HomeMy WebLinkAboutRes. 20-082Resolution Giving Approval To Certain Storm Drainage Improvements; Giving
Approval To The Issuance And Sale Of A Revenue Bond To Finance, Directly Or
Indirectly, The Improvements To The Facilities; Approving The Form Of The Loan
Agreement And The Revenue Bond And Pledging Revenues And Collateral To
Secure The Payment Of The Revenue Bond; And Creating Special Funds And
Accounts For The Administration Of Funds For Operating Of The System And
Aetirement Of The Revenue Bond. (State Avenue Watershed Improvement Project)
Whereas, one of the purposes of SDCL Chapter 9-40 (the "Act") as found and determined
by the Legislature is to provide for financing the acquisition, maintenance, operation,
extension or improvement of any system or part of any system for the collection, treatment
and disposal of sewage and other domestic, commercial and industrial wastes; or any
system for the control of floods and drainage; or any combination thereof, together with
extensions, additions, and necessary appurtenances; and,
Whereas, a municipality is authorized by Section 6 of the Act to issue revenue bonds to
defray the cost of extensions, additions and improvements to any utility previously owned
and is authorized to pledge the net income or revenues from the net income or revenues
from the system in accordance with Section 15 of the Act; and,
Whereas, the City of Brookings (the "City") currently operates a storm drainage system for
the control of floods and other storm water drainage and has determined that
improvements to the storm drainage system are necessary for the conduct of its
governmental programs and qualifies as an improvement, extension or addition to its
storm drainage, and has determined that improvements to the storm drainage system
are necessary for the conduct of its governmental programs and qualifies as an
improvement, extension or addition to its storm drainage system; and,
Whereas, the City has determined to issue its revenue bonds to finance the
improvements to its storm drainage system for the purpose of storm water management
(the "System") and has applied to the South Dakota Conservancy District (the "District
for a Clean Water State Revolving Fund Loan to finance the improvements;
Whereas, the City shall adopt rates and charges to be pledged, segregated and used for
the payment of the Revenue Bond.
SECTION 1. Definitions. The terms when used in this Resolution shall have the
following meanings set forth in this section unless the context clearly requires otherwise.
All terms used in this Resolution which are not defined herein shall have the meanings
assigned to them in the Loan Agreement unless the context clearly otherwise requires.
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"Loan" means the Loan made by the South Dakota Conservancy District to the City -
pursuant to the terms of the Loan Agreement and as evidenced by the Revenue Bond.
"Revenue Bond" means the revenue bond or bonds issued the date of the Loan
Agreement by the City to the South Dakota Conservancy District to evidence the City's
obligation to repay the principal of and pay interest and Administrative Expense
Surcharge on the Loan.
"System" means the City's system of collection and management of storm water
SECTION 2. Declaration of Necessity and Findings.
2.1. Declaration of Necessity. The City hereby declares and determines it is
necessary to construct and finance improvements to its System described as the
F.2.1. The City hereby expressly finds that if the Project is not undertaken, the
System will pose a health hazard to the City and its inhabitants, and will make the
City unable to comply with state and federal law.
2.2.2. Because of the functional interdependence of the various portions of the
System, the fact that the System may not lawfully operate unless it complies with
State and federal laws, including SDCL Chapter 34A-2, and the federal Clean Water
Act, and the nature of the improvements financed, the City hereby finds and
determines that the Project will substantially benefit the entire System and all of its
users within the meaning of Sections 15 and 17 of the Act.
2.2.3. The City hereby determines and finds that for the purposes of the Act,
including, in particular, Sections 15 and 17 of the Act, that only the net income from
the system as improved financed by the Revenue Bond, be pledged for its payment.
SECTION 3. Authorization of Loan, Pledge of Revenue and Security.
3.1. Authorization of Loan. The City hereby determines and declares it necessary -t,,#,
finance up to $850,000 of the costs of the Project through the issuance of bonds
payable from the net revenues of the system and other funds secured by the City.
The City hereby determines that because the Revenue Bond is issued in connection
with a financing agreement described in SDCL 46A-1 -49, pursuant to Section 15 of the
Act no election is required to issue the Revenue Bond.
