HomeMy WebLinkAboutResolution - 2009-R0260 - Financing Agreement - Texas Water Development Board - 07_08_2009Resolution No. 2009-RO260
July 8, 2009
Item No. 5.24
RESOLUTION
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the Mayor of the City of Lubbock BE and is hereby authorized and
directed to execute for and on behalf of the City of Lubbock a Financing Agreement
between the Texas Water Development Board and the City of Lubbock, in the form of the
attached Agreement, in the amount of $19,945,000.00 to fund the Lake Alan Henry
Pipeline Construction Project. Said Agreement is attached hereto and incorporated in this
Resolution as if fully set forth herein and shall be included in the minutes of the Council.
Passed by the City Council this 8th day of July , 2009.
TO MARTIN, MAYOR
ATTEST:
RebezAi Garza, City Secretary
APPROVED AS TO CONTENT:
Aubrey Spear,
Deputy City Manager
Utility Director
APPROVED AS TO FORM:
Chad Weaver, Assistant City Attorney
vw:CityAttiChad/Resolutions/RLS.Agreement-Texas Water Development Board
June 15,2009
Resolution No. 2009—RO260
FINANCING AGREEMENT
This FINANCING AGREEMENT (Agreement) is entered into between the TEXAS
WATER DEVELOPMENT BOARD (Board), an agency of the State of Texas, and the CITY OF
LUBBOCK (Borrower).
RECITALS
WHEREAS, the Board adopted Resolution No. 09-69 on May 21, 2009, making a
commitment to the Borrower for financial assistance in the amount of $19,945,000 from the
Water Infrastructure Fund administered by the Board.
WHEREAS, the Borrower intends to sell the Board the Borrower's $19,945,000 City of
Lubbock Combination Tax and Waterworks System Surplus Revenue Certificates of Obligation,
Series 2010 (Borrower Certificates of Obligation), described on Attachment A attached hereto, to
fund construction of a water supply project described in Borrower's application, and in Board
Resolution No. 09-69 (Attachment B) and the associated Memorandum to the Board
(Attachment C); and
WHEREAS, the Water Infrastructure Fund is funded, in part, with proceeds of the
Board's Water Financial Assistance Bonds, and is used to provide financial assistance under
Texas Water Code § 17.959 and Texas Constitution, Article III, Section 49-d-8 and Section 49-d-
9; and
WHEREAS, the Water Infrastructure Fund is funded, in part, with money received as
repayment of financial assistance provided from the Water Infrastructure Fund, which is used to
pay the principal and interest on the Board's Water Financial Assistance Bonds, under Texas
Constitution, Article I1I, Section 49-d-8(e); and
WHEREAS, Condition No. 1 of Board Resolution 09-69 provides that the commitment is
contingent on a future sale of bonds or on the availability of funds on hand; and
WHEREAS, the Board intends to issue Water Financial Assistance Bonds in order to
enable it to provide financial assistance from the Water Infrastructure Fund to the Borrower; and
WHEREAS, the Board and the Borrowertdesire to enter into this Agreement to set forth
the obligations of the parties with respect to the Board's intent to issue Water Financial
Assistance Bonds to provide financial assistance from the Water Infrastructure Fund to the
Borrower, and the Borrower's intent to issue its Borrower Certificates of Obligation to the
Board;
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants
herein contained, the Board and the Borrower hereby agree as follows:
AGRFEMENT
Section 1. Loan Commitment, Schedule. The Board, pursuant to its commitment to
provide financial assistance in Resolution 09-69, will provide $19,945,000 in financial assistance
to the Borrower from the Water Infrastructure Fund under the terms and conditions in Resolution
09-69, which is incorporated herein for all purposes by reference. The Board's financial
assistance will be evidenced by the Board's purchase of the Borrower Certificates of Obligation
identified in Attachment A. The Borrower hereby commits to borrow $19,945,000 from the
Water Infrastructure Fund, which loan will be evidenced by the Borrower's sale of the Borrower
Certificates of Obligation identified in Attachment A. Each party agrees to use its best efforts to
take actions as may be required by such party in order to effectuate the purchase and sale of the
Borrower Certificates of Obligation by February 15, 2010.
Section 2. Interest Rates. The financial assistance to be provided from Water Financial
Assistance Bonds to the Borrower will be made pursuant to 31 Texas Administrative Code
§363.1205.
