities Board's Resolution for the issuance of the bonds and provided further that the City Council has determined to ratify the Resolution adopted by the Public Facilities Board on November 23, 2010. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS Section 1: Recognition of Public Facilities Board's Authority. That the City Council of the City of Fayetteville, Arkansas hereby finds that the Public Facilities Board is authorized by A.C.A. §14-137-101 et seq. and the Fayetteville Code to approve the issuance of its not to exceed Nineteen Million Dollars ($19,000,000.00) Fixed Rate Refunding Revenue Bonds, Series 2010 (Butterfield Trial Village Project) for the purpose of providing moneys to refund prior bonds, pay the costs of issuing the bonds and for other purposes related thereto. The Bonds by statute and intent of this City Council are not a debt of or pledge of the credit of the City of Fayetteville, and the City is not obligated to pay any debt service or principal on the bonds whether or not said bonds have been properly issued. Section 2: Ratification of Public Facilities Board's Resolution. That the City Council of the City of Fayetteville, Arkansas hereby ratifies the Public Facilities Board's Resolution approved November 23, 2010, a copy of which is filed with the Fayetteville City Clerk. Section 3: Severability. That the City Council of the City of Fayetteville, Arkansas hereby determines that if any provision of this Resolution shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever. PASSED and APPROVED this 7th day of December, 2010. APPROVED: ATTEST: By: By: LIONELD JORDAN, Mayor SONDRA E. SMITH, City Clerk/Treasurer FAYETTEVILLE CODE OF ORDINANCES TITLE III ADMINISTRATION development of housing, health care, and related facilities for elderly persons, regardless of income, serves a substantial public purpose and there is a significant need in the city for such facilities. (Code 1965, §2-111; Ord. No. 2485, 11-21-78; Ord. No. 2991, 3-20-84; Ord. No. 4021, §1, 2-18-97; Code 1991, §33.065) State law reference(s)--Public Facilities Board Act, A.C.A. §14-137-101 et seq. 33.066 Establishment Pursuant to A.C.A. §14-137-107 there is created and established the city Public Facilities Board (hereinafter known as "facilities board") with authority as hereinafter provided to accomplish, finance, contract or purchase mortgage loans concerning, and otherwise act in such manner as may be permitted by the act to provide decent, safe, and sanitary residential housing facilities within or near the city, including the city's projected growth areas and the city's extraterritorial planning areas. Additional authority has been granted the facilities board by Ordinance No. 2708 and Ordinance No. 2991 and the facilities board's authority may vary as allowed by statute and as provided by further amending ordinances which may be passed by the city in the future. (Code 1965, §2-112; Ord. No. 2485, 11-21-78; Ord. No. 4021, §2, 2-18-97; Code 1991, §33.066) 33.067 Members Of The Board; Term Of Office; Duration Of The Board The facilities board shall consist of five persons. The initial members shall, as provided in A.C.A. §14-137- 107, be appointed by the mayor of the city to serve for terms of one, two, three, four and five years, respectively. The members of the facilities board shall be residents of the city and shall take and file with the City Clerk the oath of office prescribed by the act. (Code 1965,§2-113; Ord. No. 2485, 11-21-78; Ord. No. 2991, 3-20-84; Code 1991, §33.067) State law reference(s)--Creating ordinance -Authority, A.C.A. §14-137-107; Board members, A.C.A. §14-137-108. 33.068 Powers Of The Board (A) The facilities board is empowered, from time to time, to loan, acquire, construct, reconstruct, extend, equip, improve, sell, lease, and contract concerning (which shall include the purchase of mortgage loans and the making of loans to mortgage lenders) residential housing facilities as shall be determined by the facilities board to be necessary to effect the purposes of this article to provide decent, safe and sanitary residential housing facilities within or near the city, including the city's projected growth areas and the city's extraterritorial planning areas. In addition, the facilities board shall have each of the powers set forth in A.C.A. §14-137-111, as amended, and appropriate to the purposes for which the board is created unless otherwise restricted herein. The board may enter into which contractual or cooperative agreements with such persons as may in its discretion be advisable to