3.2. Approval of Loan Agreement. The execution and delivery of the Revenue
Obligation Loan Agreement (the "Loan Agreement"), the form of which is on file with
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the City Finance Officer (the "Finance Officer") and open to public inspection,
between the City as Borrower and the District, are hereby in all respects authorize
approved and confirmed, and the Mayor and Finance Officer are hereby authorizec
and directed to execute and deliver the Loan Agreement in the form and content
attached hereto, with such changes as the attorney for the City deems appropriate
and approves, for and on behalf of the City. The Mayor and Finance Officer are
hereby further authorized and directed to implement and perform the covenants an$
obligations of the City set forth in or required by the Loan Agreement. The Loan
Agreement herein referred to and made a part of this Resolution is on file in the
office of the Finance Officer and is available for inspection by any interested party.
3.3. Approval of Revenue Bond. The issuance of a revenue bond in a principal
amount not to exceed $850,000 as determined according to the Loan Agreement in
the form and content set forth in Appendix B attached to the form of Loan Agreement
(the "Revenue Bond") shall be and the same is, in all respects, hereby authorized,
approved, and confirmed and the Mayor, Finance Officer, and other appropriate
officials shall be and are hereby authorized and directed to execute and seal the
Revenue Bond and deliver the Revenue Bond to the District, for and on behalf of the
City, upon receipt of the purchase price, and to use the proceeds thereof in the
manner set forth in the Loan Agreement. The Mayor and Finance Officer are hereby
authorized to approve the final terms of the Revenue Bond and their execution and
delivery thereof shall evidence that approval. The Revenue Bond shall be issued
under the authority of SDCL Chapter 9-40 and SDCL Chapter 6-8B, and the
provisions of the Act are hereby expressly incorporated herein as provided in
Section 19 of tWe-kct.
3.4. Pled_qe of Revenues. The Revenue Bond together with the interest thereon,
shall not constitute a charge against the City's general credit or taxing power, but
shall be a limited obligation of the City payable solely out of the Project Debt Service
Account, which payments, revenues and receipts are hereby and in the Loan
Agreement pledged and assigned for the equal and ratable payments of the
Revenue Bond and shall be used for no other purpose than to pay the principal of,
interest and Administrative Surcharge on the Revenue Bond, except as may be
otherwise expressly authorized in the Loan Agreement (including the purpose of
securing Additional Bonds issued as permitted by the terms thereof). The City
hereby irrevocably pledges to the South Dakota conservancy District all income and
revenues of the System, including, without limitation, fees, charges to users of the
System, penalties and hook-up fees, sign-up fees, proceeds of business interruption
insurance, proceeds from the sale of property constituting part of the System and
investment income on all such revenues, but only to the extent that the revenues
exceed the amounts necessary to operate and maintain the System, provided there
shall be excluded from this pledge the proceeds of any federal or state grant or loan,
and the investment income therefrom, to the extent such exclusion is a condition of
such grant or loan. The City covenants and agrees to charge rates for all services
from the System or establish charges or rates which will be sufficient to provide for
the payments upon the Revenue Bond issued hereunder as and when the same
become due, and as may be necessary to provide for the operation and
maintenance and repairs of the System, and depreciation, and the Rate Ordinance
shall be revised from time to time so as to produce these amounts. The City hereb
reserves the right to determine on a periodic basis the appropriate allocation of
operation and maintenance expenses, depreciation, repair and reserves associated
with the facilities financed with the Revenue Bond, provided that such determination
of allocable operation and maintenance expenses shall in no event abrogate,
abridge or otherwise contravene the covenant of the City set forth in this Section 3
any other covenant or agreement in the Loan Agreement.
SECTION 4. Rates, Certification, Segregation and Review.
4.1. Rates and collection There shall be charged rates for each fiscal year which
shall ensure that its Net Revenues Available for Debt Service will equal at least
110% of its System Debt Service for such fiscal year.
4.2. Certification. In each fiscal year, or as soon as practicable, and in any event
by the date of the delivery of the unaudited financial statements required in the Loa
Agreement, the City shall (a) calculate its Net Revenues Available for Debt Service
and System Debt Service for the fiscal year, and (b) certify such figures to the Sout
Dakota Conservancy District. The certification described in clause (b) of the
preceding sentence shall be substantially in the form of the certificate attached as
Appendix E to the Loan Agreement. If the City fails to meet the Rate Covenant set
forth in Section 6.4 of the Loan Agreement, the City shall supply the District with
quarterly reports on the actions it is taking to correct its coverage deficiency until it
delivers an annual coverage certificate showing compliance with the first sentence
this Section.
4.3. Segregation. The Finance Officer shall set up bookkeeping accounts in
Iccordance with South Dakota Legislative Audit guidelines for the segregation of the
revenue.
