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HomeMy WebLinkAbout2012 01_OWRB_2012.02.07CITY OF OWASSO, OKLAHOMA RESOLUTION NO. 2012-01 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF OWASSO, OKLAHOMA, APPROVING ACTION TAKEN BY THE OWASSO PUBLIC WORKS AUTHORITY AUTHORIZING ISSUANCE, SALE AND DELIVERY OF A PROMISSORY NOTE OF THE AUTHORITY TO THE OKLAHOMA WATER RESOURCES BOARD; RATIFYING A CERTAIN LEASE, AS AMENDED; AUTHORIZING DOCUMENTS PERTAINING TO A YEAR-TO-YEAR PLEDGE OF CERTAIN SALES TAX REVENUE; AND CONTAINING OTHER PROVISIONS RELATED THERETO. WHEREAS, The Owasso Public Works Authority (the "Authority") did, by its Resolution adopted on February 7, 2012, authorize the issuance, sale and delivery of its Series 2012 Promissory Note to Oklahoma Water Resources Board, in order to refinance the outstanding principal amount of the Authority's Series 2002B Promissory Note to Oklahoma Water Resources Board, which financed improvements to the Authority's wastewater system; and WHEREAS, the Mayor and City Council hereby determine that the actions taken by the Authority should be authorized and approved. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OWASSO, OKLAHOMA THAT: Section 1. Issuance of Note. That the issuance, sale and delivery of The Owasso Public Works Authority, Tulsa County, Oklahoma, Series 2012 Promissory Note to Oklahoma Water Resources Board in the principal amount of not to exceed $1,095,000 (the "2012 Note"), all as approved by said Authority on February 7, 2012, be and hereby is authorized, approved and ratified. Section 2. Approval. That all actions heretofore taken by the Authority in connection with the issuance, sale and delivery of the 2012 Note, and all other aspects of the transaction be and are hereby authorized, approved and ratified. Section 3. Lease. The Lease dated July 31, 1973, as amended by an Amendment to Lease dated as of July 1, 1996, between the City and the Authority, whereby the City leases its water, sanitary sewer, garbage and trash collection systems and the Bailey Ranch Golf Club to the Authority, is hereby ratified and confirmed and the term of said Lease, as amended, shall extend until the 2012 Note is paid. Section 4. Sales Tax Pledge. That the Mayor or Vice Mayor and City Clerk or Assistant City Clerk be and are hereby authorized to execute and deliver any and all documentation on behalf of the City pertaining to a year-to-year pledge of certain sales tax revenue levied by the City. Section 5. Necessary Action. That the Mayor or Vice Mayor and City Clerk or Assistant City Clerk be and hereby are authorized and empowered to execute and deliver for and on behalf of the City any and all other documents or instruments reasonably necessary to accomplish the issuance, sale and delivery of the 2012 Note and all other aspects of the transaction. [Remainder of Page Intentionally Left Blank] APPROVED AND ADOPTED THIS 7TH DAY OF FEBRUARY, 2012. (SEAL) ATTEST: OF OFFICIAL 0 na Doug V o ebrake, Mayor Sherry Bislfop, City Clerk 10% - IF APO% wA - V The City Wit7eauf Limits. APPROVED BY COUNCIL TO: The Honorable Mayor and City Council FEB 7 2012 City of Owasso FROM: Sherry Bishop Assistant City Manager, Administrative Services SUBJECT: City Resolution No. 2012-01 - OWRB Loan Refinancing DATE: February 3, 2011 BACKGROUND: The Oklahoma Water Resources Board (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. For the past twenty years, all of the OPWA's major water and wastewater projects have been financed by the OWRB. Due to the low interest rates available at this time, financial advisors have been analyzing all debt for any opportunity to refinance that would provide a savings. Most of the debt either cannot be paid off early or is not callable at this time. The Series 2002B Promissory Note to the OWRB is callable at 102% on October 1, 2012. The note was originally issued in 2002 for $1,550,000 with a final maturity of October 2022 and has a principal balance remaining of $1,010,000. Based on current interest rates, refinancing the Series 2002B Promissory Note to OWRB will result in gross debt service (cash flow) savings of approximately $156,000. The new loan size (estimated at approximately $1,050,000) will be sufficient to pay all of the estimated $50,000 in transaction costs, fund the reserve fund, and pay the remaining $1,010,000 principal plus accrued interest on the 2002B Note. The final maturity of the new loan will be October 1, 2016 (shortening the 20028 note by 6 years). Approval of this refinancing would be similar to approval of other long-term debt in that it would require approval of resolutions by 2/3 of the City Council (4 yes votes) and approval by a majority of the OPWA Trustees. This approval would be different, however, in that the Council and Trustees will be asked to authorize the refinancing before the final amounts and interest rates are set for the OWRB bond issue. The OWRB will issue bonds in March for the proposed refinancing of approximately $23 million of debt by 11 different entities (one of which is the OPWA). The various needs of the different entities and the current bond market will affect the structure of the bond issue by the OWRB. The bonds will be issued with a mix of premiums and discounts to achieve the best effective interest rates. In order to allow the OWRB the maximum flexibility they need to create the best financing, the authorization by the OPWA must include a principal amount and an interest rate that allows for the premiums and discounts that may be utilized by the OWRB when these bonds are sold in March. Those amounts to be authorized in the OPWA resolution are much greater than what will be the actual final payment amount and the effective interest rate to the OPWA. The OPWA resolution included in the agenda authorizes a note in a principal amount not to exceed $1,095,000 and a net interest cost not to exceed 4.5%. These amounts are to allow the OWRB to use premiums and discounts to get the best effective interest rates and to give us the best savings. PROPOSED ACTION: OPWA Resolution No. 2012-01 authorizes an application to the OWRB for the refinancing of the 2002B Series Promissory Note and approves the professional services agreements with bond counsel, tax counsel and financial advisors. OPWA Resolution No. 2012-02 authorizes a loan from the OWRB and approves the issuance of a Promissory Note not to exceed $1,095,000 for the purpose of refinancing the Series 2002B Promissory Note and provides that the Net Interest Cost on the 2012 Note shall not exceed 4.50% per annum and including other related provisions. City Resolution No. 2012-01 approves the action taken by the OPWA authorizing the issuance of a Promissory Note to the OWRB and including other related provisions. RECOMMENDATION: Staff recommends approval of City Resolution No. 2012-01 approving the action taken by the OPWA authorizing the issuance of a Promissory Note to the OWRB and including other related provisions. ATTACHMENTS: City Resolution No. 2012-01