accomplish the purposes of this article, including, without limitation, departments, agencies, or instrumentalities of the United States of America, the state or the city; for example, the Department of Housing and Urban Development, the Federal Housing Administration, the Veterans' Administration and Prior to the issuance of any such bonds, the facilities board must submit to the City Council for its approval The following information: (1) The size of the proposed bond issue and all related details, including, but without limitation: (a) principal amount; (b) date of the bonds, (c) interest payment dates; (d) principal payment dates; (e) numbers; (f) denominations; rates of interest; (g) (h) a schedule reflecting the annual principal maturities; (i) the semiannual interest requirements and the total requirements; and (j) applicable redemption provisions. FAYETTEVILLE CODE OF ORDINANCES TITLE III ADMINISTRATION (2) Recommendations for person to serve as underwriter, trustee, and custodian for any such bonds and the mortgage lenders and servicing institutions with which the facilitie board shall contract, which the City Counc reserves the right to select or approve. Th trustee and the custodian shall be institution located within the city, if such institutions a qualified and such appointments do no otherwise adversely affect the rating of th bonds (if submitted for rating). B) The board is expressly authorized to issue revenue bonds for the purpose of financing residential housing, health care and related facilities to serve elderly persons; provided said facilities are owned by nonprofit corporations or associations. The issuance of such revenue bonds shall be accomplished by resolution duly adopted by the city Public Facilities Board and ratified by the City Council. s it e s re e ; Ord. No. 2485, - - 8; Ord. No. 2991, 3-10-84; Code 1991, §33.068) State law reference(s)--Powers generally -bidding and appraisal procedure, A.C.A. §14-137-111. 33.069 Bond Proceeds; Investments (A) Any agreements made by the facilities board with mortgage lenders must contain a provision to the effect that such mortgage lenders may only loan the proceeds provided to them to finance housing located within the city's corporate limits and to finance housing located within the city's projected growth area and extraterritorial planning area. A minimum of 75% of the bond proceeds shall be available to finance housing located within the city's corporate limits; and a maximum of 25% of the bond proceeds shall be available to finance existing housing located within the city's projected growth area and extraterritorial planning area. The facilities board shall have the authority, after prior approval of the City Council, to reallocate such percentages. (B) This section shall apply only to bonds issued for the purpose of financing owner -occupied housing. (C) The facilities board shall offer bond proceeds not otherwise required to be deposited with the custodian to financial institutions which have their' principal place of business located within the city and which are qualified for such investments. This section shall apply only to the proceeds of CD33:13 bonds issued for the purpose of financing owner - occupied housing. (Code 1965, §2-115, 2-116; Ord. No. 2485, 11-21-78; Ord. No. 2991, 3-20-84; Code 1991, §33.069) State law reference(s)--use of funds and revenue - bonds, A.C.A. §14-137-115. 33.070 Issuance Of Revenue Bonds (A) The facilities board is authorized and is limited to issue this initial series of revenue bonds, in accordance with the conditions set forth in §33.068, and to use the proceeds, either alone or together with other available funds and revenues, to accomplish the purposes for which the facilities board is created as the same relates to the providing of decent, safe, and sanitary residential housing facilities. Such revenue bonds shall be obligations only of the facilities board and shall not constitute an indebtedness for which the faith and credit of the city or any of its revenues are pledged, and the principal and interest on the bonds shall be payable from and secured by a pledge of revenues derived from residential housing facilities financed, in whole or in part, from bond proceeds and as authorized by, and in accordance with the provisions of law, together with such other collateral as may properly be pledged, under the act and as the facilities board in its discretion may determine. (B) This section shall apply only to the issuance of bonds for the purpose of financing owner - occupied housing. The