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HomeMy WebLinkAboutItem 2C: Approval of EWEB Bond Issue ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: Resolution 4931 Authorizing the Issuance and Sale of Electric Utility System Revenue Bonds in Aggregate Principal Amount of not to Exceed Eighty-Five Million Five Hundred Thousand Dollars ($85,500,000) for the Purposes of Financing Improvements to the Electric Utility System and Providing for Related Matters Meeting Date: February 25, 2008 Agenda Item Number: 2C Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 682-5589 ISSUE STATEMENT The Eugene Water & Electric Board (EWEB) is requesting authority to proceed with the issuance of Electric Utility System Revenue Bonds in the amount of $85.5 million for the purposes described below. BACKGROUND On February 13, Ken Beeson from EWEB presented information to the council on the relocation of EWEB water and electric utility operations and engineering functions to a new site in west Eugene. Mr. Beeson described the scope of the project, the sustainability measures to be incorporated into the project and the timeline. He also presented information about the public process to-date, the impact on ratepayers from the project, and the costs and funding for the project. At this meeting, the council is requested to authorize $85.5 million of Electric System Revenue Bonds. The bonds issued pursuant to this authorization will provide funds for design and construction work associated with the relocation of EWEB water and electric utility operations and engineering related functions to a new site in west Eugene, to fund necessary reserves for the bonds and to pay the costs of issuance of the bonds. The resolution limits the use of the bond proceeds to only this project; EWEB cannot use any excess proceeds for other EWEB capital projects. EWEB approved the related financing resolution unanimously at its February 5 board meeting. EWEB is expecting to issue bonds in two series for this project. The first series will be sold for $54 million in 2008 and will cover the first two years of project costs. The second issue will be sold in 2010 and will be for a maximum of $31.5 million. Proceeds from the sale of excess property are expected to be used to either reduce the amount of bonds to be issued in 2010 or to pay off bonds issued for the project, depending on the timing of the sale of the property. Based on project budget assumptions, the combined electric and water rate impact related to this project is estimated to be about 2.3% or approximately 1.6% for electric customers and 8.7% for water customers. This equates to about $52 per year for a typical residential customer (single family home, electric heat). Actual rate increases related to the project will occur gradually and will depend on the amount and timing of (1) construction expenditures, and (2) any credits from the sale of surplus property F:\CMO\2008 Council Agendas\M080225\S0802252C.doc downtown. Electric customers could see an approximate 1% increase in 2009, with a zero to 0.5% increase in 2011. Water customers could see an increase of approximately 4% to 9% in 2011. The bond resolution is authorized under the Uniform Revenue Bond Act. Under that act, EWEB will publish a notice of the bond authorization. If qualified electors are interested in placing the measure on the next available election ballot, they will have 60 days to file a petition to do so. EWEB will also be asking for approval for two additional bond financings (not related to the Roosevelt Project financing) in the next several months. The first approval will be a $46 million authorization to refinance Series 1998 Revenue Bonds and 1998A Electric Revenue Bonds. The purpose of the refinancing is to achieve interest savings on the bonds. The second financing is to issue $15,595,000 in Water Revenue Bonds to finance Water Utility capital improvements, such as the Hayden Bridge Filtration Expansion and a water main replacement. RELATED CITY POLICIES There are no City policies related to this item COUNCIL OPTIONS The council can approve or not approve this resolution. If the council does not approve the resolution, EWEB would not be able to proceed with the URBA process to allow for the issuance of the bonds to finance the design and construction work associated with the proposed operations facility in west Eugene and, as a result, will not be able to relocate the operations functions to the new west Eugene site under the current timeline. CITY MANAGER’S RECOMMENDATION The City Manager recommends approval of the resolution. SUGGESTED MOTION Move to adopt Resolution 4931 authorizing the issuance and sale of Electric Utility System Revenue Bonds in the aggregate principal amount of not to exceed eighty-five million five hundred thousand dollars ($85,500,000) for the purposes of financing improvements to the electric