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HomeMy WebLinkAboutResolution - 2010-R0066 - Financing Agreement With Texas Water Development Board To Fund Lake Alan Henry - 02/09/2010Resolution No. 2010-R0066 February 9, 2010 Item No. 5.3 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 $41,000,000.00 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 9th day of February 2010. �� �� � /--., - TOM MARTIN, MAYOR ATTEST: 3P _e Rebec a Garza, City Secretary APPROVED AS TO CONTENT: Marsha Reed, P.E., Chief Operating Officer Aubrey Spear, /Water -i Utility Director APPROVED AS TO Attorney ms!RES Agreement -Texas Water Development Board 120 10 1 202010 Resolution No. 2010-R0066 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. 10-13 (Attachment A) on January 21, 2010, making a commitment to the Borrower for financial assistance in the amount of $41,000,000 from the Water Infrastructure Fund administered by the Board for a water supply project (Project) described in Borrower's application and in Board Resolution 10-13; and WHEREAS, the Borrower intends to sell the Board the Borrower's $41,000,000 Combination Tax and Waterworks System Surplus Revenue Certificates of Obligation, proposed Series 2010C (Borrower Certificates of Obligation) (Attachment B) for the Board's financial assistance from the Water Infrastructure Fund; and WHEREAS, the Water Infrastructure Fund is funded, in part, with proceeds of the Board's Water Financial Assistance Bonds, under Texas Water Code §§17.959 and 17.9616, 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 Water Code §17.9616, and Texas Constitution, Article III, Section 49 -d -8(e); and WHEREAS, Condition No. 1 of Board Resolution No. 10-13 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 Borrower desire 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 in order to provide financial assistance from the Water Infrastructure Fund to the Borrower through the Borrower's issuance of 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: AGREEMENT Section 1. Loan Commitment, Schedule. The Board, pursuant to its commitment to provide financial assistance in Resolution 10-13, will provide $41,000,000 in financial assistance to the Borrower from the Water Infrastructure Fund under the terms and conditions in Resolution 10-13, which is incorporated herein for all purposes by reference. The 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 $41,000,000 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 October 29, 2010. Section 2. Interest Rates. The interest rates for the financial assistance to be provided from the Water Infrastructure Fund to the Borrower will be determined 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 Board's 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 by October 29, 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 October 29, 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 $1,127,500, and the parties agree that the liquidated damages shall be equivalent to such amounts. 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 November 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. 2 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 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 therefor. 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) March 1, 2010, 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. 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 Director, 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 Chief Financial Officer P.O. Box 2000 Lubbock, Texas 79457 Telephone (806) 775-2149 Email ABurchamna mail.ci.hibbock.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. 3 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: < Name: Tom Martin Title: Mayor Date: February 9, 2010 STATE OF TEXAS COUNTY OF L - Rebecca Garza, City Secretary Lw,-'-hite, Assistant City Attorney A4�'PROVF,p AS TO CONTENT: Andy Burcham, Chief Financial Officer This instrument was acknowledged before me on the / day of 20 /0 , by T m Mayr in Ober capacity as M pumo r , on behalf of ELISA SANCHEZ Notary Public, State of Texas r My Comr^ ssion Expires 11.07.2011 ` Notary Public, State of Texas TEXAS WATER DEV OP T ARD By: Name: J.evin Ward Title: Date: Executive Administrator STATE OF TEXAS COUNTY OF TRAVIS This instrument was acknowledged before me on the _� off ' day ofVe ru ar , 20.1 O by 3 • Kt \! W aL r a� _ _ in his/her capacity as Executive Administrator of the Texas Water ' Development Board, an agency of the State \��III111I I I I n►riii//� (SEAL) \����y� ... D. \.� Q • V P& Pe<0' S Z* 71� =_ h of �'� •''•.EXPIRES.•' `�� 0 .....20\�`````O ���///lIIIII►i111111` of Texas, on behalf of said agency. a� Notary�Pblic,�State ofTexas ATTACHMENT A Board Resolution A RESOLUTION OF THE TEXAS WATER DEVELOPMENT BOARD APPROVING AN APPLICATION FOR FINANCIAL ASSISTANCE FROM THE WATER INFRASTRUCTURE FUND THROUGH THE PROPOSED PURCHASE OF t. S41,000,000 CITY OF LUBBOCK COMBINATION TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION, PROPOSED SERIES 2010 C (10-13) WHEREAS, the City of Lubbock, Lubbock County, Texas, (the "Cit)"), has filed an application for financial assistance in the amount of $41,000,000 from the Water Infrastructure Fund ("I11F") 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 $41,000,000 City of Lubbock Combination Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010 C, (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: 1. 