board is expressly authorized to issue bonds for the purpose of financing housing, health care, and related facilities to serve elderly persons, provided said facilities are owned by nonprofit corporations or associations. (Code 1965, §2-117; Ord. No. 2485, 11-21-78; Ord. No. 2991, 3-20-84; Code 1991, §33.070) `Note --It should be noted that Ord. No. 4021, adopted Feb. 18, 1997, provided in the preamble and §3 that §9 of Ord. No. 2485 provided for the appointment of a bond counsel for the issuance and sale of residential housing facility bonds, and said appointment is only for the residential housing facilities bonds first authorized on Ord. No. 2485 prior to the amendments thereto. 33.071 Organization; Reports As soon as practicable after the adoption of this article the facilities board shall meet and elect such officers as shall be required by law. The facilities board may adopt such bylaws and other rules and Dennis R. Hunt Senior Vice President and Manager Stephens Inc. November 8, 2010 Mr. Kit Williams City Attorney City of Fayetteville 113 W. Mountain Fayetteville, AR 72701 Stephens Jackson T. Stephens, 1923-2005 Chairman Emeritus in Perpetuity Re: Ratifying Resolution for the Fayetteville Public Facilities Board's Butterfield Trail Village Fixed Rate Refunding Bonds, Series 2010 Dear Mr. Williams: Based on my previous discussions with you and Mr. James McCord, Counsel to the Fayetteville Public Facilities Board, I am attaching a resolution ratifying the action of the Fayetteville Public Facilities Board to authorize Butterfield Trail Village to issue fixed rate refunding bonds. Stephens serves as the financial advisor to Butterfield Trail Village in connection with this financing. In 2002, the Fayetteville Public Facilities Board and the City of Fayetteville authorized Butterfield Trail Village to issue up to $25,000,000 in variable rate debt. This financing mechanism allowed for the issuance of bonds in which interest rates are adjusted every seven days. Although this variable rate financing mechanism has worked extremely well for Butterfield Trail Village over the last eight years, the Board is convinced since interest rates are at historic lows it would be prudent on the part of the Board to convert the variable rate debt to fixed rate debt. Below are the key reasons the Board of Butterfield Trail Village is requesting the authorization to issue this fixed rate debt. Summary of Key Reasons to Convert to Fixed Rate Debt • Interest Rate Risk. As noted above, interest rates are currently at historic lows and it is a concern of Butterfield Trail Village that interest rates may increase in the future. As a result, the Board has decided that it is in its best interest to convert from a variable rate mode debt to a fixed rate mode debt. • Letter of Credit Provider Risk. The Board is additionally concerned that there are fewer letter of credit providers that exist for its variable rate debt. Given the limited number of providers, the Board is concerned with its ability in the future to 3425 North Futrall Drive Suite 201 Fayetteville, AR 72703 479-718-7400 t 479-718-7490 f 800-205-8613 dhunt@stephens.com www.stephens.com obtain a letter of credit provider at a reasonable rate. More importantly, the American Recovery and Reinvestment Act allows until December 31, 2010 for the Federal Home Loan Bank to provide "AAA" letters of credit with participating financial institutions to secure both variable and fixed rate tax-exempt debt. As a result, Butterfield Trail Village, in cooperation with Arvest Bank, will be able to issue its fixed rate debt with a "AAA" letter of credit over a much longer period of time than its current letter of credit provider allows. • Covenant Flexibility. The Butterfield Trail Village Board has negotiated with Arvest Bank a letter of credit with greater flexibility in the financing covenants to allow for the issuance of additional debt should the Board decide that future capital projects are necessary. Based on the above key points, I respectfully request on behalf of Butterfield Trail Village approval of the attached resolution ratifying the issuance of up to $19,000,000 fixed rate tax-exempt bonds for Butterfield Trail Village through the Fayetteville Public Facilities Board. Representatives from Butterfield Trail Village, the Fayetteville Public Facilities Board and I will be in attendance at the December 7, 2010 City Council meeting to address any questions that the Mayor and the Council may have regarding this request. Thank you for your assistance on this matter. Sincerely, �.. f) 