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HomeMy WebLinkAboutReso 39-21Morro Bay Resolution Approving SRF Construction LoanRESOLUTION NO. 39-21 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 A CONSTRUCTION INSTALLMENT SALE AGREEMENT AND GRANT BETWEEN THE CITY OF MORRO BAY AND THE CALIFORNIA STATE WATER RESOURCES CONTROL BOARD (STATE WATER BOARD), AUTHORIZING AND/OR RATIFYING VARIOUS AMENDMENTS TO THE CITY'S PLANNING LOAN WITH THE STATE WATER BOARD, AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH, AND AUTHORIZING STAFF TO PURSUE BRIDGE FINANCING FOR THE PROJECT IN ORDER TO MEET CASH FLOW REQUIREMENTS 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, in order to fund the Project, the City has applied for financing to the State of California State Revolving Fund Loan Program ("SRF") and the United States Environmental P rotection 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 S ection 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 S ection 4201 of America's Water Infrastructure Act of 2018 ('WIFIA") 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 has previously determined that Project costs will be allocated among the two systems in a manner consistent with that rate study for the purposes of the financing; and WHEREAS, in connection with the financing of the Wastewater System Portion of the P roject, the City has previously entered into the following contracts: (a) an Installment Sale Agreement, dated as of March 9, 2020 ("WIFIA Agreement"), by and between the City and the Morro Bay Public Facilities Corporation (the "Corporation"); (b) an Assignment Agreement, dated as of March 9, 2020, by and between the Corporation and the EPA, acting as the credit provider (referred to as "WIFIA Credit Provider") ; and 01181.0032/698610.4 1 (c) a Credit Agreement, dated as of March 9, 2020, by and among the City, the Corporation and WIFIA Credit Provider; and (d) Wastewater Planning Loan, Water Reclamation Facilities Project -Phase I Clean Water State Revolving Project No. C-06-8185-110, Agreement No. D-16-01016, dated January 20 2017, in the initial amount of $10 300,000, by and between the City and the California State Water Resources Control Board (the 'State Water Board"), as amended by Amendment No. 1 on February 25, 2019 (collectively the "Planning Loan"), and WHEREAS, the City now desires to finance the remaining costs of the Project by entering into the Construction Installment Sale Agreement and Grant, by and between the City and the State Water Board ("SRF Installment Sale Agreement"); and WHEREAS, the City now desires to authorize and/or ratify certain changes to the Planning Loan which may take the form of two or three amendments to the Planning Loan, including changes in the start of the repayment schedule, extending the amortization schedule and interest rate to be similar to the SRF Installment Sale Agreement and maintaining that any changes permit the pledge of revenues on a parity with the SRF Installment Sale Agreement, and the WIFIA Agreement; and WHEREAS, the City has the general power to sell and purchase property; and WHEREAS, pursuant to Section 5852.1(a)(1) of the California Government Code, the City must provide certain information regarding the proposed new construction financing and the amendments to the Planning Loan and the City has provided such information and good faith estimates in the staff report presented concurrently herewith; 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; and WHEREAS, entering into the SRF Installment Sale Agreement and the amendments to the Planning Loan is consistent with the City's debt management policy; and WHEREAS, the City has determined to enter into the SRF Installment Sale Agreement by pledging net revenues of the Wastewater System Portion to the payments on a parity with the WIFIA Agreement and the State Planning Loan. 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 SRF Installment Sale Agreement. The Council hereby approves the SRF Installment Sale Agreement in the form presented at this meeting, together with any changes therein or additions thereto deemed advisable by the Mayor the City Manager, Public Works Director, the City Engineer, the Assistant City Manager/Administrative Services Director acting in the capacity as Finance 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 (principal amount, including grant) of SRF Instalment Sale Agreement does not exceed Eighty Five Million Dollars and the 01181.0032/698610.4 2 maximum interest rate related to the interest component of the installment payments does not exceed two percent (2%). 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 SRF Installment Sale Agreement for and in the name of the City The Council hereby authorizes the delivery and performance of the SRF Installment Sale Agreement. S ection 3. Government Code Section 5852.1 Transparency. The City's financial consultants have provided good faith estimates pursuant to Government Code Section 5852.1 which estimates are part of the Staff Report for this matter. S ection 4. Approval of Planning Loan Amendments. The Designated Officers, and e ach of them acting alone, are hereby authorized to enter into the amendments to the Planning Loan in a form to be approved by any of the Designated Officers and reviewed by the City Attorney, the execution thereof by any Designated Officer to be conclusive evidence of such approval. The amendment to the Planning Loan which adjusts the interest rate and amortization schedule commensurate with the schedule of the SRF Installment Sale Agreement shall be subject to a not to exceed interest rate of 2% All prior actions taken by the Designated Officers with respect to the SRF Planning Loan and any amendments thereto are hereby ratified and approved. Section 5. Bridge Financing. The Designated Officers and City staff are hereby authorized to pursue bridge financing or other items to manage the cash flow needs. All amendments or changes needed or required to the Planning Loan or SRF Installment Sale Agreement in connections with any bridge financing shall be approved by a Designated Officer. The City Council shall authorize the City to secure bridge financing prior to any binding commitment for bridge financing. S ection 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, amendments to the SRF Installment Sale Agreement, Planning Loan n otices, 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, amendments to the Planning Loan, or other actions are hereby ratified and approved by the Council. Section 7. Effective Date. This Resolution shall take effect from and after its adoption. // // // 01181.0032/698610.4 3 Section 8. Certification. The City Clerk is hereby authorized and directed to certify the adoption of this resolution. PASSED AND ADOPTED by the City Council of the City of Morro Bay at a special meeting thereof held on the 22nd day of June 2021 by the following vote: AYES. Headding, Addis, Barton, Davis, Heller NOES. None ABSENT: None ABSTAIN: None EA DING, Mayor ATTEST: DANA SWANSON, City Clerk 01181.0032/698610.4 4 CERTIFICATE OF ATTESTATION AND ORIGINALITY I, Dana Swanson, City Clerk of the City of Morro Bay, hereby attest to and certify that the foregoing resolution is the original resolution adopted by the Morro Bay City Council at its special meeting held on the7$ tar day of lv .. , 2021, by the following vote: AYES* Headding, Addis, Barton, Davis, Helier NOES* None ABSENT: None ABSTAIN: None irawketatielts-Wr City Clerk 01181.0032/698610.4 5