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HomeMy WebLinkAboutReso 04-20_Morro Bay WIFIA Resolution of City Approving LoanRESOLUTION NO. 04-20 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA APPROVING PROCEEDINGS TO FINANCE THE CONSTRUCTION OF THE WATER RECLAMATION FACILITY PROJECT FROM THE PROCEEDS OF TWO INSTALLMENT SALE AGREEMENTS BETWEEN THE CITY OF MORRO BAY AND THE MORRO BAY PUBLIC FACILITIES CORPORATION, AS EACH AGREEMENT IS ASSIGNED TO THE U.S. ENVIRONMENTAL PROTECTION AGENCY, APPROVING THE FORMS OF CERTAIN DOCUMENTS AND AUTHORIZING ACTIONS IN CONNECTION THEREWITH THE CITY COUNCIL City of Morro Bay, California WHEREAS, the City of Morro Bay (the "City") plans to finance the acquisition, design, construction and equipping of a new water reclamation facility and related improvements (the "Project"); and WHEREAS, the Morro Bay Public Facilities Corporation (the "Corporation") is a nonprofit public benefit corporation duly organized and existing under the laws of the State of California, and is authorized pursuant to the nonprofit public benefit law to purchase property and borrow money for the purpose of assisting the City in financing the Project; and WHEREAS, in connection with the City undertaking the Project, the City conducted a Financial Plan and Rate Analysis for a New Water Reclamation Facility, dated July 5, 2018, by Bartle Wells Associates ("Study") which showed that certain Project costs are attributable to the wastewater system ("Wastewater System Portion") and certain Project costs are attributable to the water system ("Water System Portion"), and the City hereby determines that Project costs will be allocated among the two systems in a manner consistent with that rate study; and WHEREAS, the water system rates and the wastewater system rates have been increased in amounts consistent with the recommendations in the rate study to finance the Project; and WHEREAS, in order to fund the Project, the City has applied for financing to the State of California State Revolving Fund Loan Program and the United States Environmental Protection Agency, acting by and through the Administrator of the Environmental Protection Agency (the 'EPA") under the Water Infrastructure Finance and Innovation Act, as amended by Section 1445 of the Fixing America's Surface Transportation Act of 2015, as further amended by Section 5008 of the Water Infrastructure Improvements For the Nation Act of 2016 and by Section 4201 of America's Water Infrastructure Act of 2018 (collectively "WIFIA" ); and WHEREAS, the Corporation desires to assist the City System Portion of the Project, and to that end, desires to sell System Portion of the Project (the "WIFIA Wastewater System City pursuant to the Installment Sale Agreement, between the form of which is presented herewith and on file with the City Agreement (Wastewater System Project)"); and in financing the Wastewater a portion of the Wastewater Portion of the Project") to the City and the Corporation, the Clerk (the "Installment Sale 01181.0032/615361.5 1 34095511 043224 DRFT WHEREAS, the Corporation desires to assist the City in financing the Water System Portion of the Project, and to that end, desires to sell a portion of the Water System Portion of the Project (the "WIFIA Water System Portion of the Project") to the City pursuant to the Installment Sale Agreement, between the City and the Corporation, the form of which is presented herewith and on file with the City Clerk (the "Installment Sale Agreement (Water System Project)"); and WHEREAS, the Corporation and the City have the general power to sell and purchase property; and WHEREAS, in order to raise funds for the Project, the Corporation will assign its interests in the Installment Sale Agreement (Wastewater System Project), including the installment payments (excepting certain rights to indemnification or costs) to the EPA pursuant to an Assignment Agreement, by and between the Corporation and the EPA, as the credit provider ("WIFIA Credit Provider"), the form of which is on file with the City Clerk and presented herewith (the "Assignment Agreement (Wastewater System Project)"); WHEREAS, in order to fund the WIFIA Wastewater System Portion of the Project and assume the rights of the Corporation under the Installment Sale Agreement (Wastewater System Project), the WIFIA Credit Provider is requiring that the City and the Corporation enter into the WIFIA Credit Agreement, with the WIFIA Credit Provider, the form of which is on file with the City Clerk and presented herewith (the "WIFIA Credit Agreement (Wastewater System Project)"); and WHEREAS, in order to raise funds for the Project, the Corporation will assign its interests in the Installment Sale Agreement (Water System Project), including the installment payments (excepting certain rights to indemnification or costs) to the EPA pursuant to an Assignment Agreement, by and between the Corporation and the WIFIA Credit Provider, the form of which is on file with the City Clerk and presented herewith (the "Assignment Agreement (Water System Project)"); WHEREAS, in order to fund the WIFIA Water System Portion of the Project and assume the rights of the Corporation under the Installment Sale Agreement (Water System Project), the WIFIA Credit Provider is requiring that the City and the Corporation enter into the WIFIA Credit Agreement, with the WIFIA Credit Provider, the form of which is on file with the City Clerk and presented herewith (the "WIFIA Credit Agreement (Water System Project)"); and WHEREAS, in order to finance the remainder of the Project, the City expects in the future to consummate the funding with the State of California; and WHEREAS, the City hereby determines that installment payments due under the Installment Sale Agreement (Wastewater System Project) and payable to the Corporation, as