Section 3. Closing and Damages. By its execution of this Agreement, the Borrower represents
that it has a current need for the financial assistance that is the subject of this Agreement and
acknowledges that the Board will incur significant costs in reliance upon the Borrower's
commitment to borrow such funds. The Borrower agrees to close on the Borrower Certificates
of Obligation described in Attachment A not later than February 28, 2010. The failure of the
Borrower to close on the Borrower Certificates of Obligation in a timely manner will result in
damages to the Board, and the amount of such damages is difficult or impossible to ascertain. If
the Borrower fails to close on the sale of its Borrower Certificates of Obligation by February 28,
2010, the Borrower agrees to pay the Board, as liquidated damages, the Borrower's pro rata share
of the costs of issuance incurred by the Board in the issuance of the Water Financial Assistance
Bonds. The Borrower's pro rata share of such costs is $548,488, and the parties agree that the
liquidated damages shall be equivalent to such amount. The Borrower covenants and agrees that
it currently has funds on hand in its Water Fund #221 sufficient and legally available to pay the
liquidated damages in the event it fails to close in the time required by this section. In addition
to the foregoing, beginning March 1, 2010, the Board, at its option, may use the Water Financial
Assistance Bond proceeds to provide financial assistance to other entities. The Board may also,
at its option, elect to defease or redeem all or a portion of the Water Financial Assistance Bonds,
and, provided the Board's election is made within one year after the Water Financial Assistance
Bond proceeds are delivered to the Board by the Underwriters, the Borrower agrees to pay the
Board from currently available funds in its Water Fund #221 all costs associated with the portion
of such defeasance or redemption attributable to the Borrower's failure to close on the Borrower
Certificates of Obligation, it being understood that the Board will apply the proceeds of its Water
Financial Assistance Bonds that are set aside to purchase the Borrower Certificates of
Obligation, including investment income, to the defeasance or redemption.
Section 4. Termination.
A. The parties hereto agree that the Board's obligation to lend money to the
Borrower from the Water Infrastructure Fund is contingent upon the purchase of the Board's
2
Water Financial Assistance Bonds by the Underwriters pursuant to the Bond Purchase
Agreement. Accordingly, if the Underwriters fail to purchase the Board's Water Financial
Assistance Bonds pursuant to the Bond Purchase Agreement, the Board, upon delivery of written
notice thereof to the Borrower, may extend or terminate this Agreement together with all of its
obligations and duties hereunder without incurring any cost, fee or penalty therefore.
B. The Borrower may terminate this Agreement by delivery of written notice to the
Board at any time prior to 5:00 p.m. (Central Standard Time) fifteen business days preceding the
date on which the Board intends to execute the Bond Purchase Agreement, provided that the
Borrower agrees to compensate the Board for its costs related to the preparations for bond
issuance within 30 days of the Board's written notification to the Borrower of such costs.
Section 5. Redemption of Outstanding Debt. If proceeds of the Borrower Certificates of
Obligation are to be used, in whole or in part, to redeem outstanding bonds, commercial paper, or
other interim financing issued by the Borrower, the Borrower agrees that it will not take or fail to
take any action that will cause the Board's Water Financial Assistance Bonds to be considered to
be advance refunding bonds under Section 148 of the Internal Revenue Code of 1986, as
amended. Specifically, the Borrower agrees to redeem any such outstanding bonds, commercial
paper, or other interim financing within ninety (90) days of the date of delivery of the Board's
Water Financial Assistance Bonds and to take such other action as shall be required to comply
with this Section.
Section 6. Notices. All notices, agreements or other communications required hereunder
shall be given, and shall be deemed given, when delivered in writing to the address or telecopier
number of the identified party or parties set forth below:
Texas Water Development Board
Piper Montemayor
Team Lead, Debt and Portfolio Management
P.O. Box 13231
Austin, Texas 78711-3231
Telephone (512) 475-2117
Facsimile (512) 475-2053
City of Lubbock
Andy Burcham
Assistant City Manager (Finance)
P.O. Box 2000
Lubbock, Texas 79457
Telephone (806) 775-2149
Email ABurcham a, mail.ci.lubbock.tx.us
Section 7. Severability. In the event any provision of this Agreement shall be held
illegal, invalid or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate, render unenforceable or otherwise affect any other provisions hereof.
Section 8. Amendments, Supplements and Modifications. This Agreement shall not be
amended, supplemented or modified except by a written instrument executed by the Board and
the Borrower.
