HomeMy WebLinkAbout2013 07_OPWA_Ranch Creek Sewer Interceptor Improvements_2013.12.03OWASSO PUBLIC WORKS AUTHORITY
RESOLUTION NO. 2013 -07
A RESOLUTION OF THE OWASSO PUBLIC WORKS AUTHORITY (THE
"AUTHORITY ") APPROVING AND AUTHORIZING A CLEAN WATER SRF LOAN
FROM THE OKLAHOMA WATER RESOURCES BOARD IN THE TOTAL AGGREGATE
PRINCIPAL AMOUNT OF $3,425,000; APPROVING THE ISSUANCE OF A SERIES
2013 CLEAN WATER SRF PROMISSORY NOTE TO OKLAHOMA WATER
RESOURCES BOARD IN THE TOTAL AGGREGATE PRINCIPAL AMOUNT OF
$3,425,000, SECURED BY A PLEDGE OF REVENUES AND AUTHORIZING ITS
EXECUTION; APPROVING AND AUTHORIZING THE EXECUTION OF A LOAN
AGREEMENT FOR CLEAN WATER SRF LOAN; DESIGNATING A LOCAL TRUSTEE
AND APPROVING AND AUTHORIZING THE EXECUTION OF A TRUST
AGREEMENT, APPROVING AND AUTHORIZING THE EXECUTION OF A SECURITY
AGREEMENT; RATIFYING AND CONFIRMING A LEASE WHEREBY THE CITY OF
OWASSO LEASED TO THE OWASSO PUBLIC WORKS AUTHORITY ITS WATER,
SANITARY SEWER, AND GARBAGE AND TRASH COLLECTION SYSTEMS AND THE
BAILEY RANCH GOLF CLUB; RATIFYING AND CONFIRMING A SUBORDINATE
LIEN SALES TAX AGREEMENT; RATIFYING AND CONFIRMING A PARITY
AGREEMENT; APPROVING VARIOUS COVENANTS; APPROVING AND
AUTHORIZING PAYMENT OF FEES AND EXPENSES; AND CONTAINING OTHER
PROVISIONS RELATING THERETO.
WHEREAS, The Owasso Public Works Authority, Tulsa County, Oklahoma (the
"Borrower "), was organized under Title 60, Oklahoma Statutes 2011, Sections 176- 180.4, as
amended, for the purpose of furthering the public functions of the City of Owasso,
Oklahoma (the "City "); and
WHEREAS, the Borrower is authorized and has determined to construct
improvements to the Borrower's wastewater system (the "Project ") in order to better serve
the customers of said Borrower and in payment of part of the cost thereof, to seek money
in the form of a Clean Water SRF Loan from the Oklahoma Water Resources Board (the
"Board ") in the amount of $3,425,000; and
WHEREAS, the Board approved a loan application of the Borrower and the
Borrower has determined to borrow money from the Board to accomplish the Project
and to evidence such loan by the issuance of the Borrower's Series 2013 Clean Water SRF
Promissory Note to Oklahoma Water Resources Board in the original principal amount of
$3,425,000.00 (the "2013 Note "), said 2013 Note being secured by a lien on the revenues
derived from the water, sanitary sewer, garbage and trash collection systems and the
Bailey Ranch Golf Club of the Borrower (collectively, the "System ") and a lien on the
year -to -year pledge of certain sales tax revenue derived from the levy of a two percent
(2 %) sales tax (the "Sales Tax Revenue "); and
WHEREAS, the Borrower heretofore issued and has partially outstanding its (i)
Amended Series 1999B Promissory Note to Oklahoma Water Resources Board issued in the
original principal amount of $380,000.00; (ii) Amended Series 2001 B Promissory Note to
Oklahoma Water Resources Board issued in the original principal amount of
$1,255,000.00; (iii) Amended Series 2001C Promissory Note to Oklahoma Water Resources
Board issued in the original principal amount of $680,000.00; (iv) Series 2004 Promissory
2
Note to Oklahoma Water Resources Board issued in the original principal amount of
$2,350,000.00; (v) Utility System and Sales Tax Revenue Note, Series 2006 issued in the
original principal amount of $3,865,000.00; (vi) Series 2010 Promissory Note to Oklahoma
Water Resources Board issued in the original principal amount of $655,000; and (vii) Series
2012 Promissory Note to Oklahoma Water Resources Board issued in the original principal
amount of $1,005,000.00; and proposes to issue (contemporaneously with the 2013 Note)
its (viii) Utility System and Sales Tax Revenue Note, Series 2013 to be issued in the original
principal amount of $2,915,000.00 (collectively, the "Prior Senior Lien Debt'); and
WHEREAS, the Borrower heretofore issued and has partially outstanding its (i) Series
1999A Clean Water SRF Promissory Note to Oklahoma Water Resources Board issued in
the original principal amount of $931,609.92; (ii) Series 2001A Clean Water SRF Promissory
Note to Oklahoma Water Resources Board issued in the original principal amount of
$1,029,535.03; (iii) Series 2002A Clean Water SRF Promissory Note to Oklahoma Water
