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HomeMy WebLinkAboutOrd 166-2004 GTUA Bonds, Series 2005.pdfORDINANCE NO. ,�y-ZD0Y AN ORDINANCE by the City Council of the City of Anna, Texas, relating to bonds proposed to be issued and delivered by the Greater Texoma Utility Authority, approving the issuance thereof, and the facilities to be constructed or acquired by such Authority. WHEREAS, the Greater Texoma Utility Authority (the "Authority") and the City of Anna, Texas (the "City"), have previously executed and delivered an Amended and Restated Contract for Water Supply. and Sewer Service, dated as of November 23, 2004 (the "Contract"), whereby the Authority is to provide water and sewer services to the City; WHEREAS, under Section 4.15 of the Contract, it is provided that the City shall approve the issuance by the Authority of any bonds that are to be payable (in whole or in part) from certain moneys that the City has contracted to pay under the provisions of the Contract; WHEREAS, in connection with the proposed "Greater Texoma Utility Authority Contract Revenue Bonds, Series 2005 (Collin/Grayson Water Transmission Project)" (the "Bonds"), the Texas Water Development Board (the "Board") has agreed, pursuant to an Application Requesting Financial Assistance (the "Application"), to purchase the Bonds and, therefore, it is neither necessary nor advisable for the Authority to prepare a Notice of Sale because, insofar as the City is concerned, the Application contains sufficient information to accomplish the purpose of a Notice of Sale; and WHEREAS, the net effective interest rate on the Bonds will not exceed fifteen percent (15%) per annum and it is now appropriate for this Council to approve the Application (in lieu of approving a Notice of Sale with respect to the Bonds) as well as the issuance and delivery of the Bonds and the facilities to be constructed or acquired with the proceeds of the Bonds for the project described in Exhibit A (the "Pipeline Project") attached to the Resolution of the Authority authorizing the Bonds (the "Bond Resolution"); now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ANNA, TEXAS: SECTION 1: The facilities to be constructed, acquired, and improved by the Authority with the proceeds of the Bonds for the Pipeline Project described in Exhibit A hereto and in Exhibit A attached to the Bond Resolution are hereby approved. The use of the proceeds of the Bonds, as described in Exhibit A to the Bond Resolution, is hereby approved. The Bond Resolution is approved as to form and content, and the City acknowledges that the payment of principal of and interest on the Bonds is payable, in whole or in part, from payments to be made by the City under and pursuant to the Contract. The City agrees to provide the reports described in the Bond Resolution within the times specified therein, in compliance with the Board's commitment. The City agrees with the obligations and conditions set forth in the Board's Commitment 03-32. A copy of such commitment is attached hereto as Exhibit B. SECTION 2: It is the purpose and intent of the City Council of the City to approve the Bond Resolution, and the facilities to be constructed, acquired, and improved in full accordance with the provisions of the Contract mentioned in the preamble hereof. To the extent required by the Board or the Office of the Attorney General of Texas, the Authority is authorized by this City Council to make changes and revisions to the Bond Resolution from the form approved by this ordinance in order to expedite the delivery of the Bonds. It is the intent of the City to authorize the Authority to proceed with the construction, acquisition, and improvement of the facilities at 45546415.1\10304552 the earliest possible date, but nothing herein shall be construed as a limitation upon the right and power of the City to approve a change in the facilities for which the Bonds are to be issued (but not the purpose for which the Bonds are to be issued as set forth in the Bond Resolution), the City specifically reserving the right to modify the facilities for which the Bonds are being issued if the Authority and the City agree such modification should be made. SECTION 3: The City hereby acknowledges that it is a "Participating City" in the Pipeline Project, together with the Cities of Howe, Texas, Melissa, Texas, and Van Alstyne, Texas (each also a "Participating City"). As a Participating City, the City hereby agrees that during the "Non -flow Months" (defined in the Worksheet attached hereto as Exhibit C, which Worksheet is incorporated by reference into this Ordinance and made a part hereof for all purposes), the City shall make payments to the Authority, under the Contract, sufficient to pay 25% of the total debt service due on the Bonds (together with all other payments, fees, and charges due to the Authority under the Contract), and, furthermore, shall, during "Flow Months" (also defined in Exhibit C), make payments to the Authority, under the Contract, in amounts sufficient to pay that portion of the debt service due on the Bonds, (which may be expressed as a percentage of the total debt service due on the Bonds) equal to the City's fractional share thereof, calculated upon the basis set forth in Exhibit C and described under "Pipeline Project Contract (Debt Service) Obligation during Flow Months." SECTION 4: In all respects the Contract is re -approved and shall be and remain in full force as the agreement of the parties. 