4 Dennis Hunt Cc: James McCord Bill Wickizer Adele Atha Paul Becker Preliminary Overview FAYETTEVILLE PUBLIC FACILITIES BOARD FIXED RATE REFUNDING REVENUE BONDS, SERIES 2010 Stephens Capitalize on Independence'' (BUTTERFIELD TRAIL VILLAGE PROJECT) November 23, 2010 Preliminary Term Sheet Financing Participants • Issuer — Fayetteville Public Facilities Board • Borrower — Butterfield Trail Village, Inc. • Issuer's Counsel — McCord Law Firm • Underwriter — Lancaster Pollard • Trustee — First Security Trust • Bond and Disclosure Counsel — Friday, Eldredge & Clark • Letter of Credit Provider — Arvest Bank and the Federal Home Loan Bank • Bank's Counsel — Mitchell Law Firm • Financial Advisor — Stephens Inc. Financing Components • Amount of Issue - Not to exceed $19,000,000 • Purpose of Financing — To convert Butterfield Trail Village's current variable rate debt to a fixed rate debt secured with a 10 -year letter of credit • Security — Revenues of Butterfield Trail Village as well as a first mortgage security on the assets of Butterfield Trail Village • Dated Date — December 21, 2010 • Structure — Serial Bonds December 1, 2011 thru December 1, 2020 (Interest paid on June 1 and December 1 of each year) • Redemption Provision — December 1, 2016 and thereafter at par • Tax Status — Tax-exempt and bank qualified Stephens Capitalize on Independences' City of Fayetteville, Arkansas Public Facilities Board Fixed Rate Refunding Revenue Bonds, Series 2010 (Butterfield Trail Village Project) Sources & Uses Dated 12/21/2010 Delivered 12/21/2010 Sources Of Funds Par Amount of Bonds 02/01/11 P&I Payment Additional required Equitycontribution Total Sources Uses Of Funds Deposit to Current Refunding Fund Costs of Issuance Rounding Amount Total Uses $18,075,000.00 1,079,936.98 225,000.00 $19,379,936.98 19,152,532.99 225,000.00 2,403.99 $19,379,936.98 Stephens Capitalize on Independence'" City of Fayetteville, Arkansas Public Facilities Board Fixed Rate Refunding Revenue Bonds, Series 2010 (Butterfield Trail Village Project) Pricing Summary Maturity 12/1/2011 12/1/2012 12/1/2013 12/1/2014 12/1/2015 12/1/2016 12/1/2017 12/1/2018 12/1/2019 12/1/2020 Type of Bond Serial Coupon Serial Coupon Serial Coupon Serial Coupon Serial Coupon Serial Coupon Serial Coupon Serial Coupon Serial Coupon Serial Coupon Coupon Yield 1.000% 1.000% 1.200% 1.200% 1.450% 1.450% 1.700% 1.700% 1.950% 1.950% 2.300% 2.300% 2.500% 2.500% 2.950% 2.950% 3.200% 3.200% 3.350% 3.350% Maturity Value 790,000.00 830,000.00 865,000.00 905,000.00 945,000.00 990,000.00 1,035,000.00 1,080,000.00 1,130,000.00 9,505,000.00 Price 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% 100.000% Dollar Price 790,000.00 830,000.00 865,000.00 905,000.00 945,000.00 990,000.00 1,035,000.00 1,080,000.00 1,130,000.00 9,505,000.00 Total $18,075,000.00 $18,075,000.00 Bid Information Par Amount of Bonds Gross Production Bid (100.000%) Total Purchase Price Bond Year Dollars Average Life Average Coupon $18,075,000.00 $18,075,000.00 18,075,000.00 $18,075,000.00 $139,430.83 7.714 Years Net Interest Cost (NIC) True Interest Cost (TIC) 3.0650511% 3.0650511% 3.0487292% Stephens Capitalize on Independence' City of Fayetteville, Arkansas Public Facilities Board Fixed Rate Refunding Revenue Bonds, Series 2010 (Butterfield Trail Village Project) Debt Service Schedule Date Principal Coupon Interest LOC Fee Total P+I 12/1/2011 790,000.00 1.000% 471,558.75 273,133.33 1,534,692.08 12/1/2012 830,000.00 1.200% 491,397.50 276,560.00 1597,957.50 12/1/2013 865,000.00 1.450% 481,437.50 263,280.00 1,609,717.50 12/1/2014 905,000.00 1.700% 468,895.00 249,440.00 1,623,335.00 12/1/2015 945,000.00 1.950% 453,510.00 234,960.00 1,633,470.00 12/1/2016 990,000.00 2.300% 435,082.50 219,840.00 1,644,922.50 12/1/2017 1,035,000.00 2.500% 412,312.50 204,000.00 1,651,312.50 12/1/2018 1,080,000.00 2.950% 386,437.50 187,440.00 1,653,877.50 12/1/2019 1,130,000.00 3.200% 354,577.50 170,160.00 1,654,737.50 12/1/2020 9,505,000.00 3.350% 318,417.50 152,080.00 9,975,497.50 Total $18,075,000.00 $4,273,626.25 $2,230,893.33 $24,579,519.58 Yield Statistics Bond Year Dollars Average Life $139,430.83 7.714 Years Average Coupon Net Interest Cost (NIC) True Interest Cost (TIC) 3.0650511% 3.0650511% 3.0487292% Bond Yield for Arbitrage Purposes All Inclusive Cost (AIC) 2.0865355% 3.2344461 % IRS Form 8038 Net Interest Cost 3.0650511% Weighted Average Maturity 7.714 Years Stephens Capitalize on Independence" City of Fayetteville, Arkansas Public Facilities Board Fixed Rate Refunding Revenue Bonds, Series 2010 (Butterfield Trail Village