HomeMy WebLinkAboutResolution 073-2011Resolution No. 73 -1 1
Resolution giving approval to certain storm sewer facilities 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 operation of the system and retirement of the Revenue Bond.
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 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 system in accordance with Section 15 of the Act; and,
Whereas, the City of Brookings (the "City ") currently operates a storm sewer system for the
collection, treatment and disposal of sewage and other domestic, commercial and industrial
wastes; and for the control of floods and drainage and has determined that improvements to the
sewer facilities are necessary for the conduct of its governmental programs and qualifies as an
improvement, extension or addition to its sewer system; and,
Whereas, the City has determined to issue its revenue bonds to finance the improvements to its
storm sewer system for the purpose of collecting, treating and disposing of sewage and other
domestic, commercial and industrial wastes (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 has adopted rates and charges to be pledged, segregated and used for the
payment of the Revenue Bond.
Now, Therefore Be It Resolved by the City as follows:
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.
"Act" means South Dakota Codified Laws Chapter 9 -40.
"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.
"Project" means the City of Brookings Pheasant Nest Drainage Improvement Project as outlined
in the facilities plan.
"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 collecting, treating and disposing of sewage and other
domestic, commercial and industrial wastes.
SECTION 2. Declaration of Necessity and Findings.
2.1. Declaration of Necessity. The City hereby determines and declares it is necessary
to construct and finance improvements to its System described as the Project.
2.2. Findings. The City does hereby find as follows:
2.2.1. 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 to
finance up to $483,538 of the costs of the Project through the issuance of bonds payable
from 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
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 authorized, approved
and confirmed, and the Mayor and Finance Officer are hereby authorized 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 and 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 $483,538 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 the Act.
3.4. Pledge 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 hereby
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 or 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 1 10% 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 Loan
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 South 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 of this Section.
4.3. Segregation. The Finance Officer shall set up bookkeeping accounts in accordance
with South Dakota Legislative Audit guidelines for the segregation of the revenue.
4.4. Periodic review. The storm sewer rates shall be reviewed from time to time, not
Tess 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, Additional Bonds
payable from revenues and income of the System may be issued, as permitted in 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. 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. Project 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 shall be used solely for the following respective
purposes until payment in full of the principal of and interest on the Revenue Bond:
6.1. Project Revenue Account. There shall be deposited periodically into the Project
Revenue Account the net revenues as defined in Section 17 of the Act derived from the
operation of the Project collected pursuant to the Ordinances and resolutions of the
City of Brookings, South Dakota (collectively the "Rate Ordinance "). Moneys from the
Project Revenue Account shall be transferred periodically into separate funds and
accounts as provided below.
6.2. Project Debt Service Account. Out of the revenues in the Project Revenue
Account, there shall be set aside no later than the 25th day of each month into the
account designated Project 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 October 15 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 Project 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 Project.
6.4. Project Surplus Account. There shall be established the Project Surplus Account.
Revenues remaining in the Project 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 Project Surplus Account. If at any time there
shall exist any default in making any periodic transfer to the Project 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 Project 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 Project Debt Service Account,
moneys in the Project 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 payable at the
office of The First National Bank in Sioux Falls, Sioux Falls, South Dakota, hereby designated as
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 of
South Dakota and by this Resolution.
10.2. The City agrees and covenants that it will promptly construct the improvements
included in the Project.
10.3. 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 pursuant
to the Act, until the payment in full of the principal and interest on the Revenue Bond,
and the City agrees not to sell or otherwise dispose of the System, the Project, or any
substantial part thereof, except 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 in the distribution of water for municipal, industrial, and
domestic purposes within the City.
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 same 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 from 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.
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. 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 following its
publication, unless suspended by a referendum.
Adopted at Brookings, South Dakota, this 14t day of June, 201 I .
CITY OF BROOKINGS
hari Thornes, City Clerk
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Published:
Effective:
Tim Reed, Mayor