027-03
BOARD OF SUPERVISORS
RESOLUTION
AUTHORIZING THE EXECUTION AND DELIVERY OF A CONTINUING
DISCLOSURE AGREEMENT IN CONNECTION WITH THE ISSUANCE BY THE
VIRGINIA PUBLIC SCHOOL AUTHORITY OF ITS SCHOOL REFUNDING BONDS
(1997 RESOLUTION) SERIES 2003 B, A PORTION OF THE PROCEEDS OF WHICH
REFUNDED THE COUNTY OF FREDERICK GENERAL OBLIGATION SCHOOL
BONDS, SERIES 1994 A; AND AUTHORIZING ANY OTHER ACTIONS NECESSARY
TO ACHIEVE THE OBJECTIVES CONTEMPLATED HEREBY
WHEREAS, the Virginia Public School Authority (the "Authority") pursuant to a
resolution duly adopted on June 26, 1991, as amended, restated and supplemented (the "1991
Resolution") issued bonds ("1991 Resolution Bonds") for the purpose of purchasing general
obligation school bonds of certain cities and counties within the Commonwealth of Virginia;
WHEREAS, the Authority has issued under the 1991 Resolution a certain series of 1991
Resolution Bonds designated as "Virginia Public School Authority School Financing Bonds
(1991 Resolution) Series 1994 A" (the "Series 1994 A Bonds");
WHEREAS, the Authority used a portion of the proceeds of the Series 1994 A Bonds to
purchase certain duly authorized and issued general obligation school bonds of the County of
Frederick, Virginia (the "County") designated the County of Frederick General Obligation
School Bonds, Series 1994 A ("Local School Bonds");
WHEREAS, the Authority refunded its Series 1994 A Bonds (the "Refunded Bonds")
from a portion of the proceeds of its Virginia Public School Authority School Financing and
Refunding Bonds (1997 Resolution) Series 2003 B (the "Refunding Bonds") issued pursuant to a
resolution duly adopted by the Authority on October 23, 1997 (the "1997 Resolution");
WHEREAS, the Authority in refunding the Refunded Bonds has pledged the Local
School Bonds for the benefit of the holders of bonds issued under its 1997 Resolution;
WHEREAS, the Authority is required to assist the underwriters (the "Underwriters") of
the Refunding Bonds with their duty to comply with Securities and Exchange Commission
("SEC") Rule 15c2-12 (the "Rule");
WHEREAS, the Authority has requested the County to execute a Continuing Disclosure
Agreement in order for the Authority to assist the Underwriters in complying with the Rule, and;
Resolution - Virginia Public School Authority - School Refunding Bonds (1997 Resolution) Series
1994 A
Board of Supervisors Meeting of November 12, 2003
Page 2
WHEREAS, the Board of Supervisors of the County of Frederick, Virginia considers it
to be advisable for the County to fulfill the request of the Authority to execute a Continuing
Disclosure Agreement;
NOW, THEREFORE BE IT RESOLVED BY THE BOARD OF SUPERVISORS
OF THE COUNTY OF FREDERICK, VIRGINIA:
Continuing Disclosure Agreement.
The Chairman of the Board of Supervisors, the County Administrator and such officer or
officers as they may designate are hereby authorized to enter into a Continuing Disclosure
Agreement in the form attached as Appendix A hereto, containing such covenants as may be
necessary in order for compliance with the provisions of the Rule, and any other documents the
Authority deems necessary to comply with the SEC rules and any Internal Revenue Service rules
and regulations regarding maintaining the tax-exempt status of the bonds.
Further Actions.
The members of the Board and all officers, employees and agents of the County are
hereby authorized to take such action as they or anyone of them may consider necessary or
desirable in connection with the execution and delivery of the Continuing Disclosure Agreement
and maintaining the tax-exempt status of the bonds, and any such action previously taken is
hereby ratified and confirmed.
Effective Date.
This resolution shall take effect immediately.
