HomeMy WebLinkAboutItem 3E: Resolution Authorizing Financing for Local Improvement
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Adoption of Resolution 4937 Authorizing Interim and Long Term Financing for Local
Improvement Projects and Terminating the Authority under Resolution No. 4807
Meeting Date: April 14, 2008 Agenda Item Number: 3E
Department: Central Services Staff Contact: Sue Cutsogeorge
www.eugene-or.gov Contact Telephone Number: 682-5589
ISSUE STATEMENT
The council is asked to approve a change in the amount authorized for the issuance of interim debt to
finance local improvement projects.
BACKGROUND
On April 11, 1994, the council approved Resolution No. 4406 authorizing the issuance of a line of credit
in a maximum amount of $4 million to finance the costs of local improvement projects on an interim
basis until long-term debt was issued.
On September 13, 1999, the council repealed Resolution No. 4406 and replaced it with Resolution No.
4602. The new resolution made some technical changes to allow for extensions of the credit facility,
and to conform to Measure 5 and Measure 50 language.
On September 13, 2004, the council repealed Resolution No. 4602 and replaced it with Resolution No.
4807. The new resolution made three changes: (1) it extended the maximum length of interim
financing, per revised statutory authorization; (2) it standardized the borrowing method for both in-city
and unincorporated property assessment borrowings; and (3) it allowed the City to automatically issue
long-term bonds to repay any interim borrowing when properties are assessed.
Assessment Project Financing
Under Eugene Code, property owners are required to pay for some or all of the cost of certain kinds of
improvements abutting their property. These projects could include street paving, sidewalks, storm
sewers, sanitary sewers, and alleys. Upon completion of the projects, the property owners are assessed
and they may elect to pay the assessment up front, or finance the assessment over a 10-year period.
The City requires an interim financing mechanism to pay for project costs until the properties are
assessed. The interim financing is paid off from the up-front payments from property owners and
through the issuance of long-term bonds. Long-term bonds are issued for those assessments that
property owners have elected to pay over a 10-year period.
The City pledges repayments from property owners and foreclosures on assessed properties to repay-
ment of assessment borrowings. In addition, the City pledges its full faith and credit to repayment of the
borrowings, in the event that those other sources are insufficient to repay the debt.
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It should be noted that the authorization to issue interim or long-term financing for assessment projects
does not authorize the City to undertake any such projects. This resolution only authorizes the City to
finance those assessment projects, once the local improvement district has been formed by the council.
Proposed Changes to Authorization
The attached resolution includes the following changes to the authorization for interim and long-term
financing for assessment projects:
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It conforms to the changes made by the Legislature in the 2007 session, which completely rewrote
the public bonding statutes.
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It increases the amount of interim assessment financing from $4 million to $5 million in order to
accommodate upcoming projects. The upcoming Crest Drive project includes assessable costs of
about $2.6 million. Together with other potential assessment projects over the next few years, such
as Maple/Elmira and Jeppesen Acres, the $4 million limit may be insufficient to cover all of the
potential assessment projects during the interim construction period.
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It repeals the prior authorization.
RELATED CITY POLICIES
As of March 31, 2008, the City had $0.8 million of outstanding limited tax assessment bonds. Assess-
ment bonds are excluded from the City’s calculation of net direct debt, so they do not have an impact on
debt capacity.
COUNCIL OPTIONS
The council can either adopt the resolution or not adopt the resolution. If the resolution is not adopted
and interim construction costs for all assessment projects exceed $4 million, the City will have to find
another interim funding source for the costs until property owners pay their assessments and the long-
term bonds are issued for the projects.
CITY MANAGER’S RECOMMENDATION
The City Manager’s recommendation is to approve the proposed resolution.
SUGGESTED MOTION
Move to Adopt Resolution 4937 authorizing interim and long term financing for local improvement
projects and terminating the authority under Resolution No. 4807
ATTACHMENTS
A. Resolution
FOR MORE INFORMATION
Staff Contact: Sue Cutsogeorge
Telephone: 682-5589
Staff E-Mail: sue.l.cutsogeorge@ci.eugene.or.us
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ATTACHMENT A
RESOLUTION NO. _____
A RESOLUTION AUTHORIZING INTERIM AND LONG
TERM FINANCING FOR LOCAL IMPROVEMENT
PROJECTS AND TERMINATING THE AUTHORITY
UNDER RESOLUTION NO. 4807.
The City Council of the City of Eugene, Oregon (the "City") finds as follows:
A.
The City is authorized under ORS 287A.180 (the "Act") to obtain lines of credit
and issue obligations to provide interim financing for capital projects. The Act permits the City to
pledge all or part of the revenues of the public body that may lawfully be used to secure payment
of the interim financing to pay obligations issued under the Act.
B.