45546415.1/10304552 -2- PASSED AND APPROVED, this the 14th day of December, 2004. of Anna, Texas ATTEST: i y S cretary City,6f Anna, Texas (City Sea[) 45546415.1\10304552 S-1 EXHIBIT A PIPELINE PROJECT DESCRIPTION Construction, acquisition, and improvement of water system facilities, to include: a pipeline with diameters between 18 inches and 36 inches beginning on the north side of the city of McKinney, Texas, near the intersection of Wilmeth Road and Skyline Drive. This line extends eastward along the city of Irving, Texas, water transmission line right-of-way to a pump station site to be located near the intersection of State Highway 5 and F.M. 543. A pump station and ground storage reservoir will be constructed at that site and the treated water will be repumped into a second pipeline with diameters between 16 inches and 30 inches. The second line will continue eastward along the city of Irving water transmission to the east right-of-way line of the Dallas Area Rapid Transit ("DART') rail right-of-way (formerly S&P rail right-of-way). From that point, the proposed pipeline will extend northward through the cities of Melissa, Texas, Anna, Texas, Van Alstyne, Texas, and terminate at a water storage reservoir adjacent to the existing city of Howe, Texas, water storage facilities. 45546415.1\10304552 A-1 EXHIBIT B COMMITMENT OF THE TEXAS WATER DEVELOPMENT BOARD 45546415.1\10304552 B_1 0 4( A RESOLUTION OF THE TEXAS WATER DEVELOPMENT BOARD APPROVING AN APPLICATION FOR FINANCIAL ASSISTANCE IN THE TOTAL AMOUNT OF $11,475,000 CONSISTING OF THE PURCHASE OF: $2,800,000 GREATER TEXOMA UTILITY AUTHORITY, CONTRACT REVENUE BONDS, PROPOSED SERIES 2003 (CITIES OF HOWE, VAN ALSTYNE, ANNA AND MELISSA); AND $8,675,000 FOR THE BOARD'S ACQUISITION OF AN OWNERSHIP INTEREST IN A REGIONAL WATER SYSTEM PROJECT THROUGH THE STATE PARTICIPATION ACCOUNT OF THE TEXAS WATER DEVELOPMENT FUNDS (03-32) WHEREAS, Greater Texoma Utility Authority (the "Authority"), has filed an application seeking financial assistance in the total amount of $11,475,000 as follows: $2,800,000 from the Texas Water Development Funds; and $8,675,000 from the State Participation Account of the Texas Water Development Funds to finance a regional water system (the "Project"); and WHEREAS, the Board, under the authority of Article III, Sections 49-d, 49-d-2 and 49-d-8 of the Texas Constitution, Chapter 16, Subchapters E and F and Chapter 17, Subchapter L of the Texas Water Code, is authorized to use the State Participation Account of the Texas Water Development Funds for the development of projects; and WHEREAS, the Authority seeks financial assistance from the Texas Water Development Board (the "Board") in the total amount of $11,475,000 consisting of the Board's purchase of: $2,800,000 Greater Texoma Utility Authority Contract Revenue Bonds, proposed Series 2003, [Cities of Howe, Van Alstyne, Anna and Melissa Projects] (the "Cities"); and $8,675,000 for the Board's acquisition of an ownership interest in a regional water system through the State Participation Account of the Texas Water Development Funds, all as is more specifically set forth in the application and in recommendations of the Deputy Executive Administrator for the Office of Project Finance and Construction Assistance, to which documents express reference is made; and WHEREAS, the Authority has requested that the Board acquire an undivided interest in the proposed Project not to exceed 75.6 percent (75.6%) of the total Project costs, in order to build excess capacity in the water supply project, using the State Participation Account of the Texas Water Development Funds; and WHEREAS, the proposed Project is expected to cost $11,475,000, of which the Board's share, pursuant to this commitment, will not exceed $8,675,000; and WHEREAS, the proposed Project will provide a surface water supply from the Red River Basin to the Trinity River Basin; and WHEREAS, the Project as proposed is not now consistent with the Region C Water Plan or the objectives of the State Water Plan; and WHEREAS, the Authority will purchase the Board's interest in the Project in accordance with the terms in the Master Agreement to be executed between the Authority and the Board; and WHEREAS, the Board has considered the long-term needs of the area, the costs of the proposed Project, and the feasibility of the site; and WHEREAS, in accordance with Section 17.124 of the Texas Water Code, as revised, the Board has carefully considered all matters required by law and in particular the following for the financial assistance provided from the Texas Water Development Funds: 1. the needs of the area to be served by the water supply project, the benefit of the water supply project to the area, the relationship of the water supply project to the overall, statewide water needs, and the relationship of the water supply project to the state water plan; and the availability of revenue to the Authority, from all sources, for the ultimate repayment of the cost of the water supply project, including interest. WHEREAS, the Board hereby finds that for the loan provided from the Texas Water Development Funds: that in its opinion the revenue pledged by the Authority will be sufficient to meet all the obligations assumed by the political subdivision; 2. that the public interest