HomeMy WebLinkAbout08049ORDINANCE NO. 8049
AN EMERGENCY ORDINANCE RECOGNIZING AND CONFIRMING
THE CITY OF PUEBLO, COLORADO'S SEWER ENTERPRISE AS AN
ENTERPRISE; AUTHORIZING THE ISSUANCE BY THE CITY'S SEWER
ENTERPRISE OF A GOVERNMENTAL AGENCY BOND, SERIES 2009,
IN A PRINCIPAL AMOUNT OF $1,500,000, FOR THE PURPOSES OF
FINANCING THE CONSTRUCTION OF FACILITIES TO REMOVE
AMMONIA AT THE WATER RECLAMATION FACILITY, INSTALLING A
DEWATERING SYSTEM, INSTALLING AN ULTRVIOLET RADIATION
DISINFECTION SYSTEM, INSTALLING A SOLAR PHOTOVOLTAIC
ARRAY AND PAYING THE COSTS OF ISSUING THE SERIES 2009
BOND; PRESCRIBING THE FORM, TERMS AND CONDITIONS OF THE
SERIES 2009 BOND; PROVIDING FOR THE SALE OF THE SERIES
2009 BOND; PROVIDING FOR THE APPLICATION OF THE NET
PLEDGED REVENUES OF THE SEWER ENTERPRISE TO PAY THE
PRINCIPAL OF AND INTEREST AND PREMIUM, IF ANY, ON THE
SERIES 2009 BOND; DECLARING AN EMERGENCY; AND
PRESCRIBING OTHER DETAILS IN CONNECTION THEREWITH
WHEREAS, the City of Pueblo, in the County of Pueblo and State of Colorado
(the "City "), is a municipal corporation duly organized and existing as a home rule city
pursuant to Article XX of the Constitution of the State of Colorado (the "State ") and the
home rule charter of the City (the "Charter'); and
WHEREAS, under the Charter, the City is possessed of all powers which are
necessary, requisite or proper for the government and administration of its local and
municipal affairs, all powers which are granted to home rule municipalities by the
Colorado Constitution, and all rights and powers that now or hereafter may be granted
to municipalities by the laws of the State; and
WHEREAS, the City owns and operates a municipal sanitary sewer system, as
more fully defined herein (the "Sewer Enterprise "); and
WHEREAS, the legislative powers of the City are vested in a board of council
members, also known as the city council (the "City Council "), which also operates as the
governing body of the Sewer Enterprise; and
WHEREAS, the City Council, sitting as the governing body of the Sewer
Enterprise, has determined that it is necessary for the efficient and proper management
of the Sewer Enterprise and is in the best interest of the users of the Sewer Enterprise
that there be authorized and issued a bond of the Sewer Enterprise for the purposes of
financing the construction of facilities to remove ammonia at the water reclamation
facility, installing a dewatering system, installing an ultraviolet radiation disinfection
system and installing a solar photovoltaic array (collectively, the "Project ") and for
paying the costs of issuing the bond; and
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WHEREAS, the City Council has determined that it is in the best interest of the
users of the Sewer Enterprise that the payment of such bonds be secured by the Net
Pledged Revenues (as defined herein) of the Sewer Enterprise; and
WHEREAS, the City Council, acting by and through its Sewer Enterprise, and
pursuant to Ordinance No. 6963 (the "Series 2003 Ordinance "), issued a Governmental
Agency Bond, Series 2003, in the initial principal amount of $8,402,620.20, of which
$6,226,401.96 remains outstanding (the "Series 2003 Bond "); and
WHEREAS, except with respect to the Series 2003 Bond and bonds which have
heretofore been paid in full, or for which provision for the payment in full has been
made, the City Council has not pledged, nor in any way hypothecated, revenues derived
and to be derived from the operation of the Sewer Enterprise to the payment of any
bond(s) or for any other purpose, and the conditions for the issuance of additional Parity
Lien Bonds (as defined herein) established in Section 14 of the Series 2003 Ordinance
have been satisfied, with the result that the Net Pledged Revenues may now be
pledged lawfully and irrevocably for payment of the Series 2009 Bond herein
authorized; and
WHEREAS, to finance the estimated costs of the Project, the Sewer Enterprise
has made an application to the Colorado Water Resources and Power Development
Authority (the "Authority "), for a loan, which the Authority has conditionally accepted,
and therefore the Sewer Enterprise has determined to enter into a loan agreement (the
"Loan Agreement ") with the Authority, pursuant to which the Authority shall loan the
Sewer Enterprise an amount not to exceed $1,500,000 (the "Loan "); and
WHEREAS, the Sewer Enterprise's repayment obligations under the Loan
Agreement shall be evidenced by a Governmental Agency Bond, Series 2009 (the
"Series 2009 Bond ") to be issued by the Sewer Enterprise to the Authority, which shall
be payable solely from and secured by a pledge of and an irrevocable and nonexclusive
lien on the Net Pledged Revenues of the Sewer Enterprise; and
WHEREAS, Article X, Section 20 of the Colorado Constitution ( "Amendment
One ") requires that districts (as defined in Amendment One) not issue bonded debt
