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HomeMy WebLinkAboutItem 3C - Resolution Authorizing EWEB Bonds for Carmen-Smith Project ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Adoption of Resolution 5061 Authorizing the Eugene Water & Electric Board to Issue and Sell Electric Utility System Revenue Bonds and Electric Utility Revenue Refunding Bonds Meeting Date: May 29, 2012 Agenda Item Number: 3C 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 $45,000,000 for capital improvements and $38,000,000 for the purpose of refinancing to achieve interest rate savings. BACKGROUND Carmen-Smith Project An authorization for $45,000,000 of Electric Utility System Revenue Bonds is being requested to 1) provide reimbursement of $20 million of project costs paid from reserves over the last several years and 2) provide funds for 2012 and 2013 to continue the relicensing of the Carmen-Smith Hydroelectric Project. The reimbursement of prior year project costs will be placed in reserve to pay for project costs in 2014 and beyond. The Carmen-Smith Hydroelectric Project, which is located 71 miles east of Eugene on the upper McKenzie River, represents almost half of EWEB’s total owned generation capacity. EWEB received an initial federal license for the Carmen-Smith Project in 1958. This 50-year license expired in November of 2008, and EWEB has been operating under an annual license from the Federal Energy Regulatory Commission (FERC) since that time. The annual license renews automatically until EWEB receives a new license for the project from the FERC. The council will receive a presentation on this project at the May 29 work session. EWEB has previously issued $13.4 million in bonds relating to the Carmen-Smith Project and additional project costs from 2012 to the completion of the project are expected to be approximately $156 million. The project will be funded through two additional bond authorizations: $45 million requested at this time, and the remainder to be requested after the license has been approved. EWEB expects rates to increase two percent as a result of issuance of the currently requested bonds. Refunding The City, acting by and through EWEB, issued $12,410,000 Series 2002C and $40,865,000 Series 2003 Electric System Revenue Bonds. The current outstanding balance for these bonds is $8,290,000 and S:\CMO\2012 Council Agendas\M120529\S1205293C.doc $30,265,000, respectively. The 2002C bonds were originally issued to finance the generation, transmission, substations, distribution and general plant. The 2003 bonds were primarily for facility improvements to the Leaburg-Walterville and Carmen-Smith Hydroelectric Projects and refunding of previous debt issues. The bonds are currently callable. EWEB is proposing to refinance these bonds to achieve approximately $4,600,000 in interest savings over the life of the bonds. The savings of these bonds will help reduce future rates. RELATED CITY POLICIES There are no City policies related to this item. COUNCIL OPTIONS The council can approve or not approve this resolution. If council does not approve the resolution, EWEB would not be able to issue new revenue bonds for its Carmen-Smith Project and proceed with the refinancing of the Series 2002C and 2003 bonds to achieve interest rate savings. EWEB would minimize ongoing design and implementation work and re-evaluate project options once the license is issued. CITY MANAGER’S RECOMMENDATION The City Manager recommends adoption of the resolution SUGGESTED MOTION Move to adopt Resolution No. 5061 authorizing EWEB to issue and sell electric utility system revenue bonds and electric utility revenue refunding bonds. ATTACHMENTS A.Proposed Resolution FOR MORE INFORMATION Staff Contact: Sue Cutsogeorge Telephone: 541-682-5589 Staff E-Mail: Sue.L.Cutsogeorge@ci.eugene.or.us S:\CMO\2012 Council Agendas\M120529\S1205293C.doc ATTACHMENT A RESOLUTION NO. _______ A RESOLUTION AUTHORIZING EWEB TO ISSUE AND SELL ELECTRIC UTILITY SYSTEM REVENUE BONDS AND ELECTRIC UTILITY REVENUE REFUNDING BONDS. The City Council of the City of Eugene finds that: A. Oregon Revised Statutes (“ORS”) Sections 287A.150 and 287A.360 (the “Act”) authorize 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 or EWEB other than the Bond Fund established by the Bond Resolution, nor constitute a general obligation of EWEB or of the City or create a charge upon the tax revenues of the City or any other revenues or property of the City or property of EWEB, except the revenues and other moneys and securities pledged under the Bond Resolution. D. EWEB has requested by resolution that the City Council of the City (the “City Council”) adopt this Resolution in part to set the terms for and authorize the issuance of not to exceed $45,000,000 in aggregate principal amount of electric utility system revenue bonds (the “New Money Bonds”) for the purpose of financing the design, construction, installation and equipping of certain capital improvements related to the relicensing of the Carmen-Smith Hydroelectric Project (the “New Money Project”), to fund necessary reserves and to pay the costs of issuance of the New Money Bonds. E. On March 26, 1991, the electors of the City authorized issuance of up to $22,000,000 of electric system revenue bonds. Subsequently, the City Council adopted Ordinance No. 19741 on January 9, 1991, and Ordinance No. 19780 on June 10, 1991, authorizing the issuance of electric revenue bonds in an amount not to exceed $22,000,000, and Resolution No. 4719 on May 13, 2002, authorizing the issuance of energy utility system conservation bonds in an amount not to exceed $12,000,000, and refunding bonds in an amount not to exceed $3,500,000. Pursuant to that authorization, the City, acting by and through EWEB, issued the City of Eugene, Oregon Electric Utility System Revenue Bonds, Series 2002C in the Resolution – Page 1 principal amount of $12,410,000 (the “Series 2002C Bonds”), which Series 2002C Bonds are currently outstanding in the principal amount of $8,290,000. F. On May 18, 1993, the electors of the City of Eugene authorized issuance of up to $150,000,000 of electric system revenue bonds. Subsequently, the City Council adopted Resolution No. 4677 on June 25, 2001, authorizing the issuance of revenue bonds in an amount not to exceed $50,000,000, and Resolution No. 4757 on May 12, 2003, authorizing the issuance of electric revenue bonds in an amount not to exceed $64,000,000. Pursuant to that authorization, the City, acting by and through EWEB, issued the City of Eugene, Oregon Electric Utility System Revenue Bonds, Series 2003 in the original principal amount of $40,865,000 (the “Series 2003 Bonds”), which Series 2003 Bonds are currently outstanding in the principal amount of $30,265,000. G. EWEB has determined that substantial present value savings may be achieved by issuing refunding bonds for the purpose of refunding all or a portion of (i) the outstanding Series 2002C Bonds which may be called and redeemed as of on any date on or after August 1, 2012, without premium, and (ii) the Series 2003 Bonds maturing on or after August 1, 2013, which Series 2003 Bonds maturing on and after August 1, 2014 may be called on and after August 1, 2013, 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 $38,000,000 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. 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 Resolution – Page 2 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 petitions may be submitted, and the City, acting by and through EWEB, shall cause the Notice to be published in The Register-Guard, Eugene, Oregon, 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 meeting the requirements of ORS 287A.150 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 $45,000,000, 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 five 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 the Act and Sections 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 $38,000,000 for the purpose of refunding all or a portion of the Series 2002C Bonds and Series 2003 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: (1) Mature not later than thirty (30) years from the date of issuance of the series; (2) 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 Resolution – Page 3 pursuant to negotiation at par or with a net original issue discount or premium that does not exceed eighteen percent (18.0%) of the aggregate principal amount thereof; and (3) 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. 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 2002C Bonds and Series 2003 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: (a) Prepare a plan showing that the estimated Electric Utility System revenues are sufficient to pay the estimated debt service on the Bonds; (b) Adopt a bond authorizing resolution and provide a copy of such resolution to the City; and (c) 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 and ordinances 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 $45,000,000 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 Resolution – Page 4 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 any other 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 the Act, 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: (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 8 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, underwriter in the case of a negotiated sale, trustees, registrars, paying agents, escrow agents, verification agents 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 or final official statement(s) or other disclosure document(s) for any of the Bonds or in connection with a preliminary or final 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, to obtain a rating on any or all of the Bonds from Moody’s Investors Service, Inc., Standard & Poor’s and/or Fitch Ratings, and to issue and publish such notices of sale of the Bonds or execute such purchase contracts as may be necessary or required to accomplish the sale of the Bonds in accordance with this Resolution and to determine any other terms, conditions or covenants regarding any or all of the Bonds or Resolution – Page 5 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 29 day of May 2012. City Recorder Resolution – Page 6 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 ________, 2012, 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 a portion of the design, construction, installation and equipping of certain capital improvements related to the relicensing of the Carmen-Smith Hydroelectric Project (the “Project”), to fund necessary reserves and to pay the costs of issuance of bonds. The costs of the portion of the Project to be funded, together with bond issuance costs and debt service reserves, with the proceeds of the revenue bonds are estimated to be not less than $45,000,000. In accordance with these estimates, the City expects that the revenue bonds will be issued in an aggregate principal amount not to exceed $45,000,000. 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 _________, 2012 (the 61 day after the date of publication of this notice), the question of issuing not to exceed $45,000,000 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). A-1