Item 3: PH on MWMC IGA - Laserfiche WebLink

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recourse to local government in regard to regional wastewater user rates or charges recommended by the MWMC--specifically the vagueness of the grant of authority to MWMC to adopt and impose "any additional amount [of the recommended user charges or system development charges] that is necessary to maintain adequate bond ratings and reasonable access to the capital market." Based upon this concern, the definition of MWMC's authority to adopt rates and amounts above the level necessary to meet bond covenants has been modified to read" ... and to achieve and maintain an unenhanced credit rating of A for the Commission's Bonds from at least one nationally recognized rating agency." [Note that this language now appears in Section 3.e. 1 of the draft IGA and is cross-referenced in sections 8c and 16] An un-enhanced credit rating represents the rating of the bond issuer in the absence of any additional guarantees for payment of debt service, such as bond insurance. This modified language was reviewed by Bond Counsel for the governing bodies and determined to meet the objective of ensuring the MWMC would have reasonable access to the bond market for capital financing purposes. Questions were also raised in the work session about what the council's authority is in the process for setting the regional wastewater user rates, and what authority the council has in the review and approval of the implementation of the capital projects contained in the 2004 Facilities Plan. The MWMC establishes regional wastewater user rates on an annual basis. These rates are part of the annual regional wastewater program budget, which must be ratified by the governing bodies before they go into effect (see Section 13 of the proposed IGA). The governing bodies, therefore, have approval authority over the annual regional wastewater budget and associated user rates, with the exception of that portion of the user rates necessary to meet bond covenants and to achieve and maintain an un-enhanced credit rating of A for the commission' s bonds from at least one nationally recognized rating agency. The annual review and approval authority of the governing bodies extends to the capital improvement program as well, since the capital projects are listed in, and funded through, the annual regional wastewater budget. Any of the governing bodies may object to the capital projects list in an annual budget for the regional wastewater program, which would require written notification to the commission of the specific reason for the objection and a request for reconsideration. Under Section 13 of the IGA, if a governing body objects to the commission's decision after reconsideration, the governing body may refer the matter to the general membership of the Metropolitan Policy Committee (MPC) for mediation in accordance with any procedure adopted by MPC. Furthermore, the draft IGA calls for the MWMC to update the 2004 Facilities Plan on a five-year frequency, with these scheduled updates to be submitted to the governing bodies for review and approval at least six months in advance of the anticipated approval date and accompanied by an estimate of the effect the update may have on sewer user charges and system development charges. Finally, during the work session a question was asked whether SDCs will fund the new capacity necessary to serve growth in the service area. The 2004 Facilities Plan estimates a total of $144 million (in 2004 dollars) in capital improvement needs over the next 20 years. According to CH2M Hill, $57.8 million of this total is related to projects needed to serve projected growth in the service area during the planning period. The rates derived from the adopted SDC methodology were calculated to raise this amount of funding. For informational purposes, Attachment E includes a project list from the 2004 Facilities Plan which identifies the funding allocation for each project based upon the percentage of the project that is attributed to growth versus the percentage to be funded by existing users. The council is now scheduled to hold public hearings on the ordinance and resolution related to the amendments to the IGA and issuance of revenue bonds by MWMC, respectively. Final action on both L:\CMO\2005 Council Agendas\M050509\S0505093.doc