[Council Communication]  [Proposed Resolution]  [Declaration]

Council Communication

Title:	Resolution Authorizing the Issuance of Water Revenue Bonds and a Master Water Revenue Bond Declaration
Dept:	Finance Department
Date:	May 6, 2003
Submitted By:	Lee Tuneberg, Finance Director
Approved By: ...........................	Gino Grimaldi, City Administrator

Synopsis:	Attached is a resolution authorizing staff to take the necessary and final steps to issue Water Revenue Bonds for capital projects and refunding the 1994 bonds. This is a follow-up to Resolution 2003-04 approved by Council on February 18, 2003. Attached to the resolution is a Master Water Revenue Bond Declaration that authorizes the Finance Director to make the necessary and appropriate decisions (within the guidelines established by Council) during the bond sale for an effective transaction.
Recommendation:	Staff recommends approval of this resolution.
Fiscal Impact:	This is consistent with the 2002-2003 budget and past practices in financing capital projects except that the City will not be paying a third party trustee to authorize payments. Instead, the City will work directly with the paying agent thus saving hundreds of dollars each year.
Background:	The listing of projects included in the Capital Improvement Program approved as part of the FY 2002-2003 budget process identified certain water infrastructure projects deemed necessary and appropriate to meet public need. Such projects routinely utilize multiple funding sources for the work including System Development Charges, Local Improvement Districts proceeds and borrowings paid over the life of the loan(s) with water rate revenues. Approved projects requiring partial funding through bond sale with the debt service paid by rates are: 1. New Fire Flow Distribution Reservoir ($2.3 million, $1.6 million form bonds) 2. Transmission Line from Reeder to the Plant ($1.2 million, $734,000 from bonds) 3. Main Supply Line from the Plant to Crowson Reservoir, ($1.1 million, $541,000 from bonds) Note: The amounts shown are the most current estimates for project costs. These estimates translate into a bond sale of approximately $2.9 million for projects. The resolution asks for a not to exceed amount of $3.5 million allowing issue costs and reserve requirements to be included in the sale. We estimate an average interest rate of 4.2% on the new issue of 20 year bonds. The potential for refunding the 1994 Water Revenue Bonds is high with a net savings to the city of $188,000 over the remaining life of the bonds replacing the current 6.3% rate with a 3.6% borrowing. The calendar tentatively calls for competitive bids to be opened May 28th with a June 12 closing date.

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RESOLUTION NO. 2003-_______

A RESOLUTION OF CITY OF ASHLAND, JACKSON COUNTY, OREGON, AUTHORIZING THE ISSUANCE OF WATER REVENUE BONDS AND A MASTER WATER REVENUE BOND DECLARATION.

BE IT RESOLVED by the City Council (the "Council") of the City of Ashland (the "City") that:

Section 1. Findings

The Council finds as follows:

1.1 The City adopted Resolution No. 2003-04, authorizing the City to issue up to $3,500,000 of revenue bonds under the Uniform Revenue Bond Act to finance improvements, property acquisition and other public purposes related to the water system, including a transmission line, a distribution line, a fire flow distribution, a reservoir, and a water treatment plant and to pay all cost incidental thereto (the "Projects"). The City published notice as required by law. More than 60 days have passed since that notice was published, and no petitions were filed to refer that resolution. The City is now authorized to issue the bonds described in that resolution.

1.2 The City now desires to issue revenue bonds to finance the Projects as described in City Resolution No. 2003-04.

1.3 The City adopts this resolution to authorize the issuance of up to $3,500,000 of water revenue bonds pursuant to City Resolution No. 2003-04, and to provide the terms under which future parity obligations may be issued.

1.4 The City previously issued its Water Revenue Bonds, Series 1994 (the "Series 1994 Bonds"). The City may obtain debt service savings by refunding all or a portion of the Series 1994 Bonds.

Section 2. Bonds Authorized

2.1 The City hereby authorizes the sale and delivery of its Water Revenue Bonds, Series 2003 (the "Series 2003 Bonds") in accordance with this Resolution and the Master Water Revenue Bond Declaration authorized by Section 2.3(v) of this Resolution and attached (the "Master Declaration") to finance the Projects and refund all or any portion of the Series 1994 Bonds. The aggregate principal amount of the Series 2003 Bonds shall not exceed Three Million Five Hundred Thousand Dollars ($3,500,000), plus an amount sufficient to refund all or any portion of the City's Series 1994 Bonds.

2.2 The Series 2003 Bonds and any obligations issued on a parity with the Series 2003 Bonds shall be special obligations of the City that are payable solely from the revenues of the City's water system and related amounts that are pledged as provided in the Master Declaration.

2.3 The Finance Director or the City Administrator or the person designated by the Finance Director or the City Administrator to act on behalf of the City under this Resolution (any of whom is referred to in this resolution as a "City Official") may, on behalf of the City:

(i) Participate in the preparation of, authorize the distribution of, and deem final the preliminary and final official statements and any other disclosure documents for the Series 2003 Bonds.

(ii) Establish the final principal amounts, maturity schedules, interest rates, sale prices, redemption terms, payment terms and dates, record dates and other terms for the Series 2003 Bonds, and either publish a notice of sale, receive bids and award the sale of that series to the bidder complying with the notice and offering the most favorable terms to the City, or select one or more underwriters and negotiate the sale of that series with those underwriters.

(iii) Undertake to provide continuing disclosure for the Series 2003 Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission.

(iv) Apply for and purchase municipal bond insurance, reserve sureties or other forms of credit enhancements for the Series 2003 Bonds, and enter into related agreements.

(v) Finalize the terms of, execute and deliver the Master Declaration, which pledges the sewer system revenues, contains covenants regarding the levels of sewer system fees and charges that the City must impose, describes the terms of the Series 2003 Bonds, and the terms under which future obligations may be issued on a parity with the Series 2003 Bonds. The Master Declaration shall be in substantially the form attached to this Resolution as Exhibit A, but with such changes as the City Official may approve.

(vi) Appoint and enter into agreements with escrow agents, paying agents, verification agents and other professionals and service providers.

(vii) Take any action desirable to call, redeem and pay any bonds that are refunded with the Series 2003 Bonds.

(viii) Enter into covenants to maintain the excludability of Series 2003 Bond interest from gross income under the Internal Revenue Code of 1986, as amended (the "Code").

(ix) Designate the Series 2003 Bonds as qualified tax-exempt obligations pursuant to Section 265(b)(3) of the Code.

(x) Execute any documents and take any other action in connection with the Series 2003 Bonds which the City Official finds will be advantageous to the City.

This resolution was read by title only in accordance with Ashland Municipal Code §2.04.090 duly PASSED and ADOPTED this 6th day of May, 2003.
City RecorderBarbara Christensen

SIGNED and APPROVED this 6th day of May, 2003.
Mayor,  Alan W. DeBoer

Reviewed as to form:
City Attorney, Paul Nolte

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The Declaration is available in PDF format.  To view the declaration on your computer, please click on the link below:

Bond Declaration 2003 -Final.pdf (93.9KB)

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