16-094.00 DA Davidson: Bond Purchase Agreement D A DAVIDSON
FIXED INCOME CAPITAL MARKETS
May 18, 2016
Mr. Mark Calhoun,Acting City Manager
City of Spokane Valley
11707 E. Sprague Avenue, Suite 106
Spokane Valley, Washington 99206
CITY OF SPOKANE VALLEY
$7,275,000
LIMITED TAX GENERAL OBLIGATION BONDS,2016
BOND PURCHASE AGREEMENT
On May 10, 2016, the City Council (the "Council") of the City of Spokane Valley, Washington (the "City")
passed Ordinance No. 16-005 (the "Bond Ordinance"), authorizing the issuance, sale and delivery of the
City's Limited Tax General Obligation Bonds, 2016 (the "Bonds"), and delegating to the Acting City
Manager the authority to execute and deliver this Bond Purchase Agreement (the "Agreement") subject to
certain parameters set forth therein. In light of such authority, D.A. Davidson & Co. (the "Underwriter")
hereby offers to enter into this Agreement with the City. This offer is made subject to the City's written
acceptance and execution of this Agreement by 5:00 PM (PT), on May 18, 2016, and, if not so accepted, is
subject to withdrawal by the Underwriter at any time by written notice delivered to the City. Time shall be
of the essence of this Agreement.
Upon your acceptance, this Agreement shall be in full force and effect in accordance with its terms and shall
be binding upon the City and the Underwriter. Reference is made to the Bond Ordinance for definitions of
capitalized terms used and not otherwise defined herein.
1) Purchase of the Bonds;Purpose;Terms and Public Offering
Purchase Price. Upon the terms and conditions and in reliance upon the representations set forth
herein, the Underwriter hereby agrees to purchase from the City and the City hereby agrees to sell to
the Underwriter, all (but not less than all) of the Bonds in the aggregate principal amount of
$7,275,000 at an aggregate purchase price of $7,906,075.55 (representing the par amount of the
Bonds, plus the net original issue premium of $671,088.05, less the Underwriter's discount of
$40,012.50).
Use of Proceeds. Proceeds of the Bonds will be used to(i)to finance a portion of the costs related to
the construction, equipping and furnishing of a new City Hall facility and(ii)pay costs of issuing the
Bonds.
Terms and Public Offering. The Bonds shall be issued and secured under and pursuant to the Bond
Ordinance, shall be dated the Closing Date (estimated to be June 2, 2016), and shall mature, bear
interest and have such other terms as set forth in Exhibit A hereto. The Underwriter agrees to make a
public offering of the Bonds at the initial offering prices or yields set forth in the Official Statement
Fixed Income Capital Markets
Columbia Center • 701 5th Avenue,Suite 4050 • Seattle,WA 98104 • (206)389-8000 • 1-888-389-8001 • FAX(206)389-4040
www.davidsoncomoanies.com/ficm/
D0,1DAVIDSON
FIXED INCOME CAPITAL MARKETS
referred to in Section 3(b)herein(as hereinafter defined,the"Official Statement"), which prices may
be changed from time to time by the Underwriter.
2) Closing
On June 2, 2016, or on such other date as the Underwriter and the City may mutually agree (the
"Closing Date"), the Underwriter will accept delivery of the Bonds and pay the purchase price
thereof as set forth in Section 1 herein by wire transfer of immediately available funds (the
"Closing"). The Bonds shall be delivered through The Depository Trust Company,New York, New
York("DTC") in definitive form, bearing CUSIP numbers and issued under a book-entry system.
3) Representations and Warranties
The City makes the following representations and warranties:
a) General
i) The City is a municipal corporation organized and existing under the laws of the State of
Washington and is authorized to issue the Bonds, to enter into this Agreement and all other
agreements contemplated hereby and to adopt the Bond Ordinance.
ii) The City has complied to date with all applicable provisions of the laws of the State of
Washington in connection with the execution and issuance of the Bonds.
iii) The Bond Ordinance and this Agreement have been duly and validly authorized, adopted and
executed by the City.
iv) As of the Closing Date,the City will have authorized all necessary action to be taken by it for
(A) the issuance and sale of the Bonds upon the terms set forth herein, in the Official
Statement, and the Bond Ordinance; (B)the execution, delivery, receipt and due performance
of this Agreement, the Bonds, the Bond Ordinance, and all other agreements contemplated
hereby or required in order to carry out, give effect to and consummate the transactions
described in this Agreement; and (C) carrying out, giving effect to and consummation of the
transactions described in this Agreement.