requires state assistance in the water supply project; and that the Authority and the Cities of Howe, Van Alstyne and Anna have adopted and implemented a program of water conservation for the more efficient use of water that will meet reasonably anticipated local needs and conditions and that incorporates practices, techniques or technology prescribed by the Texas Water Code and rules of the Board. WHEREAS, the Board finds that for the financial assistance provided from the State Participation Account of the Texas Water Development Funds: it is reasonable to expect that the state will recover its investment in the facility; 2. the cost of the facility exceeds the current financing capabilities of the area involved, and the optimum regional development of the facility cannot be reasonably financed by local interests without state participation; 3. the public interest will be served by acquisition of the facility; 4. the facility to be constructed or reconstructed contemplates the optimum regional development, which is reasonably required under all existing circumstances of the site; I W 5. the Authority is willing and reasonably able to finance that portion of the cost of the facility that the Board does not acquire; 6. all necessary permits have been obtained; and that the Authority and the Cities of Howe, Van Alstyne and Anna have adopted and implemented a program of water conservation for the more efficient use of water that will meet reasonable anticipated local needs and conditions and that incorporates practices, techniques or technology prescribed by the Texas Water Code and rules of the Board. NOW THEREFORE, based on said considerations and findings, the Texas Water Development Board resolves as follows: a commitment is made by the Board in the total amount of $11,475,000 consisting of the Board's purchase of: $2,800,000 Greater Texoma Utility Authority Contract Revenue Bonds, proposed Series 2003 (Cities of Howe, Van Alstyne, Anna and Melissa Projects), from the Texas Water Development Funds; and $8,675,000 for the Board's acquisition of an ownership interest in a regional water system, from the State Participation Account of the Texas Water Development Funds; 2. this commitment will expire on March 19, 2004; and 3. staff is authorized to negotiate the terms of a Master Agreement, which will set forth the responsibilities, duties and liabilities of each party. Such commitment for the loan provided from the Texas Water Development Funds is conditioned as follows: that the bond counsel opinion must include an opinion that the interest on the obligations is excludable from gross income or is exempt from Federal income taxation. Bond counsel may rely on covenants and representations of the issuer in rendering this opinion; 2. that the bond counsel opinion must include an opinion that the obligations are not "private activity bonds." Bond counsel may rely on covenants and representations of the issuer on rendering this opinion; that the resolution authorizing the issuance of the obligations must include that the proceeds of the obligations and the facilities financed with the proceeds of the obligations will not be used in a manner that would cause the obligations to be "private activity bonds"; 4. that the resolution authorizing the issuance of the obligations must include that the issuer will comply with the provisions of Section 148 of the Internal Revenue Code of 1986 (relating to arbitrage); 5. that the resolution authorizing the issuance of the obligations must include that the issuer will make any required rebate to the United States of arbitrage earnings; that the resolution authorizing the issuance of the obligations must include that the issuer will take no action which would cause the interest on the obligations to be includable in gross income for Federal income tax purposes; 7. that the transcript must include a No Arbitrage Certificate or similar certificate setting forth the issuer's reasonable expectations regarding the use, expenditure and investment of the proceeds of the obligations; 8. that the transcript must include evidence that the information reporting requirements of Section 149(e) of the hitemal Revenue Code of 1986 will be satisfied. This requirement is currently satisfied by filing IRS Form 8038 with the Internal Revenue Service. A completed copy of IRS Form 8038 must be provided to the Development Fund Manager prior to release of funds; 9. that the Authority will not cause or permit the obligations to be treated as "Federally Guaranteed" obligations within the meaning of section 149(b) of the Internal Revenue Code; 10. that this commitment is contingent on a future sale of bonds or on the availability of funds on hand; 11. that the resolution authorizing the issuance of obligations will state that obligations can be called for early redemption only in inverse order of maturity, and on any date beginning on or after the first interest payment date which is 10 years from the dated date of the obligations, at a redemption price of par, together with accrued interest to the date fixed for redemption; 12. that the Authority, or an obligated person for whom financial or operating data is presented either individually or in combination with other issuers of the Authority obligations or obligated persons, will, at a minimum, covenant to comply with requirements for continuing disclosure on an ongoing basis substantially in the manner required by Securities and Exchange Commission (SEC) rule 15c2-12 and determined as if the Board were a Participating Underwriter within the meaning of such rule, such continuing disclosure undertaking being for the benefit of the Board and the beneficial owner of the Authority obligations, if the Board sells or otherwise transfers such obligations, and the beneficial owners of the Board's certificates if the Authority is an obligated person with respect to such certificates under rule 15c2-12; dr . 