4.4. Periodic review. The storm sewer drainage fees shall be reviewed from time-tv,
time, not less than yearly, and shall be modified in order to produce such funds as
are necessary and required to comply with the Loan Agreement's rate covenant and
to pay principal of, interest and Administrative Surcharge on the Revenue Bond
when due. The rates may be set by ordinance or resolution in accordance with this
Section. The rate ordinance or resolution shall be necessary for the support of
government and shall be effective upon passage.
SECTION 5. Additional Bonds. As permitted by Sections 8 and 9 of the Act, Addition
Bonds payable from revenues and income of the System may be issued, as permitted i
the Loan Agreement, and no provision of this Resolution shall have the effect of
restricting the issuance of, or impairing the lien of, such additional parity bonds with
respect to the net revenues or income from the extensions, additions or improvements]
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The City shall have the right to issue additional bonds secured by a lien subordinate to
the lien from the Revenue Bond pursuant to the Loan Agreement.
SECTION 6. System Fund Accounts. For the purpose of application and proper
allocation of net income of the System and to secure the payment of principal,
Administrative Surcharge and interest on the Revenue Bond, the following mandatory
asset segregations shall be included in the sewer system account of the City and shal
be used solely for the following respective purposes until payment in full of the princip-
of and interest on the Revenue Bond:
6.1. System Revenue Account. There shall be deposited periodically into the
System Revenue Account the net revenues as defined in Section 17 of the Act
derived from the operation of the System collected pursuant to the Ordinances an
resolutions of the City of Brookings, South Dakota (collectively the "Rate
Ordinance"). Moneys from the System Revenue Account shall be transferred
periodically into separate funds and accounts as provided below.
6.2. System Debt Service Account. Out of the revenues in the System Revenue
Account, there shall be set aside no later than the 25thday of each month into the
account designated System Debt Service Account, a sum sufficient to provide for the
payment as the same become due of the next maturing principal of, interest and
Administrative Surcharge on the Revenue Bonds and any reserve determined by the
City's governing body to be necessary. The amount set aside monthly shall be not
less than one-third of the total principal, interest, and Administrative Surcharge
payable on the following January 15, April 15, July 15 or October15 and if there shall
be any deficiency in the amount previously set aside, then the amount of such
deficiency shall be added to the current requirement.
6.3. Depreciation Account. There shall be established a General Depreciation
Account. Out of the revenues of the System Revenue Account there shall be set
aside each month into the General Depreciation Account an amount determined by
the Common Council to be a proper and adequate amount for repair and
depreciation of the System.
6.4. System Surplus Account. There shall be established the System Surplus
Account. Revenues remaining in the System Revenue Account at the end of any
fiscal year after all periodic transfers have been made therefrom as above required,
shall be deemed to be surplus and shall be transferred to the System Surplus
Account. If at any time there shall exist any default in making any periodic transfer
to the System Debt Service Account, the Common Council shall authorize the City
Finance Officer to rectify such default so far as possible by the transfer of money
from the System Surplus Account. If any such default shall exist as to more than
one account or fund at any time, then such transfer shall be made in the order such
funds and accounts are listed above.
When not required to restore a current deficiency in the System Debt Service
Account, moneys in the System Surplus Account from time to time may be used for
any of the following purposes and not otherwise:
a) To redeem and prepay the Revenue Bond when and as such Revenue
Bond becomes prepayable according to its terms;
b) To pay for repairs of or for the construction and installation of
improvements or additions to the System; and, if the balances in the Project Debt
Service Account and the Project Depreciation Account are sufficient to meet all
payments required or reasonably anticipated to be made there from prior to the
end of the then current fiscal year, then:
c) To be held as a reserve for redemption and prepayment of any bonds of
the System which are not then but will later be prepayable according to their
terms; or
d) To be used for any other authorized municipal purpose designated by the
Common Council.
e) No moneys shall at any time be transferred from the Project Surplus
Account or any other account of the Fund to any other fund of the City, nor shall
such moneys at any time be loaned to other municipal funds or invested in
warrants, special improvements bonds or other obligations payable from other
funds, except as provided in this Section.
SECTION 7. Approval of Paying Agent/Registrar. The Revenue Bond shall be payabli-,
2t the office of U.S. Bank National Association, St. Paul, Minnesota, hereby designated
?s paying agent and registrar.
SECTION 8. Approval of Bond Counsel. Meierhenry Sargent LLP is hereby retained as
Bond Counsel with respect to the Revenue Bond.
SECTION 9. Tax Matters. The Interest on the Revenue Bond shall be excludable from
gross income for federal income tax purposes under the Internal Revenue Code of
1986, as amended ("the Code") and applicable Treasury Regulations (the
"Regulations").
