HomeMy WebLinkAboutItem 4: Resolution on MWMC Borrowing Authority
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Action: Resolution 4971 Approving the Issuance of Additional Revenue
Bonds by the Metropolitan Wastewater Management Commission;
and Providing an Effective Date
Meeting Date: April 20, 2009 Agenda Item Number: 4
Department: Public Works Staff Contact: Peter Ruffier
www.eugene-or.gov Contact Telephone Number: 682-8606
ISSUE STATEMENT
The Metropolitan Wastewater Management Commission (MWMC) oversees the regional wastewater
program (RWP) that serves the Eugene/Springfield communities. To maintain compliance with state-
mandated regulations and to increase wastewater treatment capacity necessary to provide for anticipated
community growth, the MWMC established a 20-Year Capital Improvement Program. The specific
capital projects needed are identified in the approved 2004 Facility Plan, and it is estimated that these
projects will cost a total of $196 million (in 2006 dollars). The commission has issued $100 million in
debt (via two revenue bonds and a state revolving fund loan) to support the CIP, the maximum amount
of borrowing it is currently authorized for by the intergovernmental partners in MWMC (the cities of
Eugene and Springfield, and Lane County). To complete the approved Facilities Plan, the commission
is requesting an additional $100 million in borrowing authority for revenue bonds and low-interest
loans.
BACKGROUND
A public hearing on this matter was held before the council on Monday, April 20, 2009. No public
testimony was offered at the hearing. The Springfield City Council approved a resolution increasing the
borrowing authority of the MWMC, on April 6, 2009. The Lane County Board of Commissioners is
scheduled to address the issue on May 20, 2009.
In 2004, the MWMC and the three governing bodies adopted a Facilities Plan for the regional
wastewater program, which included capital projects that had an estimated cost of $144 million (in 2004
dollars), necessary to meet the wastewater treatment needs of the Eugene-Springfield metropolitan area
through the year 2025. The 2004 Facilities Plan outlines a schedule for construction of the capital
improvements necessary to maintain regulatory compliance as well as satisfy anticipated demands for
treatment capacity.
The construction program implementing the 2004 Facilities Plan improvements encompasses 38
individually described capital projects that span 20 years of implementation. The CIP is on schedule to
meet legal and regulatory obligations. Many of the critical components of the Facilities Plan are front-
loaded in the 20-year period. This is to comply with a requirement that, by the end of 2009, wastewater
facilities be able to transport and treat the peak flow generated by a five-year, 24-hour storm event. This
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deadline is established by an adopted state water quality standard. Furthermore, following the
settlement of litigation filed by Oregon River Watch, the U.S. Environmental Protection Agency issued
an administrative compliance order which mandates MWMC to meet this deadline and complete the wet
weather related Facilities Plan projects on schedule.
In 2005, the MWMC was given authority by the governing bodies to borrow up to $100 million to pay
for the CIP program. The cities of Springfield and Eugene, and Lane County, authorized this borrowing
through various resolutions and orders. The Eugene Resolution number was 4837.
In November 2006, the MWMC issued its first revenue bond in the amount of $47,270,000. In
November 2008, the MWMC completed its second successful bond sale in the amount of $50,730,000.
In addition, during 2008 the MWMC borrowed $2,000,000 in the form of State Revolving Fund (SRF)
loan administered by the Department of Environmental Quality (DEQ) specifically for wastewater
treatment plant improvements.
As per the Intergovernmental Agreement (IGA), the MWMC has maintained a bond rating of A or
higher. For the 2008 series bond, MWMC’s rating was upgraded to AA by Standard and Poors, which
resulted in favorable interest rates.
The commission is requesting authorization to borrow up to an additional $100 million to provide the
flexibility to generate future revenue necessary to complete the 2004 Facilities Plan over the 20-year
implementation period. It is currently anticipated that an additional $31 million in borrowing will be
needed in the near term to complete the remaining CIP projects necessary to ensure compliance with
current regulatory requirements. Subsequent borrowing in varying amounts will occur as necessary in
amounts not to exceed the total borrowing authority.