Resources Board issued in the original principal amount of $886,417.88; (iv) Utility System
and Sales Tax Revenue Note, Subordinate Series 2007 issued in the original principal
amount of $10,000,000.00; (v) Series 2009B Clean Water SRF Promissory Note (Wastewater
Treatment Plant) to Oklahoma Water Resources Board issued in the original principal
amount of $10,795,000.00; (vi) Series 2009C Clean Water SRF Promissory Note (76th Street
Interceptor) to Oklahoma Water Resources Board issued in the original principal amount
of $4,510,000.00; and (vii) Series 2011 Clean Water SRF Promissory Note to Oklahoma
Water Resources Board issued in the original principal amount of $3,115,000.00
(collectively, the "Prior Subordinate Lien Debt'); and
WHEREAS, said lien on the revenues derived from the System and the Sales Tax
Revenue is subordinate in all respects to the lien on said revenues of the System and Sales
Tax Revenue securing the Prior Senior Lien Debt, and said lien is on a parity in all respects
with the lien on the revenues derived from the System and the Sales Tax Revenue
securing the Prior Subordinate Lien Debt; and
WHEREAS, it is the desire of the Borrower to authorize the execution and delivery of
any and all documents necessary or attendant to the issuance of the 2013 Note.
NOW, THEREFORE, BE IT RESOLVED BY THE TRUSTEES OF THE OWASSO PUBLIC WORKS
AUTHORITY, TULSA COUNTY, OKLAHOMA:
Section 1. Issuance of Note. The Borrower is hereby authorized to accept said
loan and issue its 2013 Note payable to the Board and secured by a pledge of revenue
derived from the operation of the System and a year -to -year pledge of the Sales Tax
Revenue. The officers of the Borrower are hereby authorized and directed to execute
said 2013 Note and to do any and all lawful things to effect said loan and secure said
loan from the Board, provided that the principal amount of the 2013 Note shall be an
amount of $3,425,000.00, and the rate of interest on the 2013 Note shall be a fixed rate of
interest of two hundred twenty -eight hundredths of one percent (2.28%) per annum
inclusive of administrative fees of one half of one percent (1 /2 %).
Section 2. Execution of Loan Agreement for Clean Water SRF Loan. The Loan
Agreement for Clean Water SRF Loan by and between the Borrower and the Board (the
"Loan Agreement") is hereby approved and the Chairman or Vice Chairman and
Secretary or Assistant Secretary of the Borrower are hereby authorized to execute same
for and on behalf of the Borrower, and to do all other lawful things to carry out the terms
and conditions of said Loan Agreement.
Section 3. Designation of Local Trustee and Execution of Trust Agreement. The
Borrower hereby designates The Bank of New York Mellon Trust Company, N.A., Tulsa,
Oklahoma, to serve as local trustee (the "Local Trustee ") of certain funds in relation to the
2013 Note. The Trust Agreement, by and between the Borrower and the Local Trustee,
pertaining to the 2013 Note (the "Trust Agreement ") is hereby approved and the
Chairman or Vice Chairman and Secretary or Assistant Secretary are hereby authorized
to execute same for and on behalf of the Borrower, and to do all other lawful things to
carry out the terms and conditions of said Trust Agreement.
Section 4. Execution of Secures Agreement. The Security Agreement by the
Borrower in favor of the Board (the "Security Agreement "), whereby the Borrower gives a
lien on the revenues of the System and a lien on the Sales Tax Revenue to the Board to
secure payment of the 2013 Note is hereby approved and the Chairman or Vice
Chairman and Secretary or Assistant Secretary are hereby authorized to execute same
for and on behalf of the Borrower, and do all other lawful things to carry out the terms
and conditions of said Security Agreement.
Section S. Covenants of Borrower. Until payment in full of the 2013 Note and
performance of all obligations owing to the Board under the Loan Agreement and the
instruments executed pursuant hereto, unless the Board shall otherwise consent in writing,
the Borrower hereby represents its intent to abide by and carry out the covenants
contained in the Security Agreement and the Loan Agreement, which covenants are
incorporated herein in their entirety.
