Loading...
HomeMy WebLinkAboutItem 2D-Res.for Long-Term FinanEUGENE CITY COUNCIL AGENDA ITEM SUMMARY Resolution 4807 Authorizing Interim and Long Term Financing for Local Improvement Projects and Terminating the Authority Under Resolution No. 4602 Meeting Date: September 13, 2004 Agenda Item Number: 2D Department: Central Services Staff Contact: Sue Cutsogeorge www. cl. eugene, or. us Contact Telephone Number: 682-5589 ISSUE STATEMENT The council is asked to approve the issuance of interim and long-term debt to finance local improvement projects. BACKGROUND The City requires interim construction financing for assessment projects. These projects could include street paving, sidewalks, storm sewers, sanitary sewers, and alleys. Upon completion of the projects, the property owners are assessed and long-term bonds may be sold to repay the credit facility. On April 11, 1994, the council approved Resolution 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 On September 13, 1999, the council repealed Resolution 4406 and replaced it with Resolution 4602.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. There are three reasons why staff is requesting revised authority for assessment program financing at this time. First, the state legislature has changed the statutes regarding interim financings since Resolution 4602 was approved. The revised statutes allow the loan to be outstanding for a maximum of five years instead of a maximum of one year. The proposed resolution makes a change to conform to the revised statutory language. Second, the current resolution only allows use of the facility for in-City projects. This restriction was put in place during the period of time when the City was constructing large sewer projects in the River Road and Santa Clara areas and did not want to secure the borrowings with its full faith and credit. Under revised assessment policies, projects are now a mix of in-City and unincorporated properties, with the in-City projects making up the bulk of the assessments. It is more efficient for the City to use one borrowing method for assessments that include both in-City and unincorporated properties. Therefore, the proposed resolution language removes the in-City restriction on use of the credit facility. Third, the revised resolution allows the City to automatically issue long-term bonds when properties are assessed. The long-term bond proceeds are used to repay the outstanding interim borrowing. The term of the long-term bonds matches the term of the property owner payments on their assessment contracts. For the smaller assessment projects, the City will enter into a bank loan to finance the long-term L:\CMO\2004 Council Agendas\M040913\S0409132D.doc assessment contracts. This will be much more cost effective than a bond sale in the credit markets for small assessment projects. For larger projects, such as the upcoming West University Alley Project, the City will compare the costs of a long-term bank loan with a bond sale in the public credit markets and choose the most cost-effective method of finance. The security for the credit facility and any long-term bonds is primarily the proceeds from improvement bonds and foreclosures on properties that have been assessed. In addition, the City pledges its full faith and credit to repayment of the credit facility. City staff selected a provider for an interim credit facility through an RFP process in 1994. As a result of that process, the City selected Bank of America to provide a line of credit. That credit facility has been renewed under the terms of the resolution since that time. The City's contract with Bank of America expires as of November 1, 2004. Staff is in the process of conducting an RFP process to choose a provider for both the interim and long-term financing requirements of the assessment program. Bids are due on September 15. A provider is expected to be chosen by late September and a credit facility will be signed by November 1, when the current facility expires. RELATED CITY POLICIES As of June 30, 2004, the City had $430,000 of outstanding limited tax assessment bonds. Issuance of limited tax assessment bonds in the next few years is expected to be relatively small, with the West University Alley Project (estimated at about $1.6 million) being the largest. Assessment bonds are excluded from the City's calculation of net direct debt, so they do not have an impact on debt capacity. CO[INCIL OPTIONS The council can either adopt the resolution or not adopt the resolution. If the resolution is not adopted, the City will have to incur additional legal expenses to re-write the credit facility documents that were included in the RFP process, and may have to start the RFP process over again to choose an assessment program financing provider consistent with the existing authority. CITY MANAGER'S RECOMMENDATION The City Manager's recommendation is to approve the proposed resolution. S[IGGESTED MOTION Move to approve Resolution 4807 authorizing interim and long term financing for local improvement projects and terminating the authority under Resolution No. 4602. ATTACHMENTS A. Resolution FOR MORE INFORMATION Staff Contact: Sue Cutsogeorge Telephone: 682-5589 Staff E-Mail: sue.l.cutsogeorge~ci.eugene.or.us L:\CMO\2004 Council Agendas\M040913\S0409132D.doc ATTACHMENT A RESOLUTION NO. A RESOLUTION AUTHORIZING INTERIM AND LONG TERM FINANCING FOR LOCAL IMPROVEMENT PROJECTS AND TERMINATING THE AUTHORITY UNDER RESOLUTION NO. 4602. The City Council of the City of Eugene, Oregon (the "City") finds as follows: A. The City is authorized under ORS 288.165 (the "Act") to obtain lines of credit and issue obligations to provide interim financing for capital assets. The Act permits the City to pledge its anticipated taxes, grants, other revenues, the proceeds of any bonds or other permanent financing, or any combination of the foregoing to pay obligations issued under the Act. B. The City adopted Resolution No. 4602 on September 13, 1999. It authorized borrowings for in-City local improvement projects under the Act as it existed in 1999. In 1999 the Act limited obligations and refundings to a term of one year. In 2003 the Act was amended to allow obligations to have a term of up to five years. 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 $4,000,000, 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 Resolution No. 4602. 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 Four Million Dollars ($4,000,000); 1.2. Each Interim Financing shall have a term of not more than five years, and shall comply with the limitations of the Act. Resolution- 1 L:kCMOk2004CouncilAgendaskM040913kS0409132D-attA.doc 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 1 lb 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 that receive Interim Financing or were financed under the authority of Resolution No. 4602, 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. Bonds may 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 1 lb 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; Resolution - 2 L:SCMO52004 Council Agendas~M0409135S0409132D-attA.doc 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. 4602. The City shall not issue any additional obligations under Resolution No. 4602 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 September, 2004. City Recorder Resolution - 3 L:SCMO52004 Council Agendas~M0409135S0409132D-attA.doc