Project) Current Refunding Escrow Date Principal Rate Interest 12/21/2010 - 1/1/2011 2/1/2011 18,992,564.00 0.110% 2,403.99 Receipts 159,968.99 18,994,967.99 Disbursements 159,968.49 18,994,968.49 Cash Balance 159,968.99 0.50 Total $18,992,564.00 - $2,403.99 $19,154,936.98 $19,154,936.98 Investment Parameters Investment Model [PV, GIC, or Securities] Default investment yield target Securities User Defined Cash Deposit Cost of Investments Purchased with Bond Proceeds Total Cost of Investments Target Cost of Investments at bond yield Actual positive or (negative) arbitrage Yield to Receipt Yield for Arbitrage Purposes State and Local Government Series (SLGS) rates for 159,968.99 18,992,564.00 $19,152,532.99 $19,111,085.96 (41,447.03) 0.1139430% 2.0865355% 11/16/2010 Stephens Capitalize on Independence" JAMES N. McCORD Attorney at Law The Fulbright Building 217 E. DICKSON STREET SUITE #102 FAYETTEVILLE, ARKANSAS 72701 TELEPHONE (479) 695-1134 FACSIMLE (479) 442-1490 iimmccordlaw@windstream.net Kit Williams Fayetteville City Attorney City Administration Building 113 W. Mountain Fayetteville, AR 72701 November 24, 2010 VIA HAND DELIVERY Re: Fayetteville Public Facilities Board Fixed Rate Refunding Revenue Bonds (Butterfield Trail Village Project), Series 2010 In Aggregate Principal Amount Not To Exceed $19,000,000 Dear Kit: I am counsel to the Fayetteville Public Facilities Board (the "PFB"). Enclosed is a Resolution unanimously approved by the five members of the PFB on November 23, 2010, authorizing issuance of the above referenced bonds. Also enclosed is a "Preliminary Overview" of the proposed bond issue prepared by Stephens Inc., Financial Advisor to the Board of Directors for Butterfield Trail Village, Inc. Dennis Hunt, Senior Vice President and Manager, Stephens, Inc. reviewed the Overview with the PFB before the Bond Authorizing Resolution was approved. Mr. Hunt advised the PFB that the principal amount the Board's outstanding variable rate bonds for the Butterfield project is $18,835,000. He summarized the key reasons to convert to fixed rate debt as follows: Interest Rate Risk. Interest rates are currently at historic lows and may increase in the future. Letter of Credit Provider Risk. Because of the limited number of letter of credit providers for variable rate debt, Butterfield is concerned about its future ability to obtain a letter of credit provider at a reasonable rate. The American Recovery and Reinvestment Act allows until December 31, 2010, for the Federal Home Loan Bank to provide "AAA" letters of credit with participating financial institutions to secure both variable and fixed rate tax-exempt debt. As a result, Butterfield, in cooperation with Arvest Bank, will be able to issue its fixed rate debt with a "AAA" letter of credit over a much longer period of time than its current letter of credit provider allows. Covenant Flexibility. Butterfield has negotiated with Arvest Bank a letter of credit with greater flexibility in the refinancing covenants to allow for the issuance of additional debt if future capital projects are necessary. In response to a question from PFB member Tommy Deweese, Dennis Hunt stated that prior to passage of the American Recovery and Reinvestment Act, the Federal Home Loan Bank could not issue letters of credit for tax-exempt debt and it will not be able to do so after December 31, 2010. Section 33.068(2)(B) of the Fayetteville Code of Ordinances requires that the Bond Authorizing Resolution approved by the PFB on November 23, 2010, be ratified by the Fayetteville City Council. A ratifying resolution is on the Agenda for the December 7, 2010, City Council meeting. To answer any questions the Council member may have regarding this matter, I will attend the Council's Agenda Session on Tuesday, November 30, 2010, at 4:30 p.m. in Room 326 of the City Administration Building. Dennis Hunt from Stephens Inc. will most likely attend as well. It may be that the ratifying resolution is an appropriate item for the Consent Agenda at the December 7, 2010, City Council meeting. Should there be any questions regarding this matter prior to the Agenda Session, please contact me or Dennis Hunt. Sincerely, pc: Fayetteville Public Facilities Board members (via e-mail) Dennis Hunt (via e-mail) Shep Russell, Bond Counsel (via e-mail) Steve Gunderson, Borrower's Counsel (via e-mail) RESOLUTION AUTHORIZING THE ISSUANCE OF THE ISSUER'S REFUNDING REVENUE BONDS (BUTTERFIELD TRAIL VILLAGE PROJECT), SERIES 2010 IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $19,000,000 (THE "BONDS") TO