Section 9. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
Section 10. State Audit. By executing this Agreement, the Borrower accepts the
authority of the State Auditor's Office, under direction of the legislative audit committee, to
conduct audits and investigations in connection with any and all state funds received pursuant to
this Agreement. The Borrower shall comply with and cooperate in any such investigation or
audit. The Borrower agrees to provide the State Auditor with access to any information the State
Auditor considers relevant to the investigation or audit. The Borrower also agrees to include a
provision in any subcontract related to this Agreement that requires the subcontractor to submit
to audits and investigation by the State Auditor's Office in connection with any and all state
funds received pursuant to the subcontract.
Section 11. Force Majeure. Either party may be excused from performance under this
contract for any period when performance is prevented as the result of an act of God, strike, war,
civil disturbance, epidemic, or court order, provided that the party experiencing the event of
Force Majeure has prudently and promptly acted to take any and all steps that are within the
party's control to ensure performance and to shorten the duration of the event of Force Majeure.
The party suffering an event of Force Majeure shall provide notice of the event to the other party
as soon as practicable but not later than 36 hours after the termination of the event. Subject to
this provision, such nonperformance shall not be deemed a default or a ground for termination.
Section 12. Effective Date. This Agreement shall be effective as of the date of the last
signature below.
Section 13. Binding Agreement. The respective commitments of the Board and the
Borrower set forth above shall be binding upon the Board and the Borrower upon both parties'
execution of this Agreement.
4
CITY OF LUBBOCK
By: ✓ t�n� �`�
Name: TOM MARTIN
Title: Mayor
Date: July 8, 2009
STATE OF TEXAS
COUNTY OF LA&bboC.L
ATTEST-
'52C
Re rca Garza
City Secretary
This instrument was acknowledged before me on the - day of f 20 01
by Tom IV tQ 11\ in(Dher capacity as MCW pr on behalf of
-One Gist 'Q - L idd opus
(SEAL
EI,ISA SANCHEZ
Notary Public, State of Texas
MY Corninimon Expires 11.07.2011
PON
TEXAS WATER DEVELOPMENT BOARD
By:
Nam • J. Kevin Ward
Title: Executly.,g 44ministrator
Date:_ &
STATE OF TEXAS
COUNTY OF TRAVIS
Lv�
Notary Public, State of Texas
This inspument was acknowledged before me on the 9 day of Av!,vst , 200(t, by
S . hnvi. in his capacity as Executive Administrator of the Texas Water Development Board, an
agency of the State of Texas, on behalf of said agency.
(SEAL)
\-IS Dq
6
`�--�-� ,�:, der•-1-/
Notary Public, State of Texas
Resolution No. 2009—RO260
ATTACHMENT A
DESCRIPTION OF BORROWER CERTIFICATES OF OBLIGATION
Title of Borrower Certificates of Obligation City of Lubbock Combination Tax and
Waterworks System Surplus Revenue
Certificates of Obligation, Series 2010
Project Name Lake Alan Henry Pipeline Construction
Project Number 21608
Loan Number L090084
Aggregate Principal Amount of Borrower Certificates of Obligation $19,945,000
Anticipated Closing Date
Dated Date: [To Come]
Maturity Schedule: [To Come]
Maturity Principal Amount
0
A RESOLUTION OF THE TEXAS WATER DEVELOPMENT BOARD
APPROVING AN APPLICATION FOR FINANCIAL ASSISTANCE
FROM THE WATER INFRASTRUCTURE FUND THROUGH THE PROPOSED
PURCHASE OF $19,945,000 CITY OF LUBBOCK COMBINATION TAX AND
WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION,
PROPOSED SERIES 2010
(09-69)
WHEREAS, the City of Lubbock, Lubbock County, Texas, (the "City"), has filed an
application for financial assistance in the amount of $19,945,000 from the Water Infrastructure
Fund ("WIF') in accordance with §§ 15.973 and 15.974, Water Code, to finance the
implementation of water supply projects through the state and regional water planning process;
and
WHEREAS, the City seeks financial assistance from the Texas Water Development
Board (the "Board") through the Board's proposed purchase of $19,945,000 City of Amarillo
Combination Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series
2010, (the "Obligations"}, as is more specifically set forth in the application and in
recommendations of the Board's Project Finance and Construction Assistance staff, to which
documents express reference is made; and
WHEREAS, in accordance with § 15.975, Water Code, the Board hereby finds:
• r
i
I . that the revenue and/or taxes pledged by the City will be sufficient to meet the
all of the obligations assumed by the City;
2. that the project wilt meet water needs in a manner consistent with the state and
regional water plan for region 0, as required by § 16.0536), Water Code,
3. that the project is a recommended water management strategy in a Board -
approved regional water plan adopted pursuant to §16.053, Water Code, and/or
in the State Water Plan adopted in accordance with § 16.051, Water Code;
4. that the City has adopted a water conservation program for the more efficient
use of water that will meet reasonably anticipated local needs and conditions
and that incorporates practices, techniques or technology prescribed by the
Texas Water Code and the Board's rules;
5. that the application and financial assistance requested meet the requirements of
Chapter 15, Subchapter Q and Chapter 17, Subchapter E, Water Code, and the
Board's rules set forth in 31 Tex. Admin. Code (TAQ Chapter 363, Subchapters
A and L; and
6. that the current water audit required by § 16.0121, Water Code, has been
completed by the City and filed with the Board.