assigned to WIFIA pursuant to the Assignment Agreement (Wastewater System Project), reflect the costs of the WIFIA Wastewater System Portion of the Project being funded by WIFIA and will be secured by, among other things, pledged revenues of the Wastewater System, and that installment payments due under the Installment Sale Agreement (Water System Project) reflect the costs of the WIFIA Water System Portion of the Project being funded by WIFIA and will be secured by, among other things, pledged revenues of the Water System; and WHEREAS, in order to provide the funds for the acquisition, construction and installation of the WIFIA Wastewater System Portion of the Project and the WIFIA Water System Portion of 01181.0032/615361.5 2 3409551.1 043224 DRFT the Project, the Corporation will cause the WIFIA Credit Provider to advance funds from time to time pursuant to the WIFIA Credit Agreement (Wastewater System Project) and the WIFIA Credit Agreement (Water System Project) to the City, as agent for the Corporation, to pay the costs of the WIFIA Wastewater System Portion of the Project and the WIFIA Water System Portion of the Project; and WHEREAS, the Corporation will appoint the City as its agent to carry out the construction of the WIFIA Wastewater System Portion of the Project, the City will apply all funds advanced under the WIFIA Credit Agreement (Wastewater System Project), to the costs of the WIFIA Wastewater System Portion of the Project, pursuant to the Installment Sale Agreement (Wastewater System Project) and the WIFIA Credit Agreement (Wastewater System Project), and WHEREAS, the Corporation will appoint the City as its agent to carry out the construction of the WIFIA Water System Portion of the Project, the City will apply all funds advanced under the WIFIA Credit Agreement (Water System Project), to the costs of the WIFIA Water System Portion of the Project, pursuant to the Installment Sale Agreement (Water System Project) and the WIFIA Credit Agreement (Water System Project), and WHEREAS, following the payment in full of the purchase price of the WIFIA Wastewater System Portion of the Project and the WIFIA Water System Portion of the Project, respectively, the City will have full and exclusive ownership of the WIFIA Wastewater System Portion of the Project and the WIFIA Water System Portion of the Project; and WHEREAS; the installment payments for the WIFIA Wastewater System Portion of the Project shall be payable from revenues of the Wastewater System and secured by a pledge of and security interest in the Net Revenues of the Wastewater System and other funds described and defined in the Installment Sale Agreement (Wastewater System Project) ("Wastewater Pledged Collateral'); and WHEREAS, the installment payments for the WIFIA Water System Portion of the Project shall be payable from revenues of the Water System and secured by a pledge of and security interest in the Net Revenues of the Water System and other funds described and defined in the Installment Sale Agreement (Water System Project) ("Water Pledged Collateral'); and WHEREAS, pursuant to Section 5852.1(a)(1) of the California Government Code, the City must provide certain information regarding the proposed financing as provided below; and WHEREAS, the Council has duly considered such transactions and wishes at this time to approve said transactions in the public interests of the City. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS: Section 1. Recitals. The Council hereby finds the recitals hereto are true and correct and incorporates such recitals herein by this reference. Section 2. Approval of Installment Sale Agreement (Wastewater System Project); Consent to Assignment. The Council hereby approves the Installment Sale Agreement (Wastewater System Project) in the form presented at this meeting, together with any changes therein or additions thereto deemed advisable by the Mayor, the City Manager, the Finance 01181.0032/615361.5 3 3409551.1 043224 DRFT Director or Treasurer, each acting alone (the "Designated Officers"), whose execution thereof shall be conclusive evidence of the approval of any such changes or additions, so long as the purchase price of the Installment Sale Agreement (Wastewater System Project) does not exceed $26,000,000, the maximum interest rate related to the interest component of the installment payments does not exceed 3%, and the final payment date of the Installment Sale Agreement (Wastewater System Project) is not later than November 1, 2058. The interest component of the installment payments shall be calculated by adding one basis point (0.01 %) to the rate of securities of a similar maturity (based on the weighted -average life of the principal components payable on each installment payment date) as published, on the execution date of the foregoing agreement, in the United States Treasury Bureau of Public Debt's daily rate table for State and Local Government Series (SLGS) securities, currently located on the Internet at https://www,treasurydirect.gov/GA-SL/SLGS/selectSLGSDate.htm (the "WIFIA Rate") The default interest rate shall not exceed 200 basis points above the otherwise applicable interest rate. The Designated Officers, each acting alone, are hereby authorized and directed for and in the name and on behalf of the City to execute, and the City Clerk is hereby authorized and directed to attest, the final form of the Installment Sale Agreement (Wastewater System Project) for and in the name of the City. The Council hereby authorizes the delivery and performance of the Installment Sale Agreement (Wastewater System Project) and consents to the assignment by the Corporation. The Council hereby approves the pledge of the Wastewater Pledged Collateral (including, without limitation, the Net Revenues of the Wastewater System) pursuant to Section 