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HomeMy WebLinkAbout2012 01_OPWA_OWRB Refinancing_2012.02.07THE OWASSO PUBLIC WORKS AUTHORITY RESOLUTION NO. 2012-01 A RESOLUTION AGREEING TO FILE APPLICATION WITH THE OKLAHOMA WATER RESOURCES BOARD (THE "OWRB") FOR FINANCIAL ASSISTANCE THROUGH THE STATE LOAN PROGRAM, WITH THE LOAN PROCEEDS BEING FOR THE PURPOSE OF REFINANCING CERTAIN INDEBTEDNESS OF THE OWASSO PUBLIC WORKS AUTHORITY, TULSA COUNTY, OKLAHOMA; APPROVING PROFESSIONAL SERVICES AGREEMENTS; AND CONTAINING OTHER PROVISIONS RELATED THERETO. WHEREAS, The Owasso Public Works Authority, Tulsa County, Oklahoma (the "Authority") has under consideration the refinancing of its Series 2002B Promissory Note to Oklahoma Water Resources Board dated December 30, 2002, in the original principal amount of $1,550,000 (the "Refinancing"); and WHEREAS, it is deemed desirable for the Authority to give preliminary authorization for the issuance of obligations for such purpose; and WHEREAS, the Oklahoma Water Resources Board has made monies available to qualified entities for the financing of certain qualifying projects; and WHEREAS, the Authority hereby agrees to file an application(s) with the Oklahoma Water Resources Board for financial assistance in the aggregate amount as will be sufficient to pay certain costs associated with the referenced Refinancing. BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE OWASSO PUBLIC WORKS AUTHORITY, TULSA COUNTY, OKLAHOMA: Section 1. Application. The Authority shall file an Application(s) with the Oklahoma Water Resources Board seeking financial assistance through the State Loan Program; and the Chairman or Vice Chairman and Secretary or Assistant Secretary of the Authority are hereby authorized to execute said Application(s) for and on behalf of the Authority. The Authority is further authorized to advance to the Oklahoma Water Resources Board the necessary application fees in connection with the referenced Application(s), if any. Section 2. Professional Services Agreements. The Authority is authorized to enter into legal services agreements with The Public Finance Law Group PLLC, as the Authority's Bond Counsel, and with Hawkins Delafield & Wood LLP, and the Authority's Special Tax Counsel, and a professional services agreement with Municipal Finance Services, Inc., as the Authority's Financial Advisor. Section 3. Other Matters. The Chairman or Vice Chairman and Secretary or Assistant Secretary of the Authority are hereby authorized and directed to do all other lawful things necessary to carry out the terms and conditions of this Resolution. [Remainder of Page Left Blank Intentionally] PASSED AND APPROVED THIS 7TH DAY OF FEBRUARY, 2012. ``tj%jIOIIIII,/ wo 40 Q SEAL o (SEAL) ' -b a 06. z r ATTEST: Q By Sherry Bi op, Secreta THE OWASSO PUBLIC WORDS AUTHORITY, TULSA COUNTY, OKLAHOMA By x ~ Dougu orieebrake, Chairman The CAPPROVED BY COUNCIL . TO: The Honorable Chair and Trustees FEB 7 2012 Owasso Public Works Authority FROM: Sherry Bishop Assistant City Manager, Administrative Services SUBJECT: OPWA 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 2002B 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 OPWA Resolution No. 2012-01 authorizing an application to the OWRB for the refinancing of the 2002B Series Promissory Note and including other related provisions. ATTACHMENTS: OPWA Resolution No. 2012-01