NOW THEREFORE, based on these considerations and findings, the Texas Water
Development Board resolves as follows:
A commitment is made by the Board to the City of Lubbock for financial assistance in
the amount of $19,945,000 from the Water Infrastructure Fund, to be evidenced by the
Board's proposed purchase of $19,945,000 City of Lubbock Combination Tax and
Waterworks System Surplus Revenue Certificates of Obligation, Series 2010. This
commitment will expire on May 31, 2010.
Such commitment is conditioned as follows:
l . this commitment is contingent on a future sale of bonds by the Board or on the
availability of funds on hand;
2. this commitment is contingent upon the issuance of a written approving opinion
of the Attorney General of the State of Texas stating that all of the requirements
of the laws under which said obligations were issued have been complied with;
that said obligations were issued in conformity with the Constitution and laws
of the State of Texas; and that said obligations are valid and binding obligations
of the issuer;
3, this commitment is contingent upon the City's compliance with all applicable
requirements contained in the rules, regulations and policies of the Board;
4. the City's bond counsel opinion must include an opinion that the interest on the
obligations is excludable from gross income or is exempt from federal income
taxation. Bond counsel may rely on covenants and representations of the City
when rendering this opinion;
5. the City's bond counsel opinion must include an opinion that the obligations are
not "private activity bonds. Bond counsel may rely on covenants and
representations of the issuer when rendering this opinion;
6. the ordinancetresolution authorizing the issuance of these obligations,
(hereinafter referred to as the "Authorizing Document" ), must include a
provision prohibiting the City from using the proceeds of this loan in a manner
that would cause the obligations to become "private activity bonds";
7. the Authorizing Document must include that the issuer will comply with the
provisions of Section 148 of the Internal Revenue Code of 1986 (relating to
arbitrage);
8. the Authorizing Document must include a provision requiring the City to make
any required rebate to the United States of arbitrage earnings;
9. the Authorizing Document must include a provision prohibiting the City from
taking any action that would cause the interest on the obligations to be
includable as gross income for federal income tax purposes;
10. the Authorizing Document must state that obligations can be called for early
redemption only in inverse order of maturity, and on any date beginning on or
after the first interest payment date which is 10 years from the dated date of the
obligations, at a redemption price of par, together with accrued interest to the
date fixed for redemption;
It. the Authorizing Document must provide that the City will not cause or permit
the obligations to be treated as "federally guaranteed" obligations within the
meaning of §149(b) of the internal Revenue Code;
12. the bond transcript must include a No Arbitrage Certificate or similar Federal
Tax Certificate setting forth the City's reasonable expectations regarding the
use, expenditure and investment of the proceeds of the obligations;
13. the bond transcript must include evidence that the information reporting
requirements of §149(e) of the Internal Revenue Code of 1986 will be satisfied.