v) The Bonds when issued, delivered and paid for as provided for herein and in the Bond
Ordinance, will have been duly and validly authorized and issued and will constitute limited
tax general obligations of the City secured as provided in the Bond Ordinance and as
described in the Official Statement referred to in Section 3(b)below.
vi) There are no legal or governmental proceedings pending or, to the knowledge of the City,
threatened, (A) affecting the corporate existence of the City or the titles of its officers to their
respective offices; (B) seeking to prohibit, restrain, or enjoin the adoption of the Bond
Ordinance, the sale, issuance, or delivery of the Bonds or the transactions described in the
Official Statement; or (C) wherein an unfavorable decision, ruling or finding could have a
material adverse effect on the financial position or operating condition of the City, the
authority for or the validity or security of the Bonds, the Bond Ordinance, this Agreement or
the transactions described herein and in the Official Statement.
vii)The financial statements of the City included in the Official Statement fairly represent the
City's financial position and result of operations of as of the dates and for the years set forth
therein; and except as described in the Official Statement, there has been no material
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adverse change in the financial condition or operations of the City, and the City has not
issued additional bonds or other indebtedness or otherwise become obligated under any
material financings.
b)Preliminary and Final Official Statement
i) The City has "deemed final" as of its date the Preliminary Official Statement dated May 12,
2016 relating to the Bonds (the "Preliminary Official Statement") for purposes of
paragraph(b)(1) of Rule 15c2-12 ("Rule 15c2-12") of the Securities and Exchange
Commission (the "SEC"), except for the omission of only such material as is permitted by
such paragraph. As of its date and as of the date hereof, the Preliminary Official Statement
did and does not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading(except for such information that
may be omitted from a preliminary official statement pursuant to Rule 15c2-12 and as
provided in the following sentence). For the purposes of this paragraph and paragraph (iii)
below, the City makes no representation with respect to information within the Preliminary
Official Statement or Official Statement relating to DTC, the book-entry system, the rating,
pricing information, the City's financial advisor ("Financial Advisor") or the Underwriter,
and has not undertaken to verify independently other information obtained or derived from
various sources and presented in the Official Statement.
ii) By the Bond Ordinance, the City has authorized the distribution by the Underwriter of the
Preliminary Official Statement and the Official Statement, when available, in offering the
Bonds for sale to prospective purchasers of the Bonds. As promptly as practicable after the
execution of this Agreement(but not later than the earlier of(i)seven business days from the
date hereof and (ii)two business days before the Closing Date), the City shall cause to have
prepared and delivered to the Underwriter a final Official Statement for the Bonds executed
by an authorized officer of the City (the "Official Statement"). The Official Statement shall
be dated the date hereof and shall be in substantially the same form as the Preliminary
Official Statement with only such changes as approved by the Underwriter. To enable the
Underwriter to comply with Rule 15c2-12 and the rules of the Municipal Securities
Rulemaking Board (the "MSRB"), the City agrees to deliver or have delivered to the
Underwriter (i) a reasonable number of printed, conformed copies of the Official Statement
as the Underwriter may request and (ii) an electronic copy of the Official Statement in a
word-searchable Portable Document Format("PDF").
iii) As of its date and as of the Closing Date, the Official Statement will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, the City makes no representations with respect to certain
information within the Official Statement as provided in paragraph (i) above. The City
agrees to notify the Underwriter if, between the date of this Agreement and the "end of the
underwriting period"under Rule 15c2-12 (a period concluding the final date the Underwriter
is charged with furnishing copies of the Official Statement to potential customers under Rule
15c2-12, but no later than 25 days after the Closing Date), it becomes aware of information
or an event that might cause the Official Statement to be inaccurate or incomplete in any
material respect. At the request of the Underwriter, the City will, at its own expense,
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supplement the Official Statement to the extent necessary to make it accurate and complete in
all material respects and in a form reasonably approved by the Underwriter.
c) Continuing Disclosure
i) Pursuant to the Bond Ordinance the City has adopted a continuing disclosure undertaking
with respect to the Bonds for the purposes of assisting the Underwriter in meeting the
requirements of Rule 15c2-12 and in substantially the form included in the Official Statement
(the"Continuing Disclosure Undertaking").
ii) Except as described in the Official Statement,the City has not failed to comply in all material
respects with each continuing disclosure undertaking previously entered into by it pursuant to
Rule 15c2-12 within the past five years.
