HomeMy WebLinkAboutItem 2E: Resolution Authorizing EWEB Borrowing (water system)
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Adoption of Resolution 5026 Authorizing the Issuance and Sale of Electric Utility
System Revenue Bonds for the Purpose of Financing Improvements to the Electric Utility
System in the Aggregate Principal Amount of Not to Exceed Thirty-Six Million Dollars
($36,000,000); Authorizing the Issuance and Sale of Electric Utility Revenue Refunding
Bonds in the Aggregate Principal Amount of Not to Exceed Forty-Six Million Eight
Hundred Thousand Dollars ($46,800,000) to Refund Series 1998A Taxable Bonds and
Series 2001B Bonds; and Providing for Related Matters
Meeting Date: March 14, 2011 Agenda Item Number: 2E
Department: Central Services Staff Contact: Sue Cutsogeorge
www.eugene-or.gov Contact Telephone Number: 541-682-5589
ISSUE STATEMENT
The Eugene Water & Electric Board (EWEB) is requesting authority to proceed with the issuance of
Electric Utility Revenue Bonds in the amount of $36,000,000 for capital improvements and $46,800,000
for the purpose of refinancing to achieve interest rate savings.
BACKGROUND
A new authorization for $36,000,000 of Electric Utility System Revenue Bonds is being requested under
the provisions of the Uniform Revenue Bond Act. The bonds that are issued pursuant to this
authorization will provide funds for design and construction work associated with electric utility capital
infrastructure improvements such as electric substation rebuilds and upgrades.
The City, acting by and through EWEB, previously issued $12,455,000 Series 1998A and $39,385,000
Series 2001B Electric System Revenue Bonds. As of August 1, 2011, a balance of $8,295,000 and
$33,385,000, respectively, will remain outstanding for these bonds. The 1998A bonds were originally
issued to finance the acquisition of an undivided ownership interest in a wind power generation facility
located in the Foote Creek Rim area in Carbon County, Wyoming. The 2001B bonds were primarily for
facility improvements to the Leaburg-Walterville hydroelectric project.
The series of bonds are currently callable. EWEB is proposing to refinance these bonds to achieve
approximately $1,400,000 in interest savings over the life of the bonds. The savings of these bonds will
help reduce future rates. The overall impact on electric rates net of the savings from the refunding is a
two percent rate increase.
RELATED CITY POLICIES
There are no City policies related to this item.
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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 issue new revenue bonds to complete its capital improvements and proceed
with the refinancing of the Series 1998A and 2001B to achieve interest rate savings.
CITY MANAGER’S RECOMMENDATION
The City Manager recommends approval of the resolution.
SUGGESTED MOTION
Move to adopt Resolution 5026, authorizing the issuance and sale of Electric Utility System Revenue
Bonds for the purpose of financing improvements to the Electric Utility System in the aggregate
principal amount of not to exceed thirty-six million dollars ($36,000,000); authorizing the issuance and
sale of Electric Utility Revenue Refunding Bonds in the aggregate principal amount of not to exceed
forty-six million eight hundred thousand dollars ($46,800,000) to refund Series 1998A taxable bonds
and Series 2001B bonds; and providing for related matters.
ATTACHMENT
A. Proposed Resolution
FOR MORE INFORMATION
Staff Contact: Sue Cutsogeorge
Telephone: 541-682-5589
Staff E-Mail: Sue.L.Cutsogeorge@ci.eugene.or.us
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ATTACHMENT A
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF ELECTRIC
UTILITY SYSTEM REVENUE BONDS FOR THE PURPOSE OF FINANCING
IMPROVEMENTS TO THE ELECTRIC UTILITY SYSTEM IN THE AGGREGATE
PRINCIPAL AMOUNT OF NOT TO EXCEED THIRTY SIX MILLION DOLLARS
($36,000,000); AUTHORIZING THE ISSUANCE AND SALE OF ELECTRIC UTILITY
REVENUE REFUNDING BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF
NOT TO EXCEED FORTY SIX MILLION EIGHT HUNDRED THOUSAND DOLLARS
($46,800,000) TO REFUND SERIES 1998A TAXABLE BONDS AND SERIES 2001B
BONDS; AND PROVIDING FOR RELATED MATTERS
The City Council of the City of Eugene finds that:
A.
Oregon Revised Statutes (“ORS”) Section 287A.150 and 287A.360 authorizes the City of
Eugene, Oregon (the “City”) to issue revenue bonds and revenue refunding bonds
payable from identified revenues of the City.The 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 and authorize the issuance of not to exceed $36,000,000 in aggregate
principal amount of electric utility system revenue bonds (the “New Money Bonds”) for
the purpose of financing the acquisition, design, construction, installation and equipping
of certain capital improvements to the electric utility generating, transmission and
distribution systems (collectively, the “New Money Project”), to fund necessary reserves
and to pay the costs of issuance of New Money Bonds.
E.
On May 18, 1993, the electors of the City of Eugene authorized issuance of up to
$150,000,000 of electric system revenue bonds (the “Election Authorization”).
Subsequently, the City Council adopted Resolution No. 4571 authorizing the issuance of
electric revenue bonds in an amount not to exceed $15,000,000. Pursuant to that
authorization, the City, acting by and through EWEB, issued the City of Eugene, Oregon
Electric Utility System Revenue Bonds, Series 1998A (Federally Taxable) in the
principal amount of $12,455,000 (the “Series 1998A Taxable Bonds”), which Series
1998A Taxable Bonds will be outstanding in the principal amount of $8,295,000 as of
August 1, 2011.
F.