This requirement is currently satisfied by filing IRS Form 8038 with the Internal
Revenue Service. A completed copy of IRS Form 8038 must be provided to the
Executive Administrator of the Board prior to the release of funds;
14. the City, or an obligated person for whom financial or operating data is
presented to the Board in the application for financial assistance either
individually or in combination with other issuers of the City's obligations or
obligated persons, will, at a minimum, covenant to comply with requirements
for continuing disclosure on an ongoing basis substantially in the manner
required by Securities and Exchange Commission ("SEC) rule 15c2-12 and
determined as if the Board were a Participating Underwriter within the meaning
of such rule, such continuing disclosure undertaking being for the benefit of the
Board and the beneficial owner of the City's obligations, if the Board sells or
otherwise transfers such obligations, and the beneficial owners of the Board's
bonds if the City is an obligated person with respect to such bonds under SEC
rule 15c2-12;
15. the Authorizing Document mustcontain a provision that the City will at all
times levy a tax and/or to maintain and collect sufficient rates and charges to
produce net system revenues in an amount necessary to meet the debt service
requirements of all outstanding bonds and to maintain the funds established and
required by this ordinance;
16. prior to closing, the City must submit documentation evidencing the adoption
and implementation of sufficient system rates and charges or, if applicable, the
levy of an interest and sinking tax rate sufficient for the repayment of system
debt service requirements;
17. the Authorizing Document must include a provision requiring the City to use
any surplus proceeds from the obligations remaining after completion of the '
water supply project, to redeem, in inverse annual order, the obligations owned
by the Board;
18. if a bond insurance policy is utilized:
(a) thirty (30) days before closing, the City shall submit a draft of the policy
to the Board's Executive Administrator for a determination on whether
the policy provides appropriate security in accordance with Board
policies;
(b) prior to closing, the City shall provide the executed underlying
documents of the policy (e.g; commitment letter, specimen policy) in a
form and substance that is satisfactory to the Board's Executive
Administrator; and
(c) prior to closing, the Attorney General of the State of Texas must have
considered the use of said policy as a part of its approval of the proposed
bond issue.
19. prior to closing, and if not previously provided with the application, the City
shall submit an executed engineering contract for design and construction, an
executed financial advisor contract, and an executed bond counsel contract in a
form and substance that are satisfactory to the Board's Executive Administrator,
20. loan proceeds shall not be used by the City when sampling, testing, removing or
disposing of contaminated soils and/or media at the project site. The
Authorizing Document shall include an environmental indemnification
provision wherein the City agrees to indemnify, hold harmless and protect the
Board from any and all claims, causes of action or damages to the person or
property of third parties arising from the sampling, analysis, transport, storage,
treatment and disposition of any contaminated sewage sludge, contaminated
sediments and/or contaminated media that may be generated by the City, its
contractors, consultants, agents, officials and employees as a result of activities
relating to the project to the extent permitted by law; and
21. should one or more of the provisions in this resolution be held to be null, void,
voidable or, for any reason whatsoever, of no force and effect, such provision(s)
shall be construed as severable from the remainder of this resolution and shall
not affect the validity of all other provisions of this resolution which shall
remain in full force and effect,
22. the Executive Administrator of the Board may require that the City execute a
separate financing agreement in form and substance acceptable to the Executive
Administrator;
23. that prior to the release of construction funds for that portion of a project that
proposes surface water development, the Executive Administrator must have a
written finding that the City has the right to use water that the project financed
by the Board will provide.;
PROVIDED, however, the Authorizing Document is subject to the following special
conditions:
24. that this the loan is approved for funding under the Board's pre -design funding
option, as specified in 31 TAC §363.1206 of the Board's rules, and initial and
future releases of funds are subject to all of the Board's rules relating to such
funding option;
25. the Authorizing Document must contain a provision that requires as follows:
a. if system revenues are actually on deposit in the Interest and Sinking
Fund in advance of the time when ad valorem taxes are scheduled to be
levied for any year, then the amount of taxes which otherwise would
have been required to be levied and collected may be reduced to the
extent and by the amount of revenues then on deposit in the Interest and
Sinking Fund; or
b. if surplus revenues are based upon budgeted amounts:
i� i. the Authorizing Document must include a requirement that the
City transfer and deposit in the Interest and Sinking Fund each
month an amount of not less than 1/12th of the annual debt service
on the obligations until the amount on deposit in the Interest and
Sinking Fund equals; the amount required for annual debt service
on the obligations; further, that the ordinance authorizing the
issuance of the obligations must include a requirement that the City
shall not transfer any funds from the City's pledged system
revenues to any fund other than the Interest and Sinking Fund until
such time as an amount equal to the annual debt service on the
obligations for the then -current fiscal year has been deposited in
the Interest and Sinking Fund;
ii. the Authorizing Document must include a requirement that for each
year that the obligations are outstanding, and prior to the time taxes
are to be levied for such year, the City shall establish, adopt, and
maintain an annual budget that provides for either the monthly
deposit of sufficient surplus pledged revenues and/or tax revenues,
the monthly deposit of any other legally available funds on hand at
the time of the adoption of the annual budget, or a combination
thereof, into the Interest and Sinning Fund for the repayment of the
obligations; and
iii. the Authorizing Document must include a requirement that the City
at all times maintain and collect sufficient rates and charges in
conjunction with any other legally available funds so that aner
payment of the costs of operating; and maintaining the system, it
produces revenues in an amount not less than 1.10 tines debt
service requirements of all outstanding bonds of the City and other
obligations of the City which arc secured in whole or in part by the
pledged revenues, for which the City is budgeting the repayment of
such obligations, or the City shall provide documentation which
evidences the levy and collection of an ad valorem tax rate
dedicated to the Interest and Sinking Fund, in conjunction with ally
other legally available funds, sufficient for the repayment of debt
service requirements;
76. prior to the release of construction funds for that portion of -,I project that
proposes ground water or surface water development, the Board's Executive
Administrator must either (a) issue a written finding that the City has the right
to appropriate and use the water required by the project being financed by the
Board; or (b) a written detennination that a reasonable expectation exists that
such a finding will be made before any release of funds for construction;
APPROVED and ordered of record this, the 21" day of May, 2009.