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 will meet water needs in a manner consistent with the state and regional water plan for region O, as required by § 16.0530, 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 (TAC) 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. L 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 MW amount of $41,000,000 from the Water Infrastructure Fund, to be evidenced by the Board's proposed purchase of $41,000,000 City of Lubbock Combination Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010 C. This commitment will expire on January 31, 2011. Such commitment is conditioned as follows: 1. 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 ordinance/resolution 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; %NW 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 t;... obligations, at a redemption price of par, together with accrued interest to the date fixed for redemption; 11. 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. if there are existing obligations of the City outstanding after any loan(s) made by the Board pursuant to this commitment, the lien or liens securing the Board's loan shall be at least on a parity with lien or liens securing such outstanding debt. 16. the Authorizing Document must contain 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; 17. loan proceeds are public funds and, as such, these proceeds shall be held in escrow or in trust at a designated state depository institution or other properly chartered and authorized institution in accordance with the Public Funds 4 Investment Act, Chapter 2256, Government Code, (the "PFIA"), and the Public P �... Funds Collateral Act, Chapter 2257, Government Code, (the "PFCA"). 18. prior to closing, the City shall execute an escrow agreement or trust agreement, approved as to form and substance by the Executive Administrator, and shall submit that executed form to the Board when any portion of loan proceeds are to be held in escrow or in trust; 19. 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; 20. 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; 21. 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. 22. 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; 23. 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 24. 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) 4 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. 25. 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, 26. 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: 27. 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; 28. 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: L 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 tine of the adoption of the annual budget, or a combination thereof, into the Interest and Sinking Hund for the repayment of the obligations; and iii. the Authorising Document must include a requirement that the City at ail times maintain and collect sufficient rates and charges in conjunction with any other legally available fiends so that alter payment of the costs of operating and maintaining the system, it produces revenues in an amount not less than 1.10 times debt service requirements of all outstanding bonds of the City and other obligations of the City which are 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 Pond, in conjunction with any other legally available fiends, sufficient for the repayment of debt service requirements; 29. prior to the release of constl•uction fields for that portion of a 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 determination 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 January, 2010. TEXAS NATER DEVELOPMENT BOARD .JamE. Herring, Chairman FITTEST: f .I. 6wp Mand Exccutivc Administrator 6 ATTACHMENT B 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 2010C Project Name Lake Alan Henry Pipeline Construction Project Number 21608 Loan Number Aggregate Principal Amount of Borrower Certificates of Obligation $41,000,000 Anticipated Closing Date Dated Date: [To Come] Maturity Schedule: [To Come] Maturity Principal Amount 7 James E. Herring, Chairman Jack Hunt, Vice Chairman Lewis H. McMahan, Member J. Kevin Ward Thomas Weir Labatt 111, Member Edward G. Vaughan, Member Executive Administrator Joe M. Crutcher, Member February 16, 2010 Mr. Mike McGregor City of Lubbock Utilities Grant/Contract Manager P.O. Box 2000 402 Municipal Drive Lubbock, Texas 79457 Re: WIF Financing Agreement Dear Mr. McGregor: 46kjl4p 4�0 Ail"�� Enclosed is the executed original financing agreement for WIF in the amount of $41,000,000. It has been signed by Kevin Ward and notarized. Please let me know if you have any questions regarding this matter. I can be reached at (512) 475-2117. Sincerely, TPerontemayor of Debt & Portfolio Management Attachment Our Mission To provide leadership, planning, financial assistance, information, and education for the conservation and responsible P.O. Box 13231 • 1700 N. Congress Avenue • Austin, Texas 78711-3231 Telephone (512) 463-7847 • Fax (512) 475-2053 • 1-800-RELAYTX (for the hearing impaired) www.twdb.state.tx.us • infoLd twdb. state. tx. us TNRIS - Texas Natural Resources Information System • www,tnris.state.tx.us A Member of the Teras Geopranhic Information Council (TGIC) of water for Texas. TNR1S