4) Closing Conditions
The Underwriter enters into this Agreement in reliance upon the representations and warranties of the
City contained herein and in the Bond Ordinance and in reliance upon the representations and
warranties to be contained in the documents and instruments to be delivered on the Closing Date and
upon the performance by the City of its obligations hereunder both on and as of the date hereof and
as of the Closing Date. Accordingly, the Underwriter's obligation under this Agreement to accept
delivery of and to pay for the Bonds shall be conditioned upon the performance by the City of its
obligations to be performed hereunder and under such documents and instruments at or prior to the
Closing, and shall also be subject to the following additional conditions:
a) the representations and warranties of the City contained herein shall be true and correct on the
date hereof and on the Closing Date;
b) on the Closing Date,the Bond Ordinance shall be in full force and effect and the Bond Ordinance
and the Official Statement shall not have been supplemented or amended, except in each case as
may have been agreed to by the Underwriter;
c) on the Closing Date, there shall have been no material adverse change in the financial position,
results of operations or condition, financial or otherwise, of the City;
d) at or prior to the Closing,the Underwriter shall receive, in addition to the documents described in
Section 3 of this Agreement,the following documents:
i) a certified copy of the Bond Ordinance;
ii) a certificate of the City confirming that its representations and warranties contained
herein are true and correct;
iii) the opinion of Pacifica Law Group LLP, as Bond Counsel, dated the Closing Date,
substantially in the form included in Appendix A to the Official Statement and
addressed to the City and the Underwriter;
iv) confirmation that the Bonds have been rated "Aa3" by Moody's Investors Service
and that such rating has not been revoked or downgraded; and
v) such additional legal opinions, certificates, proceedings, instruments and other
documents as the Underwriter or Bond Counsel may reasonably request.
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If the conditions to the Underwriter's obligations contained in this Agreement are not satisfied
(unless otherwise waived in writing by the Underwriter) or if the Underwriter's obligations shall be
terminated for any reason permitted herein, this Agreement shall terminate and neither the
Underwriter nor the City shall have any further obligation hereunder.
5) Termination
The Underwriter shall have the right to cancel its obligation to purchase the Bonds if between the
date hereof and the Closing, (i) legislation shall have been enacted by the Congress of the United
States or the legislature of the State of Washington or legislation shall have been reported out of
committee of either body, or a decision shall have been rendered by a court of the United States or of
the State of Washington or the Tax Court of the United States, or a ruling shall have been made or a
regulation or temporary regulation shall have been proposed or made or any other release or
announcement shall have been made by the Treasury Department of the United States or the Internal
Revenue Service, with respect to the general character of the Bonds which, in the reasonable
judgment of the Underwriter, materially adversely affects the market for the Bonds, or(ii)there shall
exist any event which, in the reasonable judgment of the Underwriter, either (a) makes untrue or
incorrect in any material aspect as of such time any statement or information contained in the Official
Statement or (b) is not reflected in the Official Statement but should be reflected therein in order to
make the statements and information contained therein not misleading in any material respect, or
(iii)there shall have occurred an outbreak or escalation of hostilities or any other national or
international calamity or crisis, the effect of which outbreak, escalation, calamity or crisis on the
financial markets of the United States is such as, in the reasonable judgment of the Underwriter,
would make it impracticable for the Underwriter to market or enforce contracts for the sale of the
Bonds, or (iv) there shall be in force a general suspension of trading on the New York Stock
Exchange or minimum or maximum prices for trading shall have been fixed and in force, or
maximum ranges for prices for securities shall have been required and be in force on the New York
Stock Exchange, whether by virtue of a determination by that Exchange or by order of the SEC or
any other governmental authority having jurisdiction, or(v)a general banking moratorium shall have
been declared by either Federal, State of Washington or New York authorities having jurisdiction and
be in force, or (vi) there shall be established any new restriction on transactions in municipal
securities materially affecting the free market for municipal securities (including the imposition of
any limitation on interest rates) or extension of credit by, or charge to the net capital requirements of,
the Underwriter established by the SEC, any other federal or state agency or the Congress of the
United States, or by Executive Order.
6) Payment of Expenses
Subject to the provisions of Section 1, all fees, expenses and costs incident to the execution and
performance of this Agreement and to the authorization, issuance and sale of the Bonds to the
Underwriter, including, but not limited to: the fees and expenses of Bond Counsel; the fees of the
Financial Advisor; the fees of the Bond Registrar; the fees of the rating agency; costs of preparation,
printing and distribution of the Preliminary and final Official Statement; and the cost of printing the
Bonds, if any, (and full execution thereof) shall be paid by the City. All expenses to be paid by the
City pursuant to this Agreement may be paid from Bond proceeds to the extent permitted by the
Bond Ordinance. The obligation of the City under this Section 6 shall survive the payment of the
Bonds. The Underwriter shall pay the costs of qualifying the Bonds for sale in the various states
chosen by the Underwriter, all advertising expenses in connection with the public offering of the
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Bonds and all other expenses incurred by the Underwriter in connection with the public offering and
distribution of the Bonds.