TEXAS WATER DEVELOPMENT BOARD
-A",� , � 0-%----Z<
1 Ja i/Cs E. Hcrri ig, Chairman
`.
, o
ATTEST:
14�C
-(a /,.-0/
cvm Ward
Executive Administrator
ITEM SUMMARY CONSENT
DATE: MAY 13, 2009 PRESENTED BY: DA.RR.ELL NICHOLS
® TWDB 0 FINANCE COMMITTEE 0 TWRFA ❑ AUDIT COMMITTEE
APPLICANT City of Lubbock
EVIDENCE OF DEBT $19,945,000 Combination Tax and Waterworks System Surplus
Revenue Certificates ofObli ation, Proposed Series 2010
PLEDGE Ad Valorem Tax and Pledge of the Surplus Revenues of the City's
❑ Taxable ® Tax -Exempt ❑ AMT (Tax -Exempt) ❑ RWAF (Tax -Exempt)
❑ Approval by Minute Order Z Approval by Resolution
ACTION REQUESTED
Approve by resolution, a request from the City of Lubbock (Lubbock County) for a loan in the amount
of $19,945,000 from the Water Infrastructure Fund to finance construction of water supply project,
utilizing the pre -design funding option.
PROJECT DESCRIPTION
The City of Lubbock (City) is requesting funding in the amount of $19,945,000 from the Water
Infrastructure Fund (WIF) for the construction of the furst of three segments of a raw water transmission
line from Lake Alan Henry to the City. The project to be funded by the Texas Water Development
Board (Board) includes approximately 21 miles of 42-inch pipeline. This segment is to be known as
Raw Water Line I and the estimated construction cost is $40,705,000. The City has requested to utilize
the last of the Board's FY2009 WIF construction funding. The remaining $20,760,000 for the proposed
project will be funded by the City from local funds.
Lake Alan Henry is located 65 miles southeast of the City and was constructed by the City in 1993. Due
to the impacts on current water supplies from the recent drought conditions, the City is interested in
using Lake Alan Henry as a water supply source as soon as the raw water conveyance facilities, pump
stations, water treatment plant, and treated water lines can be constructed. On March 25, 2008, the
Board approved by resolution a request from the City for a loan in the amount of $22,615,000 from the
WIF program for the costs associated with planning, design, special engineering services, and land and
easement acquisition for the entire project. The current estimated cost for the entire project is
$264,910,000.
SOURCE OF FUNDS
AMOUNT PROGRAM
Water Infrastructure Fund
$19,945,000 WIF-Construction
Local Funds/Market Issue
$20,760,000
Total
$40,705,000
COMMITMENT PERIOD: ONE (1) YEAR TO EXPIRE ON MAY 31, 2010
ITEM SUMMARY
PAGE
ENTITY DESCRIPTION
The City is located in the South Plains area of the State, 121 miles south of the City of Amarillo. The
City has an estimated population of 212,365.
BACKGROUND
This is the City's second application for financial assistance from the Board. The Board holds
$21,640,000 of the City's outstanding debt. The City received a $22,615,000 loan from the WIF
program in March 2008, which was closed in June 2008.