13, that the resolution authorizing the obligations contain a provision that the Authority will maintain rates and charges to the Contracting Parties sufficient to meet the debt service requirements on the outstanding'obligations of the Authority that are supported by such revenues, and that the Authority will require in its contract with the Contracting Parties that the Contracting Parties maintain rates and charges for its water system sufficient to pay all Contracting Parties obligations secured by and made payable from the revenues derived from the operation of its water system; 14. that prior to release of funds, the Authority will execute a water treatment contract with the City of Sherman, the form and substance of which is satisfactory to the Executive Administrator of the Board; 15. that prior to release of funds, the Authority will provide evidence to the Board sufficient that the Board may make a determination that the needs to be addressed by the Project will addressed in a manner that is consistent with the Region C water plan, and the objectives of the State Water Plan; 16. that prior to the release of funds for the costs of planning, engineering, architectural, legal, title, fiscal, or economic investigation, studies, surveys, or designs, the Executive Administrator of the Board must either issue a written finding that the Authority has the right to use water that the project financed by the Board will provide or a written determination that a reasonable expectation exists that such a finding will be made before the release of funds for construction; 17. that prior to the release of construction funds, the Executive Administrator of the Board must have made a written finding that the Authority has the right to use water that the project financed by the Board will provide; and 18. that prior to closing, the City of Melissa shall adopt and implement the program of water conservation as approved by the Board.' Such commitment for the Board's acquisition of an interest in the Project through the State Participation Account of the Texas Water Development Funds is conditioned as follows: that the Authority agrees to take such actions as are necessary to assure, or to refrain from such actions as would materially adversely affect, the excludability from gross income for Federal income tax purposes of interest payable on such obligations as are issued by the Board to finance its acquisition of an undivided interest in the Project; that prior to release of funds, the Authority will execute a water treatment contract with the City of Sherman, the form and substance of which is satisfactory to the Executive Administrator of the Board; that prior to release of funds, the Authority and the Board will execute a Master Agreement which will set forth the responsibilities, duties and liabilities of each party; 4. that prior to release of funds, the Authority will provide evidence to the Board sufficient that the Board may make a determination that the needs to be addressed by the Project will addressed in a manner that is consistent with the Region C water plan, and the objectives of the State Water Plan; and 5. that prior to closing, the City of Melissa shall adopt and implement the program of water conservation as approved by the Board. PROVIDED, HOWEVER, the foregoing resolution is subject to the following additional requirements prior to funding of the loan: issuance of a written approving opinion of the Attorney General of the State of Texas stating that all of the requirements of the laws under which said obligations were issued have been complied with; that said obligations were issued in conformity with the Constitution and laws of the State of Texas; and that said obligations are valid and binding obligations of the issuer; 2. compliance with all applicable requirements contained in the Rules, Regulations, and Policies of the Texas Water Development Board; 3. that this commitment is contingent on a future sale of bonds or on the availability of funds on hand; and 4. approval by the Attorney General of the State of Texas of the legality of the Master Agreement and any other contract relating to the Board's participation in the Project. APPROVED and ordered of record this the 19th day of March 2003. TEXAS WATER DEVELOPMENT BOARD Y� E. G. Rod Pittman, Chairman ATTEST: evin Ward Executive Administrator EXHIBIT C GREATER TEXOMA UTILITY AUTHORITY — PIPELINE PROJECT WATER AND DEBT SERVICE COSTS ALLOCATION WORKSHEET Pipeline Protect Contract (Debt Service) Obligation during Non -flow Months: Each Participating City has entered an Amended and Restated Contract for Water Supply and Sewer Service with the Authority ("Service Contract"). Under the Service Contract, a Participating City makes a monthly payment to cover (i) debt service costs on Authority obligations issued to finance improvements to the