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HomeMy WebLinkAboutResolution 131-1998 • � 1 RESOLUTION 131-98 RESOLUTION RELATING TO LEASE-PURCHASE OF CITY FACILITIES; CONCURRING IN THE ACTIONS OF THE CITY COMMISSION; AGREEING TO CERTAIN COVENANTS AND RESTRICTIONS BE IT RESOLVED by the Utility Board of the Brookings Municipal Utilities, Brookings, South Dakota (the Utility), as follows: Section 1. Recitals. 1.01. The City of Brookings(the City) is authorized by South Dakota Codified Laws, Chapters 9-40 and 9-41, as amended(together,the Act), and the city charter, to acquire land and acquire and construct improvements and equipment comprising a system for the purpose of providing (i) electricity, gas or other light, heat and power, (ii)water and water supply for municipal, industrial and domestic purposes, (iii) collection,treatment and disposal of sewage and other domestic, commercial and industrial wastes, and (iv) a telephone system and related services. Pursuant to the Act and the city charter, the City has established the Utility to provide such services. The Utility and the City have found it necessary and appropriate to acquire and construct certain interests in land(the Land), improvements, and equipment(the Facilities) described in the Lease (as hereinafter defined), and have temporarily financed the acquisition and construction of the Facilities through a lease-purchase agreement between the First National Bank in Brookings, Brookings, South Dakota(the Trustee) and the City(the Refunded Lease), and certificates of participation in the Refunded Lease (the Refunded Certificates,together with the Refunded Lease,the Refunded Obligations). The Utility Board has been advised that the Refunded Obligations can be advantageously refunded at this time to provide definitive long- term financing for the Facilities. 1.02. The City has agreed with the Trustee that the Trustee will,pursuant to a Ground Lease and Easement Agreement between the City and the Trustee (the Ground Lease), acquire the interests in the Land, including any Facilities now in existence, from the City, and the Trustee will lease its interest in the Land and lease and agree to sell the existing Facilities and the Facilities to be acquired, renovated, constructed and equipped thereon to the City pursuant to a Lease-Purchase Agreement between the Trustee and the City(the Lease). 1.03. The Trustee will execute and deliver a Declaration of Trust(the Trust Agreement), joined in by the City, pursuant to which the Trustee will (i) issue Certificates of Participation(the Certificates) in the lease payments to be made by the City under the Lease and (ii)receive the proceeds of the sale of the Certificates and disburse such proceeds for payment of the Refunded Obligations on March 11, 1999, and for payment of costs of issuance of the Certificates. The proceeds of the Refunded Certificates now on deposit in the trust funds for the Refunded Obligations shall be transferred to the Reserve Fund and the Construction Fund established under the Trust Agreement. -1- 1.04. Forms of the following documents relating to the Facilities and the refunding of the Refunded Obligations (the Documents) will be prepared and submitted to the City: (a)the Lease; (b) the Trust Agreement; (c)the Ground Lease; and (d) a Certificate Purchase Agreement. Section 2. Authorization and Approval of the Documents. The financing described above is found to be favorable and the execution and delivery of the Documents by the City and the issuance of the Certificates and the sale thereof in accordance with the Certificate Purchase Agreement are hereby approved. Section 3. Security Provisions. 3.01. Sufficiency of Net Revenues. This Board reasonably anticipates that the gross revenues to be received from the operation of the Utility during the period for which the Lease will be in force and the Certificates will be outstanding will be more than sufficient to pay all costs of the operation and maintenance of the Utility and to provide net revenues adequate to pay the Lease Payments, when due, and to maintain the reserves required by the Lease and the Trust Agreement. The Board acknowledges that, while the Lease and the Certificates are not secured by any pledge of or security interest in the revenues of the Utility, and the City's obligation to make payments under the Lease is not limited to the revenues of the Utility,the City Commission anticipates that the Lease Payments will be made from the net revenues of the Utility. Prior to June 15 in each year in which the Lease is in force, the Board will make, or cause to be made, an estimate of revenues and expenses for the Utility for the next succeeding calendar year and, not later than June 15 in each such year shall submit a written report to the City Commission stating that the estimated net revenues of the Utility will be sufficient to pay the Lease Payments and any other amounts payable under the Lease for such next succeeding calendar year, or if the estimated net revenues will not be sufficient, stating the amount of the estimated shortfall. 3.02. Rates and Char�es. The Board will maintain, revise, charge and collect rates and charges for service furnished and made available by the Utility, according to schedules such that the gross revenues derived therefrom will be sufficient, when combined with other available funds, to pay when due all expenses of the operation and maintenance of the Utility, and all Lease Payments and other amounts payable under the Lease, to provide for the establishment and maintenance of adequate reserves therefor, and to provide an allowance adequate for recurring renewals and replacements of the Utility, and to fulfill the terms of all other agreements with the Trustee and the owners of the Certificates. Such charges shall at all times be sufficient to produce Net Income Available for Debt Service (as defined in the Lease) for each fiscal year at least equal to 100% of the Lease Payments coming due in such fiscal year. Section 4. Additional Utility Revenue Obli ations. This Board acknowledges that the Lease contains provisions limiting the City's ability to issue or incur Additional Utility Revenue Obligations while the Lease is in force and any Certificates are Outstanding. The Board will not approve or participate in the issuance of any Additional Utility Revenue Obligations unless the conditions set forth in the Lease for issuance of Additional Utility Revenue Obligations have been satisfied. -2- Section 5. Termination. The agreements of the Board in this Resolution are subject to the provisions for termination set forth in the Lease, which provides that the Lease will be subject to termination by the City, without penalty, at the end of any fiscal year of the City, if the City Commission fails to budget or appropriate money for the payment of the City's obligations under the Lease for the succeeding fiscal year. Section 6. Tax and Arbitrage Matters. The Board covenants and agrees with the owners from time to time of the Certificates, that it will not take, or permit to be taken by any of its officers, employees or agents, any action which would cause the interest component of the Lease Payment to become subject to t�ation under the Internal Revenue Code of 1986, as amended (the Code) and any regulations issued thereunder(the Treasury Regulations), in effect at the time of such action, and that it will take, or it will cause its officers, employees or agents to take, all affirmative actions within its powers which may be necessary to insure that the interest component of the Lease Payment will not become subject to taxation under the Code and the Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Certificates. The Board represents and covenants that the City is the owner of the Facilities and uses them for its municipal functions. So long as the Certificates are outstanding, the Board will not enter into any lease, use agreement or other contract or agreement respecting the Facilities which would cause the Certificates to be considered "private activity bonds" or "private loan bonds" pursuant to the provisions of Section 141 of the Code. Passed and approved this 10`�'day of November, 1998. � � ���c;<- ., e,. „�,�;��.� Chair ������:':a�'' ,a� -� o �,��` ''�' Secretary -3- . � , � CERTIFICATE The undersigned, being the duly qualified and acting Secretary of the Utility Board of the Brookings Municipal Utilities, hereby certifies that the above resolution is a true and correct copy of the resolution as adopted by the Utility Board on November , 1998. WITNESS my hand officially as such Secretary this day of November, 1998. Secretary -4-