FINANCIAL SECTION
Key Issues
The City is offering combination tax and surplus revenues of the City's waterworks system, The City
has a $0.07 interest and sinking fund tax rate and has increased its water rates 16% in 2008 and 10% in
2009. The City anticipates additional increases to its base water rates in 2012-20I5 for an estimated rate
of approximately $40.00. The proposed rate increases; are reflective of the rates necessary to sufficicntly
fund the debt service of the total project cost (approximately $265,000,000).
Internal Risk Score
The City has an assessed valuation of approximately $10.9 billion. The City is experiencing moderate
growth and has a stable employment base which includes Texas Tech University. The City's current
financial policy requires the maintenance of a rolling 10 year rate model. Staff assigns a risk score of
2A.
Internal Risk Score I 12A 1213 12C 3
X
Origination Fee
NIA
Included in Loan
N/A
Non -Profit, Non -Community
NIA
Amount
Disadvantaged
No
Disadvantaged Funds Available
N/A
Insurance
NIA
CREDIT QUALITY I Standard 8c Poor's I AA+ I Moody's I Aa3 I Fitch I AA
ENGINEERING SECTION
Key Issues
The City anticipates that the construction for the remaining two segments (Raw Water Line 2 and Raw
Water Line 3) will be initiated in July 2010 and January 2011 respectively. The City intends to request
funding from the Board for these two other projects, as funding from the WIF program becomes
available. Should funding from the WIF program not be available to the City, the City will fund the
remaining projects through local funds or market issues.
State Water Plan
Board staff has determined that the proposed water project is identified as a recommended water
management strategy in the 2007 State Water Plan and the 2006 Regional Plan.
Conventional
No
Pre -Design
Yes
CWSRF Tier iI
No
CWSRF Tier III
No
Project Number
21608
FtvIT Complete
NIA
DWS"
NIA
ITEM SUMMARY
BUDGET
PAGE 3
PROJECT
Uses
TWDB Funding
Other
Funds
Total
Cost
Category
Qt JSite
Previous
Commitment
This
Request
Administration
so
S
$
New Wata Plant
n/a
an d
Basic Engineering Fees
New Distribution Systcm
n/a
tin. ft.
Planning
$2,241,
$0
$0
S2,241,000
Raw Water Line 1
21.5 m}.
42•inch
Design
S I3,309,
S
$0
S 13,309,000
Construction
so
S947,000
S947,000
Subtotal Basic Engineering
Fees
$0
S947,000
$16,497.00
S eciat Fn incerin Services
Rehab Water Plant
n/a m d
Cnvironrncntal/Ptrmi
AWO.00
$500,40
Corrosion Contra
S
S45,
$45.00
Surveying
Su
S
S500,
Cxotechnieal/Testin
S204,00
S
S45,
S249,
Treated Mum Reusc
nla
Emil.
i ctio
$
$
$399,00
$399.00
New Storage Facility
n1a
allons
O&M Manual
S
S
$6,00
S6,000
Rehab Storage Facility
rtla
gallons
Subtotal Special Engineering
Fees
S1,204,fl
So
S495,000
S1,699,b00
New wells
nla
each
Contingency
S2,001,000
SO
$6,544,000
S8,545.000
Rehob Wells
Wit
each
Construction
$
S19.945,000
S12,7700
$32,719,000
New Wmtmatcr Plant
Na
In d
EasementslLand Acquisition
$3,750.00
so
SO,
$3.750.000
New Calleetion System
n/a
tin. (1.
Fiscal Fees (Financial Advisor)
S48,75
So
SO
$49,750
Rehab WW Plant
n/a
m d
Legal Fees Bond Counsel
$29,00
SO
SO
S29,000
Rehab Collation Sys.
n/a
tin. R.
Bond Issuance
S32,250
S
So
532,250
t?thcr:
n/a
each
TOTAL COSTS
S22,615,0
519,945,
S20,760,1i00
$63,320,00
OTHER PROJECT CONSIDERATIONS
Water Supply OK for Loan Lire
Yes X
at Conservation Plan
Approvable
Adopted
X
Water Plan Consistency (Water Supply Project only)
Yes
X
No
NIA
Water (tights Ccrtilics6on Required
Yes
X
Na
I
NIA
ITEM SUMMARY PAGE 4
CONSERVATION SECTION
Water Conservation Plan
The City revised its Water Conservation Plan in 2006 and updated it again in 2008. The baseline
gpcd is 190 gpcd. The City has established its five and ten-year gpcd goals as follows:
Five year goal: 180 gpcd
Ten year goal: 170 gpcd
The City's water loss goal is to maintain a 10 percent water loss for the ten year period. Based
on the City's 2005 Water Loss Audit, the apparent loss equates to 1,729 acre-ft of the produced
water of 40,267 acre-ft. Real loss equates to 986 acre-ft. The City's percentage of total water
loss when compared to the amount of produced water was about 7 percent.