7) Notices
Any notice or other communication to be given to the City under this Agreement may be given by
delivering the same in writing at the address set forth above and any such notice or other
communications to be given to the Underwriter may be given by delivering the same in writing to
D.A. Davidson & Co., Columbia Center, 701 5th Avenue, Suite 4050, Seattle, Washington 98104,
Attention: Mr. David Trageser. The approval of the Underwriter when required hereunder or the
determination of its satisfaction as to any document referred to herein shall be in writing signed by
the Underwriter and delivered to the City.
8) Miscellaneous
This Agreement is made solely for the benefit of the City and the Underwriter (including successors
or assigns of the Underwriter with the consent of the City, but excluding any purchaser, as such
purchaser, of Bonds from the Underwriter) and, to the extent expressed herein, controlling persons
thereof, and no other persons, partnership, association or corporation shall acquire to have any right
hereunder or by virtue hereof. This Agreement may not be changed or terminated orally. All
understandings and agreements previously existing between the City and the Underwriter, if any, are
merged into this Agreement, which alone fully expresses the agreement of the parties. All
representations and agreements of the City contained in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall
survive the delivery of and payment for the Bonds. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of Washington.
The Underwriter agrees to file a copy of the Official Statement on the MSRB's Electronic Municipal
Market Access("EMMA")system.
The City will cause to be delivered to the Underwriter after Closing, an original transcript of all
proceedings, documents, certificates and opinions relating to the authorization and issuance of the
Bonds.
The City acknowledges and agrees that: (i) it has previously received disclosures from the
Underwriter regarding its role and interests in connection with its purchase of the Bonds from the
City and its sale of the Bonds to investors pursuant to the MSRB's Rules G-17 and G-23; (ii) the
Underwriter is acting solely as a principal and not as a financial advisor or agent of the City and has
not assumed any advisory or fiduciary responsibility to the City with respect to the offering of the
Bonds or the process leading thereto (whether or not the Underwriter, or any affiliate of the
Underwriter, has advised or is currently advising the City on other matters); and (iii) the only
contractual obligations the Underwriter has to the City with respect to the transactions contemplated
hereby are set forth in this Agreement. The Underwriter agrees to comply in all material respects
with all applicable laws and regulations governing the underwriting of the bonds.
It is the City's understanding that a financial advisory relationship shall not be deemed to exist when,
in the course of acting as an underwriter, a broker, dealer or municipal securities dealer, a person
renders advice to an issuer, including advice with respect to the structure, timing, terms and other
similar matters concerning a new issue of municipal securities.
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The Underwriter represents that it is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, and it is licensed by and registered with the Financial
Industry Regulatory Authority as a broker dealer and with the MSRB as a municipal bond dealer.
The Underwriter shall execute and deliver on the Closing Date an issue price or similar certificate, in
form and substance reasonably satisfactory to the City and Bond Counsel (i) confirming the initial
reoffering prices ("Initial Reoffering Prices") at which each maturity of the Bonds was reasonably
expected on the sale date to be sold to the public, exclusive of bond houses, brokers, and similar
persons or organizations acting in the capacity of underwriters or wholesalers ("Public Buyers");
(ii) certifying that a bona fide offering of the Bonds has been made to Public Buyers; (iii) stating the
first price at which a substantial amount (at least 10%) of each maturity of the Bonds was sold to
Public Buyers; and (iv) if the first price at which a substantial amount of any maturity of the Bonds
does not conform to the Initial Reoffering Price of that maturity,providing an explanation of the facts
and circumstances that resulted in that non-conformity.
9) Counterparts
This Agreement may be executed in any number of counterparts each of which shall be an original
but all of which together will constitute one and the same instrument.
Very truly yours,
D.A. DAVIDSON&CO.