without prior voter approval unless the issuer is an "Enterprise" as defined in
Amendment One; and
WHEREAS, the Sewer Enterprise constitutes a government -owned business
authorized to issue its own revenue bonds, and it receives less than 10% of its annual
revenue in grants from all Colorado state and local governments, including without
limitation the City, and therefore constitutes an "Enterprise" within the meaning of
Amendment One; and
WHEREAS, the City has the power as a home rule city under Article XX of the
Colorado Constitution and the Charter to issue the Series 2009 Bond; and
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WHEREAS, for the reasons set forth in Section 22 of this Ordinance, the City
Council has determined that this Ordinance should be an emergency ordinance and be
treated as such pursuant to the provisions of Section 3 -20 of the Charter; and
WHEREAS, Article 57 of Title 11, Colorado Revised Statutes (the "Supplemental
Public Securities Act ") provides supplemental procedures for the issuance of bonds,
and the City Council has elected to have the provisions of the Supplemental Public
Securities Act apply to the issuance of the Series 2009 Bond; and
WHEREAS, there has been presented to the City Council at this meeting a
proposed form of the Loan Agreement; now, therefore
BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO:
Section 1. General. Except to the extent inconsistent with this Ordinance, all
action heretofore taken by the City and the Sewer Enterprise and the officials thereof
directed toward accomplishing the Project and toward the execution of the Loan
Agreement with, and the issuance and sale of the Series 2009 Bond to, the Authority is
hereby ratified, approved and confirmed. The City Council, after reviewing all pertinent
information pertaining to the municipal wastewater system, hereby again recognizes
and confirms the status of the wastewater system as an enterprise.
Section 2. Definitions. The definitions in this Section 2 and in the Recitals of this
Ordinance are applicable for all purposes of this Ordinance and of any supplement or
amendment hereto, except where the context by clear implication requires otherwise.
"Code" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"Debt Service Account' means the Debt Service Account established pursuant to
the Series 2003 Ordinance and affirmed and continued pursuant to Section 10 hereof.
"Gross Revenues" means all income and revenues derived directly or indirectly
from the operation and use of and otherwise pertaining to the Sewer Enterprise, or any
part thereof, whether resulting from repairs, enlargements, extensions, betterments or
other improvements to the Sewer Enterprise, or otherwise, including without limitation:
(a) All fees, rates and other charges for the use of the Sewer
Enterprise, or for any service rendered by the Sewer Enterprise in its operations,
directly or indirectly, the availability of any such service, or the sale or other
disposal of any commodities derived therefrom, but:
(i) excluding any moneys borrowed and used for the acquisition
of capital improvements;
(ii) excluding any moneys received as grants, appropriations or
gifts from the Federal government, the State or other sources, the use of
which is limited or restricted by the grantor or donor to the construction of
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capital improvements for the Sewer Enterprise or for other purposes
resulting in the general unavailability thereof, except to the extent any
such moneys shall be received as payments for the use of the Sewer
Enterprise, services rendered thereby, the availability of any such service,
or the disposal of any commodities therefrom;
(iii) excluding moneys held in any escrow or otherwise deposited
by third parties for extensions, modifications or upgrading of the sanitary
sewer system;
(iv) excluding any money and securities, and interest and other
gain from investment of such money and from such securities in any
refunding fund or escrow account or similar account pledged to the
payment of any bonds or other obligations therein specified; and
(v) excluding connection fees deposited into the Sanitary Sewer
Collection System Improvement Fund and plant investment fees deposited
into the Treatment Plant Investment Fund;
(b) all income or other gain from any investment (except as set forth in
(a)(iv) above);
(c) all income and revenues derived from the operation of any other
utility or other income - producing facilities added to the Sewer Enterprise and to
which the pledge and lien herein provided are extended by ordinance adopted by
the City Council or the qualified electors of the City or by Charter amendment
adopted by such electors; and
(d) any unrestricted cash and investments in the Revenue Account.