In recent years the City has expanded its conservation programs and activities. In 2003, the City
created the Lubbock Water Advisory Commission to assist and advise the City on conservation
issues and related water service issues. The City modified its water rate structure in 2007 to an
increasing block rate structure and adopted a winter averaging consumption approach. In the
area of public information the City pursued a more aggressive approach in trying to reach
customers. The City has developed a series of articles or advertorials for publication in the
newspaper to educate the public on water supply needs with a focus on how conservation can
help customers save money and/or postpone or downsize some projects. In addition, the water
utility department has staff that will visit homes and businesses to provide direct services such as
assisting with an irrigation system controller. Freeze and rain sensors are now required by City
ordinance on all new irrigation systems installed after September 30, 2006.
The education program for public school students provides an opportunity for young people to
participate in hands-on activities that creatively explore the science of water and the complex
issues surrounding its management stewardship.
ENVIRONMENTAL
Key Issues
None.
Environmental Summary
As set forth in the preliminary environmental information submitted by the City, there are no
known environmental, social, or permitting issues that would preclude construction of the project
or cause additional alternatives to be examined. The proposed improvements will address
deficiencies in the City's water supply capacity.
The City has recently submitted a draft Environmental Assessment for the entire project,
including the Raw Water Line 1 segment being considered in this application. Based on an
initial review of this document, it is not anticipated that the primary environmental impacts of the
Raw Water Line I project component would be especially signifieant or adverse, nor should they
affect implementation of the alternatives considered. Pursuant to the 31 Texas Administrative
Code Section 363.16 pre -design funding requirements, all financial assistance shall be
conditioned to read that funding for design and construction costs for the Raw Water Line 1
project component not be released from escrow until the environmental review has been
completed and a favorable environmental determination has been issued by the Executive
Administrator
ITEM SUMMARY
PAGE 5
If PRE -DESIGN
The preUrninary review has been conducted; full review to occur following commitment. Y
Applicant has stated that there appear to be no known environmental, social or permitting issues
that will affect the project or the evaluation of project alternatives, and staff concurs, based upon X
preliminary information.
LEGAL SECTION
Key issues
None.
CONDITIONS
Standard tax-exempt, tax and revenue conditions and further conditioned as follows:
Prior to closing, a water rights certification;
• Surplus revenue conditions; and
• Pre -design funding.
ITEM SUMMARY
PAGE
The application and documentation submitted by the applicant for
Consideration of this financial assistance have been reviewed and have
been determined sufficient for the Board's consideration.
Gregory J. Kuchy
Deputy Executive Administrator
I have reviewed the application and legal documentation submitted by
the applicant and have determined that the application contains the
information required by the applicable statutes and rules for
consideration by the Board.
Ed Wesley. Attorne
The application and documentation submitted by the applicant for
consideration of this financial assistance have been reviewed and have
been determined sufficient for the Board's consideration
Darrell Nichols, Pro cct Lead
I have reviewed the application and financial documentation submitted
by the applicant and have determined that the application and
documentation are sufficient from a financial perspective for
consideration by the Board.
Jessica Zuba, Financial Analyst
I have reviewed the application and engineering documentation
submitted by the applicant and have determined that the application and
documentation arc sufficient from an engineering perspective for
consideration by the Board,
Nicolas Palacios Project Engineer
l have reviewed the application and environmental documentation
submitted by the applicant and have determined that the application and
documentation are sufficient from an environmental perspective for
consideration by the Board.
Chris Caran, Frivirorimcatal Reviewer
I have reviewed a summary of the water supply project proposed by the
applicant and have determined that the needs to be addressed by the
water supply project will be addressed in a manner consistent with the
stoic water plan and the approved regional water plan.
Dan Hardin Director
For additional information of review of the memorandums regarding this application, please refer to the applicant's files.
Attachments: 1, Resolution (09- )
2. Location Map
3. Debt Service Schedule