By:
David Trageser
Managing Director,Public Finance Banker
Accepted and Agreed to:
CITY OF SPOKANE VALLEY, WASHINGTON
By: V0/1/LWO-aft--
Mark
Calhoun
Acting City Manager, City of Spokane Valley,Washington
Time: ` 3g ,May 18, 2016
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EXHIBIT A
TERMS OF THE BONDS
CITY OF SPOKANE VALLEY
$7,275,000
LIMITED TAX GENERAL OBLIGATION BONDS,2016
Pricing Summary
Maturity Principal Interest Price
(December 1) Amount Rate Yield (%of Par)
2016 $ 75,000 2.00% 0.70% 100.644
2017 150,000 2.00 0.80 101.782
2018 155,000 2.00 0.93 102.635
2019 160,000 3.00 1.02 106.785
2020 165,000 3.00 1.15 108.085
2021 170,000 3.00 1.28 109.102
2022 175,000 3.00 1.38 110.034
2023 180,000 4.00 1.48 117.820
2024 185,000 4.00 1.58 119.171
2025 195,000 4.00 1.68 120.287
2027 405,000 3.00 1.85 110.452
2029 435,000 3.00 2.08 108.265
2031 460,000 3.00 2.28 106.404
2033 490,000 4.00 2.04 117.644
2035 530,000 4.00 2.16 116.464
2037 570,000 4.00 2.26 115.492
2041 1,290,000 4.00 2.37 114.433
2045 1,485,000 3.00 3.20 96.200
c Priced to the call date of June 1,2026.
Exhibit A-1
Aggregate Purchase Price
Aggregate Principal Amount: $7,275,000
Less Underwriter's Discount: (40,012.50)
Plus Net Original Issue Premium: 671,088.05
Aggregate Purchase Price: $7,906,075.55
Aggregate Price: 108.674578%
True Interest Cost: 2.854796%
Description of the Bonds
The Bonds will be issued in fully registered form, will be in the denomination of$5,000 each or any integral
multiple within a single maturity and will be dated their Closing Date, expected to be
June 2, 2016. The Bonds will mature on December 1 in the years and amounts set forth above. The Bonds
will bear interest from their Closing Date, or the most recent interest payment date to which interest has been
paid or duly provided for, whichever is later, at the rates per annum set forth above. Interest will be
calculated on the basis of a 360-day year consisting of twelve 30-day months, and will be payable
semiannually on December 1 and June 1, commencing December 1, 2016, to the maturity (or prior
redemption)of the Bonds.
The Bonds have been designated as "qualified tax-exempt obligations" under Section 265(b)(3) of the
Internal Revenue Code of 1986, as amended.
Redemption
Optional Redemption. The Bonds maturing on or before December 1, 2025, are not subject to optional
redemption prior to maturity. The Bonds maturing on or after December 1, 2027, are subject to redemption
at the option of the City, in whole or in part, on any date on or after June 1, 2026, at a price equal to the
stated principal amount to be redeemed plus accrued interest, if any,to the date of redemption.
Mandatory Redemption. The Bonds maturing in the years 2027, 2029, 2031, 2033, 2035, 2037, 2041 and
2045 are Term Bonds and, if not defeased, optionally redeemed or purchased by the City as described herein
and in the Ordinance, will be called for redemption at a price equal to the stated principal amount to be
redeemed plus accrued interest, if any, to the date fixed for redemption, on December 1 in the years and
principal amounts as follows:
2027 Term Bonds 2029 Term Bonds
Mandatory Mandatory
Redemption Year Mandatory Redemption Year Mandatory
(December 1) Redemption Amount (December 1) Redemption Amount
2026 $200,000 2028 $215,000
2027' 205,000 2029' 220,000
Total $405,000 Total $435,000
Exhibit A-2
2031 Term Bonds 2033 Term Bonds
Mandatory Mandatory
Redemption Year Mandatory Redemption Year Mandatory
(December 1) Redemption Amount (December 1) Redemption Amount
2030 $225,000 2032 $240,000
2031* . 235,000 2033' 250,000
Total $460,000 Total $490,000
2035 Term Bonds 2037 Term Bonds
Mandatory Mandatory
Redemption Year Mandatory Redemption Year Mandatory
(December 1) Redemption Amount (December 1) Redemption Amount
2034 $260,000 2036 $280,000
2035' 270,000 2037' 290,000
Total $530,000 Total $570,000
2041 Term Bonds 2045 Term Bonds
Mandatory Mandatory
Redemption Year Mandatory Redemption Year Mandatory
(December 1) Redemption Amount (December 1) Redemption Amount
2038 $305,000 2042 $355,000
2039 315,000 2043 365,000
2040 330,000 2044 375,000
2041' 340,000 2045' 390,000
Total $1,290,000 Total $1,485,000
*Final maturity.
Exhibit A-3