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HomeMy WebLinkAboutRes2008-031Sponsored by: Oates CITY OF SEWARD, ALASKA RESOLUTION 2008-031 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ESTABLISH BOND RESERVES AS LEGALLY MANDATED FOR THE 2008 LONG- TERM CARE FACILITY REVENUE BONDS, IDENTIFYING THE SOURCE OF FUNDS FOR UTILITY INFRASTRUCTURE, AND APPROPRIATING FUNDS WHEREAS, the City of Seward has issued $27 million in revenue bonds to construct the new long-term care facility; and WHEREAS, the loan agreement between the City of Seward and the Alaska Municipal Bond Bank requires the City establish a bond reserve account in the amount of $1,973,360, with said reserves to remain in existence until the bonds are paid off in 2033, with said reserves available to meet required debt service payments on the bonds in the event of a default of bond payments by the City; and i'o. WHEREAS, the Seward City Council intends for the Water Enterprise Fund to loan the bond reserves to the General Fund for the purposes of investing in bond reserves, with the funds to be reimbursed to the Water Enterprise Fund at the invested rate of return; and WHEREAS, the Seward City Council further authorizes the Electric, Water, Wastewater, and General Funds to contribute to the costs of providing infrastructure to the long-term care facility, with said contributions to be reimbursed from the long-term care facility project over time, according to the following cost estimates: 1) Electric Fund will pay $115,000 for the costs associated with installing electrical infrastructure; 2) Water Fund will pay $83,000 for the costs associated with installing water infrastructure; 3) Wastewater Fund will pay $239,600 for the costs associated with installing the wastewater infrastructure; 4) Wastewater Fund will pay $67,353 for the purpose of upgrading the sewer system to Ash Street, which will not considered a loan to the project, as it is not related to the LTC facility project; 5) General Fund will pay $192,000 for the purpose of installing road infrastructure. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: CITY OF SEWARD, ALASKA RESOLUTION 2008-031 Section 1. The amount of $1,973,360 is hereby authorized to be paid from the Water Enterprise Fund to the General Fund for the purposes of establishing a required bond reserve account, in the form of a loan to be repaid to the Water Enterprise Fund over the course of the life of the bonds, or sooner, at the invested rate of return. Section 2. Funding in the amount of $115,000.00 is hereby appropriated from the Electric Enterprise Fund for the purpose of installing electric service to the long-term care facility site, with said costs to be reimbursed over the life of the bonds, or sooner. Section 3. Funding in the amount of $83,000.00 is hereby appropriated from the Water Enterprise Fund for the purpose of installing water infrastructure for the long-term care facility project, with said costs to be reimbursed over the life of the bonds, or sooner. Section 4. Funding in the amount of $239,600.00 is hereby appropriated from the Wastewater Enterprise Fund for the purpose of installing wastewater infrastructure for the long- term care facility project, with said costs to be reimbursed over the life of the bonds, or sooner. Section 5. Funding in the amount of $67,353.00 is hereby appropriated from the Wastewater Enterprise Fund for the purpose of upgrading the sewer system to Ash Street, without reimbursement from the long-term care facility in the future, as this cost is unrelated to ,,,.,, the project, but benefits from the economies associated with having a fully mobilized construction team available to facilitate upgrades. Section 6. Funding in the amount of $192,000.00 is hereby appropriated from the General Fund for the purpose of installing road infrastructure to the long-term care facility project, with said costs to be reimbursed over the life of the bonds, or sooner. Section 7. This resolution shall take effect immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14`h day of April, 2008. THE CITY OF SEWARD, ALASKA Clark Corbridge, Mayor CITY OF SEWARD, ALASKA RESOLUTION 2008-031 +rnr AYES: Dunham, Valdatta, Bardarson, Smith, Kellar, Corbridge NOES: None ABSENT: Amberg ABSTAIN: None ATTEST: Gt.dZ dz ~~1~r C~ l hanna Dollerhide Acting City Clerk, CMC (City Seal) ~~•;~ pF 4~~R~ it ~ ~ S ~CiL ~ • -~.. tppq~,, _ `~~,~~- r~~~'~~~OmA ~~5~~' Council Agenda Statement Meeting Date: April 14, 2008 Through: Phillip Oates, City Manager~~~ From: Kristin Erchinger, Finance Director Agenda Item: Establishing Bond Reserves for LTC Revenue Bonds, and Identifying Funding for Utility Infrastructure BACKGROUND & JUSTIFICATION The City of Seward has issued $27 million in revenue bonds to construct a new long-term care facility. As mandated by the Alaska Municipal Bond Bank loan agreement, the City is required to establish a bond reserve account in the amount of $1,973,360, with said account to remain in existence until the debt on the bonds is paid off in 2033. This account ensures the bond holders that, in the event funds are unavailable to meet required debt service payments, reserve funds are available to draw from to make those payments. The bond reserves will be invested during the initial construction period to maximize yield, within the restrictions of the City's investment policy. After the initial construcfion period, the bond reserves will be invested so as to avoid azbitrage. The City Council has agreed to have the Water Enterprise Fund loan the bond reserves to the General Fund, to be repaid over the term of the bonds or eazlier, if possible. In addition to establishing bond reserves, the Sewazd City Council discussed negotiation strategies for funding the infrastructure associated with the project. A decision was made to have the appropriate enterprise funds pay for the initial costs of installing the associated infrastructure, with the intent that the enterprise funds will be repaid for their investment. The electric enterprise fund will pay for the costs of the electric infrastructure to bring the utilities to the LTC site. The water enterprise fund will pay for the costs of adding water infrastructure. The General Fund will pay for the costs of adding the road. The Wastewater Enterprise Fund will pay the costs of the project's sewer infrastructure, including the stormwater drainage system. In addition, the Wastewater Enterprise Fund will pay for, but will not be reimbursed by the long-term care facility, the costs of upgrading the sewer system to Ash Street, which is being done at the request of the utility, and is a project separate from the LTC project, but benefits from economies associated with hiring a contractor that is already mobilized to do the work. CITY OF SEWARD RESOLUTION 2008-031 CONSISTENCY CHECKLIST: Where applicable, this Resolution is consistent with the Seward City Code, Charter, Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures. Other: FISCAL NOTE The Water Enterprise Fund will loan $1,973,360 to the General Fund to establish the bond reserves for the LTC revenue bonds. This loan will be repaid to the Water Enterprise Fund. The enterprise and General funds will pay for the costs of installing their respective infrastructure to the project ($115,000 for the electric enterprise fund; $83,000 for the water enterprise fund; $239,600 for the wastewater enterprise fund; $67,353 for the wastewater fund for the Ash Street wastewater upgrades; and $192,000 for the general fund for roads). Approved by Finance: RECOMMENDATION City Counci] approve establishing bond reserves in the amount of $1,973,360, with funding to come from a loan from the Water Enterprise Fund to the General Fund, and authorize payment from the General and enterprise funds for long-term care facility infrastructure, to be repaid by the long-term care facility. S:~RFSOLUTIONS'5008\08-031 LTCF keserves AS.dce