The City adopted Resolution No. 4807 on September 13, 2004. It authorized
borrowings for interim and long term financing for local improvements projects. Resolution No.
4807 limited the authority to issue interim financing for local improvement projects to not more
than Four Million Dollars ($4,000,000) outstanding at any time.
C.
The City finds it will be advantageous to adopt this resolution, authorizing the City
to obtain and maintain interim financing for local improvement projects located inside and outside
the City in a maximum outstanding principal amount of not more than Five Million Dollars
($5,000,000), and with a maximum term of five years, as provided herein.
D.
ORS Chapter 223 authorizes the City to issue bonds to provide permanent
financing for local improvement projects.
E.
The City also finds it will be advantageous to authorize the issuance of bonds
under ORS Chapter 223 to provide permanent financing for local improvement projects that
receive interim financing under the authority of this Resolution or the City’s previous resolution
authorizing interim financing for local improvement projects.
NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a
Municipal Corporation of the State of Oregon, as follows:
Section 1. Authorization and Limitation on Interim Financing.
The City is hereby
authorized to obtain and maintain one or more interim financings (the “Interim Financings”)
pursuant to this Resolution and the Act for the costs of local improvement projects, including
street paving, sidewalks and storm sewers (the “Projects”), subject to the following limitations:
1.1. The maximum principal amount of Interim Financings that may be
outstanding at any time shall not exceed Five Million Dollars ($5,000,000);
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1.2. Each Interim Financing shall have a term of not more than five years, and
shall comply with the limitations of the Act.
Section 2. Security for Interim Financings.
Interim Financings may be secured by a
pledge of:
2.1. All or any portion of the assessment payments for Projects, and any
amounts the City receives from foreclosing assessment liens;
2.2. The proceeds of any Bonds or other permanent financing for the Projects;
and,
2.3. The City’s full faith and credit and taxing power within the limitations of
Article XI, Sections 11 and 11b of the Oregon Constitution.
Section 3. Authorization and Limitation on Bonds.
The City is hereby authorized to
issue one or more series of bonds pursuant to this Resolution and ORS Chapter 223 (the
“Bonds”) to provide permanent financing for Projects, subject to the following limitations:
3.1. The principal amount of each series of Bonds shall not exceed the unpaid
balance of all final assessments for the Projects that are refinanced by the series, plus the
amount of any debt service reserves for the series, plus the costs of issuing the series; and
3.2. Each series of Bonds shall mature no later than one year after the final
scheduled assessment payment for the Projects that are refinanced by the series, and shall
comply with the limitations of ORS Chapter 223.
Section 4. Security for Bonds.
Bondsmay be secured by a pledge of:
4.1. All or any portion of the assessment payments for the refinanced Projects
and any amounts the City receives from foreclosing assessment liens for the refinanced
Projects; and,
4.2. The City’s full faith and credit and taxing power within the limitations of
Article XI, Sections 11 and 11b of the Oregon Constitution.
Section 5. Delegation.
The City Manager or the person designated in writing by the City
Manager to act under this Resolution (the "City Official") may, on behalf of the City and without
further action by the Council:
5.1. Circulate requests for proposals, obtain competitive bids, or select banks or
underwriters for each series of Interim Financings and Bonds, and enter into agreements to
sell Interim Financings or Bonds;
5.2. Establish the principal amounts, interest rates, security and all other terms
of, and execute and deliver, one or more series of Interim Financings and Bonds, subject
only to the limitations in this Resolution;
5.3. Renew, extend or replace any Interim Financings obtained under the
authority of this Resolution, and issue Bonds to refund any Bonds issued under this
Resolution;
5.4. Obtain bond insurance or other credit enhancements for Interim Financings
or Bonds, and enter into agreements with credit enhancers;
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5.5. Prepare and circulate any disclosure documents that are desirable to
facilitate the sale of Interim Financings or Bonds;
5.6. Provide that Interim Financings or Bonds shall bear interest which is
includable in gross income under the United States Internal Revenue Code;
5.7. Provide that Interim Financings or Bonds shall bear interest which is
excludable from gross income under the United States Internal Revenue Code, and enter
into covenants to protect that excludability;
5.8. Execute and deliver Interim Financings and Bonds and pay or prepay
Interim Financings and Bonds; and
5.9. Execute any documents and take any actions which the City Official
reasonably determines are desirable to carry out this Resolution, or to obtain Interim
Financings and sell Bonds in accordance with this Resolution and the Act.
Section 6. Termination of Authority Granted by Resolution No. 4807.
The City shall
not issue any additional obligations under Resolution No. 4807 after the City obtains Interim
Financing under the authority of this Resolution.
Section 7. Effective Date.
This Resolution shall take effect on the date of its adoption.
The foregoing Resolution adopted this __ day of ___________, 2008.
City Recorder
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