utility system and providing for related matters. ATTACHMENTS A. Proposed Resolution B. Letter from EWEB Board President John Simpson, dated February 15, 2008 F:\CMO\2008 Council Agendas\M080225\S0802252C.doc FOR MORE INFORMATION Staff Contact: Sue Cutsogeorge Telephone: 682-5589 Staff E-Mail: Sue.L.Cutsogeorge@ci.eugene.or.us EWEB Contact: Jim Origliosso Telephone: 484-3753 E-Mail: Jim.Origliosso@eweb.eugene.or.us F:\CMO\2008 Council Agendas\M080225\S0802252C.doc ATTACHMENT A RESOLUTION NO. ____ A RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF ELECTRIC UTILITY SYSTEM REVENUE BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED EIGHTY-FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS ($85,500,000) FOR THE PURPOSES OF FINANCING IMPROVEMENTS TO THE ELECTRIC UTILITY SYSTEM AND PROVIDING FOR RELATED MATTERS The City Council of the City of Eugene finds that: A. §46 of Chapter 783 Oregon Laws 2007 (containing provisions correlative to those repealed by Chapter 783, including those previously known as the Uniform Revenue Bond Act (“URBA”)), authorizes the City to issue bonds payable solely from revenues . generated by facilities, projects, utilities or systems owned or operated by the CityThe City, acting by and through the Eugene Water & Electric Board (“EWEB”), owns and operates an electric utility system and related facilities and systems. B. On June 16, 1986, EWEB adopted a resolution authorizing and providing for the issuance, from time to time, of City of Eugene, Oregon Electric Utility System Revenue Bonds to be equally and ratably secured by the pledge of revenues, funds and accounts thereunder (as amended and supplemented, the “Bond Resolution”). C. The Bond Resolution provides in part that the principal of, premium, if any, and interest on the bonds issued thereunder shall not be payable from any funds of the City nor constitute a general obligation of the City or create a charge upon the tax revenues or any other property or revenues of the City. D. EWEB has requested by resolution that the City Council adopt this Resolution in part to set the terms for the issuance of not to exceed $85,500,000 in aggregate principal amount of electric utility system revenue bonds (the “Bonds”) for the purpose of financing the acquisition, design, construction, installation and equipping of certain capital improvements to the Roosevelt Operations Center (collectively, the “Project”), in two phases consisting of a financing in 2008 (the “2008 Project Financing”) and a financing in 2010 (the “2010 Project Financing”), to fund necessary reserves for each financing and to pay the costs of issuance of Bonds under each financing. E. The Bonds will not be general obligations of the City, nor a charge upon its tax revenues, but will be payable solely from revenues of the Electric Utility System which EWEB pledges to the payment of such Bonds pursuant to §46 of Chapter 783 Oregon Laws 2007 and the resolutions to be adopted by EWEB pursuant to this Resolution. F. EWEB has by resolution undertaken to cause to be prepared a plan showing that EWEB’s estimated Electric Utility System revenues are sufficient to pay the estimated debt service on the Bonds authorized by this Resolution. G. The City and EWEB anticipate incurring expenditures (“Expenditures”) to finance the costs of the Project and wish to declare their official intent to reimburse themselves for 10842272.8 the Expenditures made on the Project from the proceeds of the Bonds. To the extent that the expenditures and the use of proceeds of the Bonds may qualify under federal tax law and regulations, the City, including EWEB, intends for the interest on such bonds to be excludable from gross income for federal income tax purposes under §103 of the Internal Revenue Code of 1986, as amended (the “Code”). H. EWEB has requested by resolution that the City Council adopt this Resolution in part to authorize the publication of the Notice of Revenue Bond Authorization relating to the Bonds, such notice being in substantially the form attached to this Resolution as Exhibit “A” (the “Notice”). The Notice shall specify the last date on which petitions may be submitted, and the City, acting by and through EWEB, shall cause the Notice to be published in The Register-Guard, a newspaper of general circulation within the boundaries of the City, in the same manner as are other public notices of the City. NOW THEREFORE, THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS: Section 1. Authorization of Bonds and Publication of Notice; Purpose of Issue. Based on the above findings, subject to the prior publication of the Notice and the expiration of the 60-day period following the publication of the Notice without the receipt of a petition for an election questioning the issuance of the Bonds, which facts and circumstances shall be determined conclusively and for all purposes by any