Upon motion made by Gina A. Forrester and seconded by Sidney A. Reyes, the above
resolution was approved by the following recorded vote:
Richard C. Shickle
Aye
Robert M. Sager
Absent
W. Harrington Smith, Jr.
Aye
Margaret B. Douglas
Aye
Lynda J. Tyler
Aye
Sidney A. Reyes
Aye
Gina A. Forrester
Aye
Resolution - Virginia Public School Authority - School Refunding Bonds (1997 Resolution) Series
1994 A
Board of Supervisors Meeting of November 12,2003
Page 3
The undersigned Clerk of the Board of Supervisors of the County of Frederick, Virginia
hereby certifies that the foregoing constitutes a true and correct extract from the minutes of a
meeting of the Board of Supervisors held on November 12, 2003 and of the whole thereof so far
as applicable to the matters referred to in such extract. I hereby further certify that such meeting
was duly held and complied with all requirements oflaw.
A COPY TESTE:
RESOLUTION NO.: 027-03
cc: Cheryl B. Shiffler, Finance Director
C. William Orndoff, Jr., Treasurer
Lisa K. Frye, Finance Director, Frederick County Schools
Series 2003 B Local Issuer: County of Frederick
CONTINUING DISCLOSURE AGREEMENT
[This Continuing Disclosure Agreement will impose obligations on the
Local Issuer if and only if the Local Issuer is or has become and
remains a "Material Obligated Person", as defined below]
This Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and
delivered by the undersigned local issuer (the "Local Issuer") in connection with the issuance by the
Virginia Public School Authority (the "Authority") of$74,850,000 aggregate principal amount of
its School Refunding Bonds (1997 Resolution) Series 2003 B (the "Series 2003 B Bonds") pursuant
to the provisions of a bond resolution (the "1997 Resolution") adopted on October 23, 1997, as
amended and restated. The Series 2003 B Bonds and all other parity bonds heretofore or hereafter
issued under the 1997 Resolution are collectively called the "Bonds". A portion of the proceeds of
the Series 2003 B Bonds are being used by the Authority to provide funds to refund in advance of
their maturity certain bonds of the Authority. The proceeds of the refunded bonds were used to
purchase general obligation school bonds (the "Transferred Local School Bonds") issued by certain
Virginia counties and cities (the "Transferred Local School Bond Issuers") that have used the
proceeds thereof for capital projects for public schools.
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the Local Issuer for the benefit of the holders of the Series 2003 B Bonds
and in order to assist the Participating Underwriters (defined below) in complying with the Rule
(defined below). The Local Issuer acknowledges that it is undertaking primary responsibility for any
reports, notices or disclosures that may be required under this Agreement.
SECTION 2. Definitions. In addition to the definitions set forth in the 1997 Resolution,
which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in
this Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Local Issuer pursuant to,
and as described in, Sections 3 and 4 of this Disclosure Agreement.
"Dissemination Agent" shall mean the Local Issuer, acting in its capacity as Dissemination
Agent hereunder, or any successor Dissemination Agent designated in writing by such Local Issuer
and which has filed with such Local Issuer a written acceptance of such designation.
"Filing Date" shall have the meaning given to such term in Section 3(a) hereof.
"Fiscal Year" shall mean the twelve-month period at the end of which financial position and
results of operations are determined. Currently, the Local Issuer's Fiscal Year begins July 1 and
continues through June 30 ofthe next calendar year.
"Holder" shall mean, for purposes ofthis Disclosure Agreement, any person who is a record
owner or beneficial owner of a Series 2003 B Bond.
"Listed Events" shall mean any ofthe events listed in subsection 5(b)(5)(i)(C) of the Rule.
"Local School Bonds" shall mean any of the Local School Bonds and any other bonds of the
Local Issuer pledged as security for Bonds issued under the Authority's 1997 Resolution.
"Material Obligated Person" (or "MOP") shall mean theLocal Issuer ifit has local school
bonds outstanding in an aggregate principal amount that exceeds 10% of the aggregate principal
amount of all outstanding Bonds of the Authority.
"National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule.
"Participating Underwriter" shall mean any of the original underwriters of the Authority's
Series 2003 B Bonds required to comply with the Rule in connection with the offering of such
Bonds.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State Repository" shall mean any public or private depository or entity designated by the
State as a state depository for the purpose of the Rule. As of the date ofthis Agreement, there is no
State Repository.
SECTION 3. Provision of Annual Reports.
