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R-06-47 A RESOLUTION AUTHORIZING AN APPLICATION TO THE VIRGINIA PUBLIC SCHOOL AUTHORITY AND AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $7,500,000 GENERAL OBLIGATION SCHOOL BONDS OF THE CITY OF PORTSMOUTH, VIRGINIA TO BE SOLD TO THE VIRGINIA PUBLIC SCHOOL AUTHORITY PURSUANT TO THE LITERARY FUND SUBSIDY SALE AND PROVIDING FOR THE FORM AND DETAILS THEREOF. WHEREAS, in January of 2005, the Commonwealth of Virginia Board of Education (the "Board of Education") placed an application (the "Application") of the School Board of the City of Portsmouth, Virginia (the "School Board") for a loan in the amount of $7,500,000 (the "Literary Fund Loan") from the Literary Fund, a permanent trust fund established by the Constitution of Virginia (the "Literary Fund"), for financing the Park View Elementary School project (the "Project") in the City of Portsmouth, Virginia (the "City"), on the First Priority Waiting List. WHEREAS, the Board of Education was to have approved the release of Literary Fund moneys to the School Board and make a eommitment to loan such moneys to the School Board (the "Commitment") within one year of placement of the Application on the First Priority Waiting List upon receipt of the Literary Fund of an unencumbered sum available at least equal to the amount of the Application and the approval, by the Board of Education, ofthe Application as having met all conditions for a loan from the Literary Fund. WHEREAS, the Board of Education was thereafter to have given advances on the amount of the Commitment for the Literary Fund Loan to the School Board, as construction or renovation of the Project progressed, in exchange for a loan obligation from the School Board to the Literary Fund (the "Literary Fund Obligation") for the amounts so advanced. WHEREAS, the Literary Fund Obligation was to have borne interest at two percent (2%) per annum and mature in annual installments for a period of twenty (20) years. WHEREAS, in connection with the 2006 Interest Rate Subsidy Program (the "Program"), the Virginia Public School Authority (the "VPSA") has offered to purchase general obligation school bonds of the City, and the Board of Education has offered to pay, to the City, a lump sum cash payment (the "Lump Sum Cash Payment") equal to the sum of (i) net present value difference, determined on the date that VPSA sells its bonds, between the weighted average interest rate that the general obligation school bonds of the City will bear upon sale to the VPSA and the interest rate that the Literary Fund Obligation would have borne plus (ii) an allowance for the costs of issuing such bonds of the City (the "Issuance Expense Allowance"). WHEREAS, the City Council (the "City Council") of the City of Portsmouth, Virginia (the "City") has determined that it is necessary and expedient to borrow $7,500,000 and to issue its general obligation school bonds to finance certain capital projects for school purposes. WHEREAS, the City has held a public hearing, after due publication of notice, in accordance with Section 15.2-2606, Code of Virginia of 1950. as amended ("Virginia Code") on September 12,2006 on the issuance of school bonds in the maximum amount of $7,500,000.