4.5(a) of the Installment Sale Agreement (Wastewater System Project). Section 3. Approval of Installment Sale Agreement (Water System Project); Consent to Assignment. The Council hereby approves the Installment Sale Agreement (Water System Project) in the form presented at this meeting, together with any changes therein or additions thereto deemed advisable by the Designated Officers, whose execution thereof shall be conclusive evidence of the approval of any such changes or additions, so long as the purchase price of the Installment Sale Agreement (Water System Project) does not exceed $37,000,000 the maximum interest rate related to the interest component of the installment payments does not exceed 3%, and the final payment date of the Installment Sale Agreement (Water System Project) is not later than November 1, 2058. The interest component of the installment payments shall be calculated at the WIFIA Rate. The default interest rate shall not exceed 200 basis points above the otherwise applicable interest rate. The Designated Officers, each acting alone, are hereby authorized and directed for and in the name and on behalf of the Corporation to execute, and the Secretary (or any designated deputy) is hereby authorized and directed to attest, the final form of the Installment Sale Agreement (Water System Project) for and in the name of the City. The City Council hereby authorizes the delivery and performance of the Installment Sale Agreement (Water System Project) and consents to the assignment by the Corporation. The Council hereby approves the pledge of the Water Pledged Collateral (including, without limitation, the Net Revenues of the Water System) pursuant to Section 4.5(a) of the Installment Sale Agreement (Water System Project). Section 4. Approval of WIFIA Credit Agreement (Wastewater System Project) and the WIFIA Credit Agreement (Water System Project). The Council hereby approves of the WIFIA Credit Agreement (Wastewater System Project) and the WIFIA Credit Agreement (Water System Project) in the forms presented at this meeting, together with any changes therein or additions thereto deemed advisable by any Designated Officer, whose execution thereof shall be conclusive evidence of the approval of any such changes or additions. The Designated Officers, each acting alone, are hereby authorized and directed for and in the name and on behalf of the City to execute the final form of the WIFIA Credit Agreement (Wastewater System Project) and the WIFIA Credit Agreement (Water System Project) for and in the name of the 01181.0032/615361.5 4 3409551.1 043224 DRFT City. The Council hereby authorizes the delivery and performance of the WIFIA Credit Agreement (Wastewater System Project) and the WIFIA Credit Agreement (Water System Project) . Section 5. Government Code Section 5852.1 Transparency. The City's financial consultants have provided the following good faith estimates pursuant to Government Code Section 5852.1: (a) the true interest cost with respect to the Installment Sale Agreement (Wastewater System Project) is 2.4% and with respect to the Installment Sale Agreement (Water System Project) is 2.4%, (b) the finance charges or fees to third parties related to the Installment Sale Agreement (Wastewater System Project) is $206,500 and the Installment Sale Agreement (Water System Project) is $200,000 (c) proceeds of the assignment with respect to the Installment Sale Agreement (Wastewater System Project) are expected to be $25,183,8111 not including any finance charges, reserves and capitalized interest funded by proceeds, and proceeds of the assignment with respect to the Installment Sale Agreement (Water System Project) are expected to be $36,516,526, not including any finance charges, reserves and capitalized interest funded by proceeds, and (d)the total payment amount of the installment payments for the WIFIA Wastewater System Portion of the Project and WIFIA Water System Portion of the Project, respectively, calculated as provided in Section 5852.1(a)(1)(D) of the Government Code is estimated at $$40,678,981 and $58,919,788 respectively (i.e. total of all payments the City will make to pay installment payments plus the finance charges set forth in section (b) which are not paid from proceeds). Section 6. Official Actions. The Designated Officers, the City Clerk and all other officers of the City are each authorized and directed in the name and on behalf of the City to execute any term sheets or related documents and make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the documents approved pursuant to this Resolution. Whenever in this Resolution any officer of the City is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer shall be absent or unavailable. All actions heretofore taken by the Designated Officers, including execution of any term sheets, are hereby ratified and approved by the Council Section 7. Effective Date. This Resolution shall take effect from and after its adoption. 01181.0032/615361.5 5 3409551.1 043224 bRFT Section 8, Certification, The City Clerk is hereby authorized and directed to certify the adoption of this resolution. AYES: Headding, Addis, Davis, Heller, McPherson NOES: None ABSENT: None PASSED AND ADOPTED by the City Council, City of Morro Bay at a regular meeting thereof held on the 14t'' day of January 2020 by the following vote: ATTEST: ANA SWANSON, City Clerk 01181.0032/615361.5 3409551.1 043224 DRFT CERTIFICATE OF ATTESTATION AND ORIGINALITY City Clerk of the City of Morro Bay, hereby attest to and foregoing resolution is the original resolution adopted by the Morro Bay City regular meeting held on the � day of r_, 2020, by the following vote: AYES: Headding, Addis, Davis, Heller, McPherson NOES: None ABSENT: None City Clerk certify that the Council at its 01181.0032/615361.5 % 3409551.1 043224 DRFT