(a) The Local Issuer shall, or shall cause the Dissemination Agent to, provide to each
Repository an Annual Report which is consistent with the requirements of Section 4 of this
Disclosure Agreement. Such Annual Report shall be filed on a date (the "Filing Date") that is not
later than 12 months after the end of any Fiscal Y ear (commencing with its Fiscal Year ending June
30,2003) as of the end of which such Local Issuer was a MOP, unless as of the Filing Date the Local
Issuer is no longer a MOP. Not later than ten (10) days prior to the Filing Date, the Local Issuer
shall provide the Annual Report to the Dissemination Agent (if applicable) and shall provide copies
to the Authority. In each case, the Annual Report (i) may be submitted as a single document or as
separate documents comprising a package, (ii) may cross-reference other information as provided
in Section 4 of this Disclosure Agreement and (iii) shall include the Local Issuer's audited financial
statements prepared in accordance with applicable State law or, if audited financial statements are
not available, such unaudited financial statements as may be required by the Rule. In any event,
audited financial statements of such Local Issuer must be submitted, if and when available, together with or separately from the Annual Report.
(b) If the Local Issuer is unable to provide an Annual Report to the Repositories by the
date required in subsection (a), the Local Issuer shall send a notice to the Municipal Securities
Rulemaking Board and any State Repository in substantially the form attached hereto as Exhibit A.
SECTION 4. Content of Annual Reports. Except as otherwise agreed, any Annual Report
required to be filed hereunder shall contain or incorporate by reference, at a minimum, annual
financial information relating to the Local Issuer, including operating data,
(a) updating such information relating to the Local Issuer as shall have been included or
cross-referenced in the final Official Statement of the Authority describing the Authority's Series
2003 B Bonds or
(b) if there is no such information described in clause (i), updating such information
relating to the Local Issuer as shall have been included or cross-referenced in any comparable
disclosure document of the Local Issuer relating to its tax-supported obligations or
( c) if there is no such information described in clause (i) or (ii) above, initially setting
forth and then updating the information referred to in Exhibit B as it relates to the Local Issuer, all
with a view toward assisting Participating Underwriters in complying with the Rule.
Any or all of such information may be incorporated by reference from other documents, including
official statements of securities issues with respect to which the Local Issuer is an "obligated person"
(within the meaning of the Rule), which have been filed with each of the Repositories or the
Securities and Exchange Commission. Ifthe document incorporated by reference is a final official
statement, it must be available from the Municipal Securities Rulemaking Board. The Local Issuer
shall clearly identify each such other document so incorporated by reference.
SECTION 5. Reporting of Listed Events. Whenever the Local Issuer is a Material Obligated
Person required to file Annual Reports pursuant to Section 3(a) hereof and obtains knowledge of the
occurrence of a Listed Event, and if such Local Issuer has determined that knowledge of the
occurrence of a Listed Event with respect to its local school bonds would be material, such Local .
Issuer shall promptly file a notice of such occurrence with each National Repository or the Municipal
Securities Rulemaking Board and each State Repository, if any, with a copy to the Authority.
SECTION 6. Termination of Reporting Obligation. The Local Issuer's obligations under this
Disclosure Agreement shall terminate upon the earlier to occur of the legal defeasance or final
retirement of all the Local School Bonds.
SECTION 7. Dissemination Agent. The Local Issuer may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Agreement and may discharge any such Agent, with or without appointing a successor
Dissemination Agent. The Local Issuer shall advise the Authority of any such appointment or
discharge. If at any time there is not any other designated Dissemination Agent, the Local Issuer
shall be the Dissemination Agent. [The initial Dissemination Agent shall be .]
SECTION 8. Amendment. Notwithstanding any other provision of this Disclosure
Agreement, the Local Issuer may amend this Disclosure Agreement, if such amendment has been
approved in writing by the Authority and is supported by an opinion of independent counsel,
acceptable to the Authority, with expertise in federal securities laws, to the effect that such
amendment is permitted or required by the Rule.
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed
to prevent the Local Issuer from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event, in
addition to that which is required by this Disclosure Agreement. If the Local Issuer chooses to
include any information in any Annual Report or notice of occurrence of a Listed Event, in addition
to that which is specifically required by this Disclosure Agreement, such Local Issuer shall have no
obligation under this Agreement to update such information or include it in any future Annual
Report or notice of occurrence of a Listed Event.