PROVIDE FUNDS TO REFINANCE DEBT ISSUED FOR A RESIDENTIAL LIFE CARE RETIREMENT PROJECT IN FAYETTEVILLE, ARKANSAS, FOR ELDERLY PERSONS; SPECIFYING THAT THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE AS PROVIDED IN THE TRUST INDENTURE; APPROVING AND AUTHORIZING EXECUTION OF THE TRUST INDENTURE WITH RESPECT TO THE BONDS; APPROVING AND AUTHORIZING EXECUTION OF THE PRELIMINARY AND FINAL OFFICIAL STATEMENT WITH RESPECT TO THE SALE' OF THE BONDS; MAKING CERTAIN FINDINGS AND DETERMINATIONS WITH REFERENCE TO THE BONDS; AUTHORIZING THE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF RELATED DOCUMENTS; PROVIDING FOR REPEAL OF ANY INCONSISTENT PRIOR RESOLUTIONS OF THE ISSUER; AND PROVIDING FOR THE EFFECTIVE DATE OF THIS RESOLUTION. WHEREAS, The Fayetteville Public Facilities Board (the "Issuer") has been organized and exists under the laws of the State of Arkansas as a public facilities board; and WHEREAS, the Issuer is a public body corporate and politic duly organized and validly existing under the Constitution and laws of the State of Arkansas (the "State"), including the Arkansas Code Annotated §§ 14-137-101, et seq., as amended (the "Act"), and by Ordinance No. 2485, as amended (the "Ordinances"), of the City Council of the City of Fayetteville, Arkansas (the "City"), adopted on November 21, 1978; and WHEREAS, for the purposes set forth in the Ordinances, the Issuer desires to issue not to exceed $19,000,000 in aggregate principal amount of its Refunding Revenue Bonds (Butterfield Trail Village Project), Series 2010 (the "Bonds") pursuant to a Trust Indenture dated as of December 1, 2010 (the "Indenture") by and between the Issuer and First Security Bank, as trustee (the "Trustee"), to make a loan to Butterfield Trail Village, Incorporated (thee"Borrower") to provide funds to refund the Prior Bonds, as defined in the Indenture, which refinanced the acquisition, construction and equipping of a residential life care retirement facility for the elderly, known as "Butterfield Trail Village" consisting of approximately 265 independent living units, a skilled nursing care center and related facilities located on approximately 48 acres in Fayetteville, Arkansas (the "Project"); and WHEREAS, the Bonds are payable from the Trust Estate (as that term is defined in the Indenture) (the "Trust Estate"), which Trust Estate includes ;payments on a standby letter of credit issued by Arvest Bank and a Standby Confirming Letter of Credit issued by Federal Home Loan Bank of Dallas; and WHERAS, there have been presented to this meeting the following documents, which the Issuer proposes to enter into to effectuate the proposed financing: 1. The form of Indenture, setting forth the terms of the Bonds and the conditions and security of the Bonds; 2. The form of Bond Purchase Agreement (the "Purchase Agreement") among the Borrower, the Issuer and Lancaster Pollard & Co. (the "Underwriter") relating to sale of the Bonds; 3. The form of the Preliminary Officia' Statement (the "Preliminary Official Statement") relating to the Bonds for sale; 4. The form of the Loan Agreement between the Issuer and the Borrower (the "Loan Agreement"); and 5. The form of the Bonds, as set forth in the Indenture. WHEREAS, it appears that each of the instruments above referred to, which are now before the Issuer, are in appropriate form and are appropriate instruments for the purpose intended; NOW, THEREFORE, BE IT RESOLVED BY THE FAYETTEVILLE PUBLIC FACILITIES BOARD, AS FOLLOWS: Section 1. That the proposed refinancing of the Project is hereby approved and authorized, pursuant to and in accordance with the Indenture, and as generally described in the Preliminary Official Statement. The Bonds shall mature as provided in the Indenture, and have such term, bear such interest and be subject to redemption as provided in the Indenture. The Bonds shall mature over a period not to exceed ten (10) years and shall have an average coupon rate not to exceed 5%. The refunding of the Prior Bonds is hereby approvd, authorized and confirmed and the Chairman and the Secretary are hereby authorized to execute all required documents in order to accomplish the refunding. Section 2. That in order to provide funds to refund and retire the outstanding debt issued to provide funds for the acquisition, construction and equipping of the residential life care retirement facility owned and operated by the Borrower, the issuance of the Bonds in an aggregate principal sum of not to exceed $19,000,000 in substantially the form set forth in the Indenture now before this