Section 6. Lease. The Lease dated July 31, 1973, as amended by the Amendment
to Lease dated as of July 1, 1996, both by and between the City the Borrower (the
"Lease "), whereby the City leased to the Borrower its water, sanitary sewer, and garbage
and trash collection systems and the Bailey Ranch Golf Club is hereby ratified and
confirmed and the term of said Lease shall extend until the 2013 Note is paid.
Section 7. Subordinate Lien Sales Tax Agreement. The Subordinate Lien Sales Tax
Agreement, dated September 1, 2007, by and between the Borrower and the City and
pertaining to the year -to -year pledge of the Sales Tax Revenue of the City is hereby
ratified and confirmed.
Section 8. Parity Agreement. The Parity Agreement dated as of September 10,
2007, by and among the Board, the Borrower, and the Local Trustee is hereby ratified and
confirmed.
Section 9. Fees and Expenses. Upon closing of the referenced loan, the officers of
the Borrower are hereby authorized to disburse (from loan proceeds or other available
funds of the Borrower) those fees and expenses set forth on Exhibit "A" hereto, together
with such other fees and expenses as will be set forth on the Borrower's Closing Order to
be executed in connection with the closing of the financing referenced herein.
EXHIBIT "A"
Fees and Expenses Paid at Closing
The Public Finance Law Group PLLC
Legal Fee and Out -of- Pocket Expenses $36,750,00
Municipal Finance Services
Financial Advisory Fee and Out -of- Pocket Expenses $31,612.50
The Bank of New York Mellon Trust Company
Trustee Bank Acceptance Fee
Exhibit A - page 1
$50C
Section 10. Necessary Action. The Chairman or Vice Chairman and Secretary or
Assistant Secretary of the Borrower are hereby further authorized on behalf of the
Borrower to accept, receive, execute, attest, seal and deliver the above mentioned
documents and all additional documentation, certifications and instruments, including
but not limited to the execution of a legal services agreement with The Public Finance
Law Group PLLC, as Bond Counsel, and Municipal Finance Services, Inc., as Financial
Advisor, and to take such further actions as may be required in connection with the
transactions contemplated hereby, and are further authorized to approve and make
any changes to the documents approved by this Resolution, for and on behalf of the
Borrower, the execution and delivery of such documents being conclusive as to the
approval of any terms contained therein.
ATTEST:
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ADOPTED AND APPROVED THIS 3RD DAY OF DECEMBER, 2013.
THE OWASSO PUBLIC WORKS AUTHORITY
D g nebrake, Chairman
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TO: The Honorable Chair and Trustees 04C 0 3 2 ft
Owasso Public Works Authority 2013
FROM: Linda Jones
Finance Director
SUBJECT: Ranch Creek Sanitary Sewer Interceptor Improvements
Construction Contract - OWRB Loan, Resolution 2013 -07
DATE: November 27, 2013
BACKGROUND:
The OPWA Trustees approved the Ranch Creek Sewer Interceptor Improvement project
agreement for engineering services on May 15, 2012. On April 16, 2013, the Trustees authorized a
loan application with the Oklahoma Water Resources Board (OWRB) for financing the project.
The OWRB operates the State Revolving Fund (SRF) loan program and the Financial Assistance
Program (FAP). These programs provide low interest financing for eligible water, wastewater and
stormwater projects. The OPWA application has been approved by the OWRB for financing of
this project.
The OWRB staff has completed the final review of project bids and other documentation. A final
budget amount of $3,425,000 and an interest rate of 2.28% for the 12 -year loan have been
approved by the OWRB. All documents relating to this financing have been prepared by Allan
Brooks who serves as bond counsel for the City and the OPWA, and those documents have
been reviewed by City Attorney, Julie Lombardi.
Financing for this project requires action by both the City Council and the OPWA Trustees. The
loan must be approved by the OPWA Trustees and any indebtedness incurred by the OPWA
requires City Council approval.
PROPOSED ACTION:
OPWA Resolution No. 2013 -07 authorizes a loan from the OWRB in the amount of $3,425,000 with
an interest rate of 2.28% and approves the issuance of a Series 2013B note to the OWRB. The
resolution also affirms the existing security agreements, covenants, lease and sales tax pledge;
approves and authorizes payment of fees and expenses; and authorizes the Chairman and
Secretary to execute documents and to take further action as required to complete the
transaction. City Resolution No. 2013 -22 approves action taken by the OPWA authorizing
issuance of the Series 2013B note to the OWRB. The resolution also ratifies and confirms existing
agreements between the City and the OPWA and authorizes execution of documents.
