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HomeMy WebLinkAbout2012 02_OPWA_OWRB Refinancing_2012.02.07THE OWASSO PUBLIC WORKS AUTHORITY RESOLUTION NO. 2012-02 A RESOLUTION OF THE OWASSO PUBLIC WORKS AUTHORITY AUTHORIZING A LOAN FROM THE OKLAHOMA WATER RESOURCES BOARD IN THE TOTAL AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $1,095,000; APPROVING THE ISSUANCE OF A PROMISSORY NOTE IN THE TOTAL AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $1,095,000, SECURED BY A PLEDGE OF REVENUES AND AUTHORIZING ITS EXECUTION; DESIGNATING THE LOCAL TRUSTEE; APPROVING AND AUTHORIZING THE EXECUTION OF A LOAN AGREEMENT; APPROVING AND AUTHORIZING THE EXECUTION OF A SERIES 2012 SUPPLEMENTAL NOTE INDENTURE; RATIFYING A LEASE, AS AMENDED BY AN AMENDMENT TO LEASE; APPROVING VARIOUS COVENANTS; APPROVING AND AUTHORIZING PAYMENT OF FEES AND EXPENSES; AUTHORIZING DOCUMENTS PERTAINING TO A YEAR-TO-YEAR PLEDGE OF CERTAIN SALES TAX REVENUE; 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 heretofore issued its Series 2002B Promissory Note to Oklahoma Water Resources Board in the original principal amount of $1,550,000 (the "2002B Note"); and WHEREAS, the 2002B Note provided long term financing for wastewater system improvements constructed by the Borrower; and WHEREAS, the Board has approved a loan application of the Borrower and the Borrower has determined to borrow money from the Board for the purpose of refinancing the outstanding principal amount of the 2002B Note and to evidence such loan by the issuance of the Borrower's Series 2012 Promissory Note to Oklahoma Water Resources Board in the original principal amount of not to exceed $1,095,000 (the "2012 Note"), said Note being secured by a pledge of revenue derived from Borrower's water, sanitary sewer, garbage and trash collection systems and the Bailey Ranch Golf Club (hereinafter collectively the "System") and the revenue generated pursuant to a two percent (2%) sales tax received by the Borrower from the City, which sales tax is levied pursuant to Ordinance No. 103 of the City, as amended by Ordinance No. 153 of said City (the "Limited Sales Tax Revenue"). 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 2012 Note payable to the Board. The principal amount of the 2012 Note shall not exceed $1,095,000, and the Net Interest Cost on the 2012 Note shall not exceed 4.50% per annum, and the maturity date shall be not later than October 1, 2016. The Chairman or Vice Chairman shall be authorized to execute a Certificate of Determination establishing the principal amount, maturity, and rate of interest on the Note. The 2012 Note will be secured by a lien on the revenues of the System and a year-to-year pledge of the Limited Sales Tax Revenue. The officers of the Borrower are hereby authorized and directed to execute the 2012 Note and to do any and all lawful things to effect said loan and secure said loan from the Board. Section 2. Designation of Local Trustee. The Borrower hereby designates The Bank of New York Mellon Trust Company, N.A., to serve as the Local Trustee of certain funds in relation to the 2012 Note. Section 3. Execution of Loan Agreement. The Loan Agreement, 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 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 4. Execution of Series 2012 Supplemental Note Indenture. The Series 2012 Supplemental Note Indenture, by and between the Borrower and the Local Trustee (which supplements and amends the General Bond Indenture dated as of December 1, 1997, between said parties and as heretofore supplemented and amended), pertaining to the 2012 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 to do all other lawful things to carry out the terms and conditions of said Series 2012 Supplemental Note Indenture. The General Bond Indenture as heretofore supplemented and amended and as supplemented pursuant to the terms of the Series 2012 Supplemental Note Indenture shall be referred to herein collectively as the "Indenture". Section 5. Covenants of Borrower. Until payment in full of the 2012 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 Indenture and the Loan Agreement, which covenants are incorporated herein in their entirety. Section 6. Lease. The Lease dated July 31, 1973, as amended by an Amendment to Lease dated as of July 1, 1996, between the City of Owasso, Oklahoma, and the Borrower, whereby the City leased its water, sanitary sewer, garbage and trash collection systems and the Bailey Ranch Golf Club to the Borrower, is hereby ratified and confirmed and the term of said Lease, as amended, shall extend until the 2012 Note is paid. Section 7. 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) certain fees and expenses all as set forth on Exhibit "A" hereto. Section 8. Sales Tax Pledge. That the Chairman or Vice Chairman and Secretary or Assistant Secretary of the Borrower be and are hereby authorized to execute and deliver any and all documentation on behalf of the Borrower pertaining to the year-to-year pledge of the Limited Sales Tax Revenue for purposes of securing the 2012 Note. Section 9. 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 approve the disbursement of the proceeds of the 2012 Note and other funds of the Borrower in connection with the issuance of the 2012 Note and the accomplishment of the transaction contemplated herein, and further, to accept, receive, execute, attest, seal and deliver the above mentioned documents and all additional documentation, certifications and instruments and to take such further actions as may be required in connection with the transaction 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. [Remainder of Page Intentionally Left Blank] APPROVED AND ADOPTED THIS 7TH DAY OF FEBRUARY, 2012. ww`~ J~XNC "wO~''r O (SEAL) _ Q SEAL s .•''~yw: ATTEST: . O O `w THE OWASSO PUBLIC WORKS AUTHORITY f Doug . ebrake, Chairman Sherry Bis&, Secreta EXHIBIT "A" Fees and Expenses Paid at Closing Oklahoma Water Resources Board Issuance Costs $15,000.00* The Public Finance Law Group PLLC Legal Fee and Reimbursement of Expenses $20,000.00 Hawkins Delafield & Wood LLP Special Tax Counsel Legal Fee $7,500.00 Municipal Finance Services, Inc. Financial Advisory Fee and Reimbursement of Expenses $10,000.00 The Bank of New York Mellon Trust Company, N.A. Acceptance Fee $500.00 * Not to exceed amount; to be established pursuant to Closing Order of Borrower OThe (City Wirr,ut Li€nits. APPROVED 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. 2012-02 - 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 20028 Promissory Note to the OWRB is callable at 102 0 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 4.50. 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. 2012-02 authorizing a loan from the OWRB and approving the issuance of a Promissory Note for the purpose of refinancing the Series 2002B Promissory Note and including other related provisions. ATTACHMENTS: OPWA Resolution No. 2012-02