The City Council adopted Resolution No. 4690 authorizing the issuance of electric
revenue bonds in an amount not to exceed $40,000,000. Pursuant to that authorization,
the City, acting by and through EWEB, issued the City of Eugene, Oregon Electric
Utility System Revenue Bonds, Series 2001B in the principal amount of $39,385,000 (the
“Series 2001B Bonds”), which Series 2001B Bonds will be outstanding in the principal
amount of $33,385,000 as of August 1, 2011.
G.
EWEB has determined that substantial present value savings may be achieved by issuing
refunding bonds for the purpose of refunding (i) the outstanding Series 1998A Taxable
Bonds which may be called and redeemed as of on any date on or after August 1, 2008,
without premium, and (ii) the Series 2001B Bonds maturing on or after August 1, 2012,
which may be called on and after August 1, 2011, without premium (collectively the
“Refunded Bonds”).
H.
EWEB has requested by resolution that the City Council adopt this Resolution in part to
set the terms for and authorize the issuance of not to exceed $46,800,000 electric utility
system revenue refunding bonds (the “Refunding Bonds”) for the purpose of refunding
the Refunded Bonds, to fund necessary reserves and to pay costs of issuance of the
Refunding Bonds. The New Money Bonds collectively with the Refunding Bonds are
referred to as the “Bonds”.
I.
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 ORS Sections 287A.310 and 287A.325
and the resolution to be adopted by EWEB pursuant to this Resolution.
J.
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.
K.
The City and EWEB anticipate incurring expenditures (“Expenditures”) to finance the
costs of the New Money Project and wish to declare their official intent to reimburse
themselves for the Expenditures made on the New Money Project from the proceeds of
the New Money Bonds. To the extent that the expenditures and the use of proceeds of
the New Money 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”).
L.
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
New Money 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
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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, based upon the above findings,
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 of New Money 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 New Money 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
New Money 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 $36,000,000,
for the purpose of financing the New Money 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 the New Money Bonds shall be placed on
the ballot at the next legally available election date. If such petitions are received no New
Money Bonds may be sold until the question of whether to issue the New Money 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 ORS 287A.150 and §§2.960-2.1005 of The
Eugene Code, 1971.Capitalized terms used but not defined herein shall have the meaning
assigned in the Bond Resolution, unless the context clearly requires otherwise.
Section 2.
Authorization of Refunding Bonds; Purpose of Issue. Based on the above
findings, the City Council hereby authorizes EWEB, on behalf of the City, to issue and sell the
Refunding Bonds designated as the “City of Eugene, Oregon Electric Utility System Revenue
Refunding Bonds,” in one or more series, in an amount not to exceed $46,800,000 for the
purpose of refunding Series 1998A Taxable Bonds and Series 2001B Bonds, and to fund any
required reserves and costs of issuance of the Refunding Bonds.
Section 3.
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 (7.0%) of the aggregate principal amount thereof; and (iii) have an effective interest rate
of not to exceed seven percent (7.0%) per annum; and
(b)The proceeds of the Bonds shall be used only for the purposes above
described.
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Section 4.
Delegation of Authority for Terms of Bonds; Provisions for Issuance.
Pursuant to ORS 287A.300(4), 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, obtain bond insurance or some other form of guaranty or security for the
payment of the Bonds, denominations, form, authorized signatory, which of the Series 1998A
Taxable Bonds and Series 2001B Bonds will be refunded, the terms and form of necessary or
desirable documents 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 5.
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 New Money Bonds, and hereby declares its official intent to reimburse itself or
EWEB with proceeds of the sale of the New Money Bonds to be issued in an amount not to
exceed $36,000,000 in aggregate principal amount.
Section 6.
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 7.
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 ORS 287A.150 and
287A.360, any applicable authorizations and in accordance with this Resolution.
Section 8.
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:
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(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
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 9.
Appointment of Professionals. EWEB is authorized to appoint bond
counsel, disclosure counsel, financial advisor, 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 10.
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 and to select trustees,
registrars, paying agents, financial advisor, bond counsel, disclosure counsel and any other
professional assistance that may be necessary or convenient to accomplish the issuance and sale
of any or all of the Bonds; and to determine any other terms, conditions or covenants regarding
any or all of the Bonds or the New Money Project, which are necessary or desirable to effect the
sale of any or all of the Bonds.
Section 11.
Effective Date of Resolution. This Resolution shall become effective
immediately upon its adoption.
th
The foregoing Resolution adopted by the City Council this 14 day of March 2011.
City Recorder
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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 March 14, 2011, authorizing the issuance of the
City’s revenue bonds acting by and through the Eugene Water & Electric Board (“EWEB”). The
revenue bonds will be issued in one or more series to provide funds for the purpose of financing
the acquisition, design, construction, installation and equipping of certain capital improvements
to the electric utility generating, transmission and distribution systems (collectively, the
“Project”), to fund necessary reserves and to pay the costs of issuance of the revenue bonds.
The costs of the Project to be funded, together with bond issuance costs and debt service
reserves, are estimated not to exceed $36,000,000. In accordance with these estimates, the City
expects that the revenue bonds will be issued in an aggregate principal amount of not to exceed
$36,000,000.
Subject to certain parameters, EWEB may establish all terms, conditions and covenants
regarding the revenue bonds and the revenues which are necessary or desirable to affect the sale
of the revenue bonds.
The revenue bonds will not be general obligations of the City, nor a charge upon its tax
revenues, but will be payable solely from the revenues of the City’s Electric Utility System.
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 _________, 2011 (the 61 day after the date
of publication of this notice), the question of issuing $36,000,000 of electric revenue bonds shall
be placed on the ballot at the next legally available election date. Any such petition shall be
subject to ORS 287A.150 and Sections 2.960-2.1005 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 revenue bonds is available for inspection at the Office of
the City Recorder.
The revenue bonds will be issued and sold pursuant to ORS 287A.150, and this notice is
published pursuant to ORS 287A.150(4).
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