SECTION 10. Default. Any person referred to in Section 11 (other than the Local Issuer)
may take such action as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Local Issuer to file its Annual Report or to give notice of
a Listed Event. The Authority may, and the holders of not less than a majority in aggregate principal
amount of Bonds outstanding may, take such actions as may be necessary and appropriate, including
seeking mandate or specific performance by court order, to challenge the adequacy of any
information provided pursuant to this Disclosure Agreement, or to enforce any other obligation of
the Local Issuer hereunder. A default under this Disclosure Agreement shall not be deemed an event
of default under the applicable resolution or bonds of the Local Issuer, and the sole remedy under
this Disclosure Agreement in the event of any failure of the Local Issuer to comply herewith shall
be an action to compel performance. Nothing in this provision shall be deemed to restrict the rights
or remedies of any holder pursuant to the Securities Exchange Act of 1934, the rules and regulations
promulgated thereunder, or other applicable laws.
SECTION 11. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of
the Authority, the Local Issuer, the Participating Underwriters, and holders from time to time of the
Authority's Bonds, and shall create no rights in any other person or entity.
SECTION 12. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
Date:
\\ h~o>
,2003
COUNTY OF FREDERICK, VA
A
\2 Q_Q.~
Richard C. Shickle
Chairman, Board of Supervisors
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
[AUDITED FINANCIAL STATEMENTS]
RE: VIRGINIA PUBLIC SCHOOL AUTHORITY
SCHOOL REFUNDING BONDS (1997 RESOLUTION)
SERIES 2003 B
CUSIP Numbers: 92817F K70 -92817F L95
Dated: May 1,2003
Name of Local Issuer: County of Frederick
NOTICE IS HEREBY GIVEN that the County of Frederick has not provided an Annual
Report as required by Section 3(a) of the Continuing Disclosure Agreement, which was entered into
in connection with the above-named bonds issued pursuant to that certain Series Resolution adopted
on March 19, 2003, by the Board of Commissioners of the Virginia Public School Authority, the
proceeds of which were used to refund certain School Bonds of the County of Frederick. [The
County of Frederick anticipates that the Annual Report will be filed by .] The
County of Frederick is a material "obligated person" within the meaning of Rule ISc2-12 under the
Securities Exchange Act of 1934, as amended, with respect to the above-named bonds of the
Authority.
Dated: \ \. \ \-4 Q.3
COUNTY OF FREDERICK., VIRGINIA
~
~~
Richard C. Shickle
Chairman, Board of Supervisors
EXHIBIT B
CONTENT OF ANNUAL REPORT
Description of the LocalIssuer. A description of the Local Issuer including a summary of its form
of government, budgetary processes and its management and officers.
Debt. A description of the terms of the Local Issuer's outstanding tax-supported and other debt
including a historical summary of outstanding tax-supported debt; a summary of authorized but
unissued tax-supported debt; a summary oflegal debt margin; a summary of overlapping debt; and
a summary of annual debt service on outstanding tax-supported debt as of the end of the preceding
fiscal year. The Annual Report should also include (to the extent not shown in the latest audited
fmancial statements) a description of contingent obligations as well as pension plans administered
by the Local Issuer and any unfunded pension liabilities.
Financial Data. Financial information respecting the Local Issuer including a description of
revenues and expenditures for its major funds and a summary of its tax policy, structure and
collections as of the end of the preceding fiscal year.
Capital Improvement Plan. A summary of the Local Issuer's capital improvement plan.
Demographic, Economic and Supplemental Information. A summary of the Local Issuer's
demographic and economic characteristics such as population, income, employment, and public
school emollment and infrastructure data as of the end of the preceding fiscal year. The Annual
Report should also include a description of material litigation pending against the Local Issuer.
USE OF PROCEEDS CERTIFICATE
This certificate is provided by the County of Frederick (the "County") to the Virginia Public
School Authority (the "Issuer") in connection with the distribution by the Issuer to the County of the
net savings realized by the Issuer (the "Distribution") through the issuance of its $74,850,000 School
Refunding Bonds (1997 Resolution) Series 2003 B (the "Bonds").