individual designated by EWEB, the City Council hereby authorizes EWEB, on behalf of the City, to issue and sell the Bonds designated as the “City of Eugene, Oregon Electric Utility System Revenue Bonds,” in one or more series, in the aggregate principal amount of not to exceed $85,500,000, for the purpose of funding initial phases of the Project, and to fund any required reserves and costs of issuance, and to publish the Notice as aforesaid. If petitions for an election, containing the valid signatures of not less than 5 percent of the City’s qualified electors, are received within the time indicated in the Notice, the question of issuing Bonds shall be placed on the ballot at the next legally available election date. If such petitions are received no Bonds may be sold until the question of whether to issue the Bonds is approved by a majority of electors living within the boundaries of the City who vote on that question. Any such petitions will be subject to §46 of Chapter 783 Oregon Laws 2007 and §§2.970-2.992 of The Eugene Code, 1971. Section 2. Conditions of Issuance and Sale. The City Council hereby prescribes that: (a)The Bonds of each series shall: (i) mature not later than thirty (30) years from the date of issuance of the series; (ii) be sold through public competitive sale and awarded to the bidder offering the most favorable terms to EWEB, on behalf of the City, or sold pursuant to negotiation at par or with a net original issue discount or premium that does not exceed seven percent (7%) of the aggregate principal amount thereof; and (iii) have an effective interest rate of not to exceed seven percent (7%) per annum; and (b)The proceeds of the Bonds shall be used only for the purposes above described. - 2 - 10842272.8 Section 3. Delegation of Authority for Terms of Bonds; Provisions for Issuance. Pursuant to §§48-49 of Chapter 783 Oregon Laws 2007, EWEB, or any individual designated by EWEB, is hereby authorized and directed to determine, with respect to the Bonds, the form of bond and series designation, the manner of disbursement of proceeds of the bonds, the maturity dates, principal amounts, redemption provisions, interest rates or the method for determining a variable or adjustable interest rate, denominations, form and authorized signatory and other terms and conditions of the Bonds because the same cannot be determined by the City Council at this time. Prior to the issuance of any Bonds, EWEB shall: (i) prepare a plan showing that the estimated Electric Utility System revenues are sufficient to pay the estimated debt service on the Bonds; (ii) adopt a bond resolution and provide a copy of such resolution to the City; and (iii) provide to the City a resolution determining that any and all acts, conditions and things required to exist, to happen and to be performed precedent to and in the issuance of the Bonds, exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of Oregon, the Charter of the City of Eugene and this Resolution. Section 4. Declaring Intent To Reimburse. The City reasonably anticipates that the City and EWEB may incur preliminary, cost of issuance and other project expenditures that qualify as “Original Expenditures” under Treasury Regulation §1.150-2 prior to the date of issuance of the Bonds, and hereby declares its official intent to reimburse itself or EWEB with proceeds of the sale of the Bonds to be issued in an amount not to exceed $85,500,000 in aggregate principal amount. Section 5. Statement on Form of Bond. All Bonds shall include a statement on their face to the effect: (a)That they do not in any manner constitute a general obligation of EWEB or of the City, or create a charge upon the tax revenues of the City, or upon any other revenues or property of the City, or property of EWEB, but are charges upon and are payable solely from the revenues of the Electric Utility System operated by EWEB, or any portion thereof, pledged to the payment thereof; and (b)That the holders thereof may look for repayment only to the revenues of the Electric Utility System which are pledged for the payment thereof, and may not directly or indirectly be paid or compensated through the property of the City, or EWEB, or by or through the taxing power of the City. Section 6. Bonds Payable Solely from Revenues. The Bonds shall not be general obligations of the City, nor a charge upon its tax revenues, but shall be payable solely from the revenues and funds which EWEB pledges to the payment thereof pursuant to §46 of Chapter 783 Oregon Laws 2007, any applicable URBA authorizations and in accordance with this Resolution. Section 7. Bonds Reporting. EWEB shall submit to the City by May 1 of each year the following annual reports commencing after the first sale of any Bonds or other evidences of indebtedness hereunder and each year thereafter until the Bonds have been paid and retired: (a)A report on the funds for