Delays in the construction schedule due to funding shortfalls will result in any or all of the following
consequences: 1) increased frequency of wastewater overflows and related threats to public health and
environment; 2) increased likelihood of enforcement actions taken by the DEQ and the Environmental
Protection Agency; 3) increased probability of third party law suits; 4) the potential denial of new
sanitary sewer connections based on inadequate wastewater treatment capacity within regulatory
guidelines; 5) establishment of a potential requirement that significant industrial users reduce or curtail
their wastewater discharges during times of peak flows at the treatment plant, and 6) increased long-term
costs of construction.
Timely approval for this borrowing authority is also important because of the availability of federal
economic stimulus funding that will be channeled through the DEQ’s State Revolving Loan Fund. At
this time, the DEQ has indicated that $5 million in federal stimulus funding may be allocated to the
MWMC capital program. An award of these stimulus dollars would provide loan funding at
significantly reduced interest rates and buy forgiveness of a portion of the principal to be repaid. These
funds would offset some of the need to issue revenue bonds at a higher interest rate, which in turn will
reduce the long term costs to the rate payers and new development. Without expanded borrowing
authority, the MWMC cannot accept federal stimulus funding that requires payback with interest.
RELATED CITY POLICIES
Funding for completion of the approved capital improvement projects at the regional wastewater
treatment facility is important for improving the quality of wastewater treatment and preventing wet
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weather related wastewater overflows, thereby ensuring continued protection of public health and the
environment consistent with the following City resolutions:
?
Resolution #4615, adopted in April 2000, which states “The City will work proactively to the
best of its ability, through regulatory compliance, restoration projects, community outreach and
involvement, and otherwise, to support the recovery of spring Chinook salmon populations.”
?
Resolution #4618, adopted by the City Council in February 2000, which is a statement of intent
regarding the application of sustainability principles to the City of Eugene. These principles
include protection of the quality of the air, water, land, and other natural resources; conservation
of native vegetation, fish, wildlife habitat, and other ecosystems.
The resolution further states that
the “City is committed to protecting and restoring the natural environment as growth management
and economic development decisions are made.”
?
Resolution #4554, adopted in February 1998, which includes Growth Management Policy #17,
“Protect and improve air and water quality and protect natural areas of good habitat value
through a variety of means such as better enforcement of existing regulations, new or revised
regulations, or other practices.”
COUNCIL OPTIONS
Options available to the council on this issue include:
1. Approve the request to increase the MWMC’s borrowing authority by an additional $100 million.
This decision will allow the commission to issue revenue bonds in a timely fashion to support the
completion of the 2004 Facilities Plan. The increase in borrowing authority will not affect the City
of Eugene’s budget or local wastewater rates, as the debt service will be managed through the
regional wastewater rates.
2. Approve the request for additional borrowing authority at an amount other than $100 million.
3. Take no action. This would limit the MWMC to its existing borrowing authority of $100 million,
which has already been fully utilized. In order to generate the revenue necessary to complete the
mandated projects in the 2004 Facilities Plan, the Commission would need to raise user rates and
Systems Development Charges. The necessary increases would be substantial.
CITY MANAGER’S RECOMMENDATION
The City Manager’s recommendation is to approve the request by the MWMC to extend its borrowing
authority by an additional $100 million.
SUGGESTED MOTION
Move to adopt Resolution No 4971 to increase borrowing authority of the MWMC by $100 million for a
total borrowing authority of the MWMC to $200 million.