Participating City's system and (ii) other costs. With respect to the period of time commencing when any Authority obligations relating to the Collin/Grayson Water Transmission Project (the "Pipeline Project") are issued and outstanding ("Pipeline Bonds") until water has been delivered to each Participating City for three (3) calendar months (and during any period of time thereafter [upon a monthly basis, with part of a month being considered a whole month] when water is not flowing to each Participating City) ("Non -flow Months"), each Participating City shall be charged under its Service Contract a debt service component in respect of the Pipeline Project equal to 25% of the total debt service due in that fiscal year of the Authority, payable in monthly amortization payments as set forth in the respective Service Contracts. For example, if total debt service in the Authority's fiscal year 2005 will be $200,000, and if all of the Authority's fiscal year 2005 consists of Non -flow Months, each Participating City will make Service Contract payments totaling $50,000 within such fiscal year of the Authority for Pipeline Project debt service (exclusive of other Service Contract costs due), payable in monthly amortization payments. Pipeline Water Rates: From the time water has been delivered to each Participating City through the Pipeline for one month and forward, on a monthly basis, each Participating City shall be charged for water at the greater of its minimum take -or -pay amount under the Potable Water Supply Contract made and entered between such Participating City and the Authority ("Water Contract") or the actual amount of water taken, also as specified in each Water Contract. Pipeline Protect Contract (Debt Service) Obligation during Flow Months: From the time water has been delivered to each Participating City through the Pipeline for three (3) months (i.e., beginning in the fourth month in which water has flowed through the Pipeline to all Participating Cities) and forward and while water continues to flow to each Participating City, upon a monthly basis ("Flow Month"), each Participating City shall be charged for debt service on Pipeline Bonds based upon: the amount of water actually taken by such Participating City (numerator) over the total amount of water delivered through the Pipeline (denominator), each of such Participating City's fractional portion of the total amount of water delivered through the Pipeline being expressed as a percentage of the total amount of water delivered. A Participating City's percentage of the total amount of water delivered through the Pipeline in turn reflects such Participating City's percentage (or, fractional) share of the aggregate debt service liability for the Pipeline Project to be paid in the following month. (The sum of the four (4) fractional amounts shall always equal 100% of the debt service on the Project Bonds to be paid by the Authority.) 45546415.1\10304552 C-1 For Example: In month 5, assume the aggregate minimum take -or -pay is 800,000 gallons. In the aggregate, 1,000,000 gallons are delivered. (For water, each Participating City pays the greater of its take -or -pay or the cost of the water taken, as set forth in the Water Contract.) Assume $20,000 is the aggregate monthly amortization amount of debt service to be paid on Pipeline Bonds. Each Participating City's share of the total debt service obligation is as follows: Participating City Minimum Take -or -pay Amount – Gallons— Month 5 Actual Amount Taken – Gallons— Month 5 Amount of water to be paid for in month 6 under Water Contract Percentage of debt service liability based upon water taken Pro -rated amount of debt service payment due in month 6 Anna 200,000 350,000 350,000 35% $7,000.00 Howe 150,000 100,000 150,000 10% $2,000.00 Melissa 300,000 400,000 400,000 40% $8,000.00 Van Alstyne 150,000 150,000 150,000 15% $3,000.00 Total 800,000 1,000,000 1,100,000 100.0% $20,000.00 Additional Examples, changing only the amount of water actually taken: Participating City Minimum Take -or -pay Amount– Gallons— Month 6 Actual Amount Taken– Gallons— Month 6 Amount of water to be paid for in month 7 under Water Contract Percentage of debt service liability based upon water taken Pro -rated amount of debt service payment due in month 7 Anna 200,000 150,000 200,000 25.0% $5,000.00 Howe 150,000 100,000 150,000 16.7% $3,340.00 Melissa 300,000 250,000 300,000 41.6% $8,320.00 Van Alstyne 150,000 100,000 150,000 16.7% $3,340.00 Total 800,000 600,000 800,000 100.0% $20,000.00 45546415.1/10304552 C-2 Participating City Minimum Take-or-pay Amount– Gallons— Month 7 Actual Amount Taken– Gallons— Month 7 Amount of water to be paid for in month 8 under Water Contract Percentage of debt service liability based upon water taken Pro-rated amount of debt service payment due in month 8 Anna 200,000 300,000 300,000 31.6% $6,320.00 Howe 150,000 0** 150,000 -0-**% $0.00** Melissa 300,000 450,000 450,000 47.4% $9,480.00 Van Alstyne 150,000 200,000 200,000 21.0% $4,200.00 Total 80,000 95,000 110,000 100.0% $20,000.00 **In this example, water is available for delivery to Howe, but Howe takes none. Howe still pays for the minimum amount of water under its Water Contract, but pays the amount of debt service corresponding to its fractional share of the total amount of water actually delivered, which fractional share is -0-. 45546415.1/10304552 C-3