We understand that the proceeds of the Bonds were used to refund portions of the Issuer's
$115,425,000 School Financing Bonds (1991 Resolution) Series 1994 A (the "1994 Bonds") a
portion of the proceeds of which were used to purchase the County's bonds issued on May 5,1994
(the "County Bonds").
In connection with the issuance of the County Bonds, the County executed a Use of Proceeds
Certificate (the ''Use of Proceeds Certificate") that reco gnized that the County Bonds were purchased
by the Issuer with the proceeds of the 1994 Bonds and that the exclusion from gross income of
interest on the 1994 Bonds was based in part on the use of proceeds of the County Bonds and the
school projects financed by such proceeds (the "School Projects") by the County. Consequently, the
Use of Proceeds Certificate contained certain representations and covenants of the County regarding
the use of the proceeds of the County Bonds and the School Projects.
The County recognizes that the exclusion from gross income of interest on the Bonds is
based in part on the representations contained in the Use of Proceeds Certificate and contingent on
the continuing compliance by the County with the covenants contained in the Use of Proceeds
Certificate.
Accordingly, the County certifies that it has reviewed the representations set forth in the Use
of Proceeds Certificate with respect to the School Projects (the "UPC Representations") and the use
of the School Projects and that it has discussed with the School Board of the County (the "School
Board") their use of the School Projects. Based on such review and discussions, the County hereby
certifies that the UPC Representations continue to be true and correct. Such provisions are hereby
incorporated by reference into this certificate and shall be treated as representations made by the
County as if set forth herein. Furthermore, the County has discussed the UPC Representations with
the School Board and neither the County nor the School Board will take any action that is
inconsistent with such UPC Representations.
The County further covenants that:
(a) it shall use the Distribution to pay for the cost of public school capital purposes within
six months of the date hereof and that such public school capital purposes shall be used in a manner
consistent with the UPC Representations (references to school projects shall hereinafter include the
public school capital purposes acquired with the Distribution);
(b) it shall not sell or otherwise dispose ofthe School Projects prior to the final maturity
date ofthe Bonds of August 1,2013 except as shall be permitted in the opinion of an attorney or firm
of attorneys, acceptable to the Issuer, nationally recognized as experienced with respect to matters
pertaining to the exclusion from gross income for federal income tax purposes of interest on
obligations of States and political subdivisions;
(c) it shall not knowingly take any action which will, or fail to take any action which
failure will, cause the interest on the Bonds to become includable in the gross income ofthe owners
of the Bonds for federal income tax purposes pursuant to the provisions of the Internal Revenue
Code of 1986, as amended, and the regulations promulgated thereunder in effect on the date of
original issuance of the Bonds; and
(d) in furtherance of its obligations under its County Bonds, it shall obtain the same
covenants contained in subparagraph (a), (b) and (c) above from the School Board with respect to
the School Projects.
COUNTY OF FREDERICK, V A
....
\2-.JL-Q ~ 0 Q J...;
Richard C. Shickle
Chairman, Board of Supervisors
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,2003
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Frederick County Public Schools
Visit us at www.frederick.k12 vaus
e-mail:
fryel@frederick.k12va.us
Director of Finance
TO:
John R. Riley, County Administrator .. ~
William C. Dean, Ph.D., Superintendent~}
Lisa K.. Frye, Director OfFinanC~.J..Z5JJ-\..J
Refunding of General Obligation School Bond, Series 1994A
THROUGH:
FROM:
SUBJECT:
DATE:
October 23, 2003
The Virginia Depar1ment of Treasury recently refunded certain maturities of its outstanding bonds and
applied the proceeds to the purchase of the Series 1994 bonds, a portion of which is allocable to Frederick
County.
In order to receive Frederick County's share of the savings, $5,544.23, the following forms need to be
executed.
1. Board of Supervisor Resolution
2. Use of Proceeds Certificate
3. Form 8038-G
4. Continuing Disclosure Agreement
The savings distributed to local issuers must be e>..1>ended for public school capital purposes. The school
system requests the money be allocated to the James Wood Middle School renovation project to assist
with buying some replacement furniture.
We request this topic be added to the Board of Supervisor agenda for their November 12, 2003 meeting.
Please don't hesitate to contact me should you have any questions.
Attachments (4)
540-662-3888
1415 Amherst Street, Post Office Box 3508, Winchester, VA 22604-2546
FAX 540-722-2788