ATTACHMENTS
A. Resolution No. 4971
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FOR MORE INFORMATION
Staff Contact: Peter Ruffier
Telephone: 682-8606
Staff E-Mail: Peter.J.Ruffier@ci.eugene.or.us
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ATTACHMENT A
RESOLUTION NO. __________
A RESOLUTION APPROVING THE ISSUANCE OF ADDITIONAL
REVENUE BONDS BY THE METROPOLITAN WASTEWATER
MANAGEMENT COMMISSION; AND PROVIDING AN EFFECTIVE
DATE.
The City Council of the City of Eugene finds that:
A.
Pursuant to ORS Chapter 190, the City of Springfield, Oregon, the City of
Eugene, Oregon and Lane County, Oregon (the Governing Bodies) entered into an
Intergovernmental Agreement (the Agreement) on February 9, 1977, establishing the
Metropolitan Wastewater Management Commission (the Commission) to construct,
operate, and maintain regional sewerage facilities to serve the Eugene-Springfield
Metropolitan area (the Metro Area).
B.
The original regional sewerage facilities were constructed in the early
1980s with a planned design capacity to serve the Metro Area through 2004.
C.
The Commission and the Governing Bodies have approved the 2004
Metropolitan Wastewater Management Commission Facilities Plan and 20-Year Project
List, which includes capital projects with an estimated cost of $144,000,000 (in 2004
dollars) necessary to meet the sewage treatment needs of the Metro Area through the
year 2025.
D.
After a public hearing, and based on the recommendations of the
Commission and its financial advisor, in 2005 the City Council authorized the
Commission to issue up to $100,000,000 of revenue bonds to finance regional
sewerage facilities pursuant to ORS 190.080(1)(a) and ORS 288.805 to 288.945 (now
ORS Chapter 287A).
E.
Due to various factors, including the escalation of construction costs since
2004, the cost of capital projects on the Commission’s 20-Year Project List is now
expected to exceed $196,000,000.
F.
In 2005, the Commission and its financial advisor determined that revenue
bonds were the best available financing tool and recommended that approximately
$100,000,000 in revenue bonds be issued to fund the capital projects on the
Commission’s 20-Year Project List. The recommendation was based on the original
projected cost of $144,000,000.
G.
The Commission and its investment advisor continue to believe that
revenue bonds are likely to be the best available financing tool.
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H.
The Commission and its financial advisor recommend that approximately
$________________ in additional revenue bonds be issued to fund the projected
increased cost of the capital projects on the Commission’s 20-Year Project List.
I.
Pursuant to Ordinance No. 20345 adopted on May 23, 2005, the Eugene
City Council adopted a restated and amended Agreement that, in part, created the
Commission as an intergovernmental entity pursuant to the provisions of ORS 190.010
and 190.085.
J.
ORS 190.080(1) provides that intergovernmental entities may issue
revenue bonds if the parties to the agreement approve the issuance of the revenue
bonds after a public hearing.
K.
Pursuant to Resolution No. 4837 adopted on May 23, 2005, the Board of
Commissioners authorized the Commission to issue up to $100,000,000 of revenue
bonds to finance regional sewerage facilities pursuant to ORS 190.080(1)(a) and ORS
288.805 to 288.945 (now ORS Chapter 287A).
L.
The Commission needs authority to issue additional revenue bonds to
complete the regional sewerage facilities.
M.
The Governing Bodies desire to authorize the Commission to issue such
additional revenue bonds under ORS Chapter 287A.
N.
A public hearing was held before the City Council on April 20, 2009
regarding the issuance by the Metropolitan Wastewater Management Commission of up
to $ in additional revenue bonds to finance regional sewerage
facilities pursuant to ORS 190.080(1)(a) and ORS Chapter 287A.
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.
The City Council hereby approves the issuance of up to
$______________ in additional revenue bonds by the Metropolitan Wastewater
Management Commission pursuant to ORS 190.080(1)(a) and ORS Chapter 287A to
finance regional sewerage facilities.
Section 2.
This Resolution shall become effective immediately upon its
adoption.
The foregoing Resolution adopted the _____day of ___________, 2009.
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City Recorder
00223380.DOC;1
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