each series of Bonds describing the funds established, the amounts in each fund, expenditure from each fund, the manner in which the - 3 - 10842272.8 monies in each fund have been invested, the income from such investments and the application of such income; and (b)A report on Bond payments describing amounts paid and amounts scheduled to be paid and the source of such payments. If the contents of the reports required by subsections (a) and (b) above are included in the yearly audit report of EWEB, then EWEB may comply with this Section 7 by transmitting a copy of its yearly audit report to the City. Section 8. Appointment of Professionals. EWEB is authorized to appoint bond counsel, disclosure counsel, financial advisors, a registrar and paying agent and any other professional assistance that EWEB determines is necessary or convenient to accomplish the issuance and sale of any or all of the Bonds. Section 9. Official Statement; Sale Documents. EWEB or any party designated by EWEB is authorized to prepare and distribute or direct the preparation and distribution of one or more preliminary official statement(s) or other disclosure document(s) for any of the Bonds or in connection with a preliminary official statement or other disclosure document for any other bonds, as determined to be necessary by EWEB, to obtain bond insurance or other credit enhancement or commitments therefor, if required, to obtain a rating on any or all of the Bonds from Moody’s Investors Service, Inc., Standard & Poor’s and/or Fitch Ratings, if required, and to issue and publish such notices of sale of the Bonds as may be necessary or required to accomplish the sale of the Bonds in accordance with this Resolution. Section 10. Election to Issue Bonds under URBA. Pursuant to Oregon Administrative Rule 170-061-0200 which implements the provisions of Chapter 783 Oregon Laws 2007, EWEB, on behalf of the City, may elect in writing to issue the Bonds under the URBA provisions, without regard to the provisions of Chapter 783 Oregon Laws 2007, upon satisfaction of the requirements set forth in such Oregon Administrative Rule. If the Bonds are issued under the URBA provisions, all references to the provisions of Chapter 783 Oregon Laws 2007 contained herein shall be deemed to refer to such applicable statutes of similar purpose contained in URBA. Section 11. Effective Date of Resolution. This Resolution shall become effective immediately upon its adoption. The foregoing Resolution adopted by the City Council this ___ day of February, 2008. City Recorder - 4 - 10842272.8 EXHIBIT A FORM OF NOTICE OF REVENUE BOND AUTHORIZATION NOTICE IS HEREBY GIVEN that the City Council of the City of Eugene, Oregon (the ** “City”) has adopted Resolution No. ____ on February __, 2008, authorizing the issuance of the City’s revenue bonds acting by and through the Eugene Water & Electric Board (“EWEB”). The bonds will be issued in one or more series to provide funds for the financing of the acquisition, design, construction, installation and equipping of certain capital improvements to the Roosevelt Operations Center (collectively, the “Project”), to fund necessary reserves and to pay the costs of issuance. The costs of the Project to be funded, together with bond issuance costs and debt service reserves, are estimated not to exceed $85,500,000. In accordance with these estimates, the City expects that the bonds will be issued in an aggregate principal amount of not to exceed $85,500,000. Subject to certain parameters, EWEB may establish all terms, conditions and covenants regarding the bonds and the revenues which are necessary or desirable to effect the sale of the bonds. The bonds will not be general obligations of the City, nor a charge upon its tax revenues, but will be payable solely from the revenues which EWEB pledges to the payment of the bonds. If written petitions, signed by not less than 5 percent of the City’s qualified electors, are *st filed at the Office of the City Recorder on or before ___________, 2008 (the 61 day after the date of publication of this notice), the question of issuing $85,500,000 of the revenue bonds shall be placed on the ballot at the next legally available election date. Any such petition shall be subject to §46 of Chapter 783 Oregon Laws 2007 and Sections 2.970-2.992 of The Eugene Code, 1971. The Office of the City Recorder is located at 777 Pearl Street, Room 105, Eugene, Oregon 97401. Information on procedures for filing petitions may also be obtained at such address or by telephone at (541) 682-5042. The resolution authorizing the bonds is available for inspection at the Office of the City Recorder. The bonds will be issued and sold pursuant to §46 of Chapter 783 Oregon Laws 2007, and this notice is published pursuant to §46(4) of Chapter 783 Oregon Laws 2007. * Information must be included prior to publication of the notice. A-1 10842272.8