SECTION 10. Covenants. The City hereby covenants and agrees with the District and
other owners of the Revenue Bond as follows:
10.1. The City will punctually perform all duties with reference to the Project, the
System and the Revenue Bond required by the constitution and laws of the State
South Dakota and by this Resolution. I
10.2. The City agrees and covenants that it will promptly construct the
improvements included in the Project.
The City covenants and agrees that pursuant to Sections 25 through 27 of the
Act, the lawful holders of the Revenue Bond shall have a statutory mortgage lien
upon the Project and the extensions, additions and improvements thereto acquired
In,
pursuant to the Act, until the payment in full of the principal, interest and
Administrative Surcharge on the Revenue Bond, and the City agrees not to sell or
otherwise dispose of the System, the Project, or any substantial part thereof, exce
as provided in the Loan Agreement and shall not establish, authorize or grant a
franchise for the operation of any other utility supplying like products or services in
competition therewith, or permit any person, firm or corporation to compete with it i
the distribution of water for municipal, industrial, and domestic purposes within the
City. I
10.4. The City covenants and agrees with the District and other owners of the
Revenue Bond that it will maintain the System in good condition and operate the sam.--,
in an efficient manner and at a reasonable cost, so long as any portion of the Revenue
Bond remains outstanding; that it will maintain insurance on the System for the benefit
of the holders of the Revenue Bond in an amount which usually would be carried by
private companies in a similar type of business; that it will prepare, keep and file
records, statements and accounts as provided for in this Resolution and the Loan
Agreement. The Revenue Bond shall refer expressly to this Resolution and the Act
and shall state that it is subject to all provisions and limitations thereof pursuant to
Section 19 of the Act.
SECTION 11. Depositories. The Finance Officer shall cause all moneys pertaining to
the Funds and Accounts to be deposited as received with one or more banks which are
duly qualified public depositories under the provisions of SDCL Ch. 4-6A, in a deposit
account or accounts, which shall be maintained separate and apart from all other
accounts of the City, so long as any of the Bonds and the interest thereon shall remain
unpaid. Any of such moneys not necessary for immediate use may be deposited with
such depository banks in savings or time deposits. No money shall at any time be
withdrawn from such deposit accounts except for the purposes of the Funds and
Accounts as authorized in this Resolution; except that moneys from time to time on
hand in the Funds and Accounts may at any time, in the discretion of the City's
governing body, be invested in securities permitted by the provisions of SDCL 4-5-6;
provided, however, that the Depreciation Fund may be invested in such securities
maturing not later than ten years from the date of the investment. Income received fror
the deposit or investment of moneys shall be credited to the Fund or Account from
whose moneys the deposit was made or the investment was purchased, and handled
and accounted for in the same manner as other moneys therein.
SECTION 12. Consent to Appointment. In the event of mismanagement of the Project,
a default in the payment of the principal or interest of the Revenue Bond, or in any other
condition thereof materially affecting the lawful holder of the Revenue Bond, or if the
revenues of the Project are dissipated, wasted or diverted from their proper application
as set forth in the Loan Agreement, Revenue Bond, or herein, the City hereby consents
to the appointment of a receiver pursuant to Section 33 of the Act, and agrees that the
receiver will have the powers set forth therein, and in Sections 34 and 35 of the Act to
operate and administer the Project, and charge and collect rates as described therein.
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SECTION 13. Severability. If any section, paragraph, clause or provision of this
Resolution, the Loan Agreement, the Revenue Bond, or any other Loan Document shall
be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect
any of the other provisions of this Resolution or said Loan Agreement, Revenue Bond, or
any other Loan Document.
SECTION 14. Repeal of Resolution. At such time as the Project Revenue Bond is
defeased or paid in full, this Resolution and the special charge or surcharge shall
automatically be repealed without any further action of the City.
SECTION 15. Authorization of City Officials. The Mayor, Finance Officer, City Attorney
and City officials shall be and they are hereby authorized to execute and deliver for and on
behalf of the City any and all other certificates, documents or other papers and to perform
such other acts as they may deem necessary or appropriate in order to implement and
carry out the actions authorized herein.
SECTION 16. Effective Date. This Resolution shall take effect on the 20th day
follUVngpU IaIUleU L) 1UU11.IUIIII, llllel1
Adopted at Brookings, South Dakota, this 13th day of October, 2020.
CITY OF BROOKINGS, SD
Keith W. Corbett, Mayor
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Bo le Oster, City Clerk
Published: O /& a��v
Effective:
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