meeting, subject to appropriate insertion and revision in order to comply with provisions of the Indenture, be and the same hereby are in all respects authorized, approved and confirmed, and the form and content of the Bonds set forth in the Indenture now before this meeting be and the same hereby are in all respects authorized, approved and confirmed, and the Chairman and Secretary of the Issuer be and they hereby are authorized, empowered and directed to execute, whether by manual or facsimile signatures, seal with the official or facsimile seal of the Issuer and deliver for and on behalf of the Issuer the Bonds to the Trustee for authentication, and the Trustee is hereby authorized and directed to authenticate the Bonds, and the provisions of the! Indenture with respect to the Bonds be and the same hereby are authorized, approved and confirmed and are incorporated herein by reference. 2 The Bonds shall be limited obligations payable solely from the Trust Estate, as that term is defined in the Indenture. Section 3. That the form and content of the Indenture be and the same hereby are in all respects authorized, approved and confirmed, and the Chairman and the Secretary of the Issuer be and they hereby are authorized, empowered and directed to execute and deliver the Indenture for and on behalf of the Issuer to the Trustee for the security of the Bonds and the interest thereon, including necessary counterparts, in substantially the form and content now before this meeting but with such changes, modifications, additions and deletions therein as shall to them seem necessary, desirable or appropriate (their execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Indenture now before this meeting) and that from and after the execution and delivery of the Indenture, the Chairman and the Secretary of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Indenture as executed. Section 4. That the sale of the Bonds to the Underwriter pursuant to the Purchase Agreement at the purchase price to be stated therein is hereby; authorized, and the form and content of the Purchase Agreement be and the same hereby are in all'respects approved and confirmed, and the Chairman of the Issuer be and hereby is authorized, empowered and directed to execute and deliver to the Underwriter the Purchase Agreement for and on behalf of the Issuer, including necessary counterparts, in substantially the form and content now before this meeting but with such changes, modifications, additions and deletions therein as shall to them seem necessary, desirable or appropriate (execution thereof to constitute conclusive evidence of the Issuer's approval of any and all changes, modifications, additions or deletions therein froiki the form and content of the Purchase Agreement now ; before this meeting), and that from and after the execution and delivery of the Purchase' Agreement, the Chairman and Secretary of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Purchase Agreement as executed. Section 5. That the Issuer hereby authorizes and ratifies the use of the Preliminary Official Statement in the marketing of the Bonds and authorizes the production of a final Official Statement. The Preliminary Official Statement is hereb approved in substantially the form presented to the Issuer. The Issuer hereby authorizes the Chairman to "deem final" for purposes of Rule 15c2-12 of the Securities and Exchange Commission the Preliminary Official Statement with such revisions as may be accepted by the Chairman. The Issuer hereby further authorizes and approves; the production of a final Official Statement, and authorizes and directs the Issuer to execute and deliver the Official Statement, in such form as he deems acceptable and necessary to accomplish the issuance of the Bonds, and the Chairman and Secretary of the Issuer are hereby authorized, empowered and directed to do all such acts and things necessary to carry out and comply with the provisions of the Official Statement. Section 6. That the form and content of the Loam Agreement be and the same hereby are authorized, approved and confirmed and the Chairman of the Issuer be and hereby is authorized, empowered and directed to execute and deliver the Loan Agreement for and on behalf of the Issuer, including necessary counterparts in substantially the form chid content now before this meeting but with such changes, modifications, additions or deletions therein as shall to them seem necessary, 3 desirable or appropriate (execution thereof to constitute conclusive evidence of the Issuer's approval of