RECOMMENDATION:
Staff recommends Trustee approval of OPWA Resolution No. 2013 -07 authorizing a Clean Water
State Revolving Fund (SRF) Loan from the Oklahoma Water Resources Board (OWRB) and
approving the issuance of a Promissory Note not to exceed $3,425,000; approving the issuance
of a Series 2013 Clean Water SRF Promissory Note to the Oklahoma Water Resources Board in the
total aggregate principal amount of $3,425,000, secured by a pledge of revenues and
authorizing its execution; approving and authorizing the execution of a loan agreement for a
Clean Water SRF Loan; designating a local Trustee and approving and execution of a security
agreement; ratifying and confirming a lease whereby the City of Owasso leases to the Owasso
Public Works Authority its water, sanitary sewer, and garbage and trash collection systems and
the Bailey Ranch Golf Club; ratifying and confirming a subordinate lien sales tax agreement;
ratifying and confirming a parity agreement; approving various covenants; approving and
authorizing payment of fees and expenses; and containing other provisions relating thereto.
ATTACHMENTS:
Resolution No. 2013 -07
Letter from Municipal Finance Services, Inc.
IF MUNICIPAL FINANCE SERVICES, INC.
aT P.O. BOX 747
EDMOND, OKLAHOMA 73083 -0747
405.340.1727
405.340.3607 (PAX)
TO: Sherry Bishop
Linda Jones
City of Owasso u�,j
FROM: Rick A. Smith
ly7�')
President iiii'"' ��.���!
DATE: November 14, 2013
RE: Repayment Term for Ranch Creek Interceptor Project
As you are aware, a loan application to the Oklahoma Water Resources Board (OWRB) was
submitted in May 2013 on behalf of The Owasso Public Works Authority to finance the Ranch
Creek Interceptor project through the Clean Water SRF Loan Program offered by the OWRB.
The application in the amount $3,990,000 was based on estimated construction costs along with
other estimated costs associated with the project. In addition, the requested repayment term was
15 years, resulting in an estimated annual debt payment of $320,855, upon project completion.
Several different terms were evaluated and it appeared the payment for a 15 -year term was viable
from a cash flow standpoint. By the way, the OWRB will be considering Owasso's loan
application at its meeting next Tuesday, November 19' for consideration and approval. We do
not expect any issues with the approval.
On Tuesday of this week, the City received actual construction bids with the low bid of
$2,864,543, considerably lower than the $3,078,015 in the original loan request. In addition, the
initial loan application amount included $100,000 for wetlands mitigation and $193,000 for
easements. The mitigation costs are no longer needed and the easements are now estimated to
cost $120,000. Consequently, the revised loan amount is now placed at $3,425,000, some
$565,000 less than the amount requested.
As a result of the lower loan amount, we re- evaluated repayment terms of 15 years, 12 Years and
10 Years and the debt payment impact now anticipated. Under the OWRB Loan Program, the
interest rate reflects the term of the loan, with a shorter term capturing a lower rate. Based on
today's MMD Scale used by the OWRB to set the rate, the rate on a 15 year term would be
2.46 %, a 12 year term —2.23% and a 10 year term —2.05%. As shown on the attached sheet, the
annual debt payment based on the lower loan amount for 12 years would be about what the
original payment target was a few months ago. Cutting the term down to 12 years from 15 years
saves about $200,000 in interest cost over the life of the loan. Also, as shown on the attached
sheet, a 10 -year term would increase annual payments by about $60,000 over the estimated
payment of $320,855.
By virtue of the outstanding bids received for the project and the resulting lower dollar amount
now set to be borrowed, the Authority could reduce the original term from 15 years to 12 years
and keep the debt payment at or near the level originally contemplated and save significant
interest costs. If a shorter term (10 years) is desired, we would suggest a full review of the City's
cash flow requirements to determine the impact on revenues and other anticipated needs of the
City to handle the higher debt payment.
PIease be aware that the interest rates shown in this memorandum reflect rates as of today's
index used by the OWRB to set the rate. The rate will be determined once the OWRB staff has
reviewed the bid documentation and contract documents. We expect this process to take about a
week and then the rate will be set before the Authority and City Council consider approval of the
final loan documents at their respective December 3, 2013 meetings.
We appreciate the opportunity to assist the City on this important financing and should you have
any questions, please let me know.
RAS: abb
Attachment
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