any and all changes, modifications, additions or deletions therein from the form and content of the Loan Agreement now before this meeting) and that from and after the execution and delivery of the Loan Agreement, the Chairman and the Secretary of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Loan Agreement as executed. Section 7. That the Issuer will restrict the use of the proceeds of the Bonds in such manner and to such extent, if any, as may be necessary after taking into account reasonable expectations at the timethe Bonds are delivered to the Underwriter, so that they will not constitute arbitrage bonds under Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"). The Chairman or any other officer having responsibility with( respect to the issuance of the Bonds, is authorized and directed, alone or in conjunction with the Borrower or any officer, employee, consultant or agent of the Borrower, to deliver a certificate for inclusion in the transcript of proceedings for the Bonds, setting forth the facts, estimates and circumstances and reasonable expectations pertaining to said Section 148 and regulations thereunder. In its performance of these covenants, and other covenants of the Issuer pertaining to federal income tax laws, the Issuer may rely upon the written advice of nationally recognized bond counsel which is provided to the Borrower and to the Trustee. Section 8. That the Chairman and the Secretary.I of the Issuer be and they hereby are authorized to execute and deliver for and on behalf of the I suer any and all additional certificates, documents, opinions, agreements or other papers and perform all other acts (including without limitation the filing of any financing statements or any other documents to create and maintain a security interest in the Trust Estate pledged under the Indenture) as they may deem necessary or appropriate in order to implement and carry out the intent and; purposes of this Resolution. Section 9. That in addition to, other covenants of the Issuer in this Resolution, the Issuer further covenants and agrees that it will at all times faithfully observe and perform all agreements, covenants, undertakings, stipulations and provisions contained in the Bonds, Loan Agreement, Purchase';; Agreement and Indenture, and in all proceedings of the Issuer pertaining to the Bonds. The Issuer warrants and covenants that it is, and upon delivery of the Bonds will be, duly authorized by the laws of the State of Arkansas, including particularly and;without limitation the Act, to issue the Bonds and to execute the Loan Agreement, the Indenture and the Purchase Agreement, and all other documents to be executed by it, to provide for the security for payment of the principal of, premium, if any, and interest on the Bonds in the manner and to the extent herein and in the Indenture set forth; that all actions on its part for the issuance of the Bonds ad execution and delivery of the Loan Agreement, the Indenture, the Purchase Agreement and all other documents to be executed by it in connection with the issuance of the Bonds, have been or will be duly and effectively taken; and that the Bonds will be valid and enforceable special obligations of the Issuer according to the terms thereof. !; Section 10. That the Bonds shall not be issued and 'i delivered by the Issuer unless and until the City Council of the City shall have adopted a resolution; ratifying the adoption by the Issuer of this Resolution. 4 Section 11. That the Issuer hereby consents and approves the designation by the Borrower of the Bonds as "qualified tax-exempt obligations" under Section 265(b) of the Code. Section 12. That the provisions of this Resolution are hereby declared to be separable and, if any section, phrase or provisions shall for any reason be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions. Section 13. That all prior resolutions or portions thereof of the Issuer which are inconsistent with the contents hereof are hereby repealed. Section 14. That this Resolution shall become effective immediately upon its passage and approval.: Adopted and approved this day of ai , 2010. THE FAYETTEVILLE PUBLIC FACILITIES BOARD • ATTEST: Chairman Secretary (SEAL) 5 The undersigned, Secretary of The Fayetteville Public Facilities Board hereby certifies that the foregoing pages are a true and correct copy of a Resolution of the Board adopted on the day of (�iy �r� t� , 2010, and that the Resolution is of record in the Resolution Book of the Board. EVEN under my hand and seal this o? 3 day of/Vi w >-' '/, 2010. (SEAL)