"Net Pledged Revenues" means the Gross Revenues of the Sewer Enterprise
remaining after the payment of the Operation and Maintenance Expenses of the Sewer
Enterprise.
"Operation and Maintenance Expenses" or any phrase of similar import, means
all reasonable and necessary current expenses of the Sewer Enterprise, paid or
accrued, for operating and maintaining the Sewer Enterprise or any component division
or other part thereof, or of any other designated facilities in connection with which such
term is used; and the term includes, without limitation:
(a) engineering, auditing, reporting, legal and other overhead expenses
directly related and reasonably allocable to the administration, operation and
maintenance of the Sewer Enterprise;
(b) fidelity bond premiums and property and liability insurance
premiums pertaining to the Sewer Enterprise, or a reasonably allocable share of
a premium of any blanket bond or policy pertaining to the Sewer Enterprise;
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(c) payments to pension, retirement, health and hospitalization funds,
other insurance, and to any self- insurance fund as insurance premiums not in
excess of such premiums which would otherwise be required for such insurance;
(d) any assessments, excise taxes or other charges which may be
lawfully imposed on the City, the Sewer Enterprise, the revenues therefrom, or
the City income from or operations of any properties under its control and
pertaining to the Sewer Enterprise, or any privilege in connection with the Sewer
Enterprise or this operation (but no payments made in lieu of taxes or any
general ad valorem taxes);
(e) the reasonable charges of any paying agent and any other
depository bank pertaining to any Parity Lien Bonds and any other securities
payable from the Net Pledged Revenues or otherwise pertaining to the Sewer
Enterprise, except to the extent paid from the proceeds of any Parity Lien Bonds
or other such securities;
(f) contractual services, professional services, salaries, other
administrative expenses, and costs of materials, supplies, repairs and labor,
pertaining to the Sewer Enterprise or to the issuance of any Parity Lien Bonds or
any other securities relating to the Sewer Enterprise, including, without limitation,
the expenses and compensation of any trustee, receiver, or other fiduciary,
except to the extent paid from the proceeds of any Parity Lien Bonds or other
such securities;
(g) the costs incurred by the Sewer Enterprise in the collection and any
refunds of all or any part of the Gross Revenues;
(h) any costs of utility services furnished to the Sewer Enterprise by the
City or otherwise; and
(i) all other administrative, general and commercial expenses
pertaining to the Sewer Enterprise, but
(i) excluding any allowance for depreciation;
(ii) excluding any costs of extensions, enlargements,
betterments and other improvements (or any combination thereof);
(iii) excluding any reserves for major capital replacements (other
than normal repairs);
(iv) excluding any reserves for operation, maintenance or repair
of the Sewer Enterprise;
(v) excluding any allowance for the redemption of any bond or
other security evidencing a loan, or the payment of any interest thereon, or
4829-4954-7012.4 5
any prior redemption premium due in connection therewith, or any reserve
therefor: and
(vi) excluding any liabilities incurred in the acquisition or
improvement of any properties comprising any project or any existing
facilities (or any combination thereof) pertaining to the Sewer Enterprise.
"Outstanding" means, when used with reference to bonds as of any particular
date, all bonds payable from the Net Pledged Revenues of the Sewer Enterprise in any
manner, theretofore or thereupon being executed and delivered:
(a) except any bond canceled by the Sewer Enterprise, by the Paying
Agent or otherwise on the Sewer Enterprise's behalf, at or before said date;
(b) except any bond for the payment or the redemption of which
moneys at least equal to the principal amount of, any prior redemption premium
due in connection with, and the interest on the bond to the date of maturity or the
prior redemption date, shall have theretofore been deposited with a commercial
bank in escrow or in trust for that purpose, as provided in Section 13 hereof; and
(c) except any bond in lieu of or in substitution for which another bond
shall have been executed and delivered pursuant to this Ordinance.
"Panty Lien Bonds" means the Series 2003 Bond, the Series 2009 Bond and all
other bonds or other obligations payable from Net Pledged Revenues on a parity with
the Series 2003 Bond and the Series 2009 Bond.
"Revenue Account" means the Revenue Account established pursuant to the
Series 2003 Ordinance and affirmed and continued pursuant to Section 10 hereof.
"Series 2003 Ordinance" means Ordinance No. 6963, adopted by the City
Council on second reading on April 14, 2003.
"Sewer Enterprise" means the City's municipal sanitary sewer system, consisting
of all properties, real, personal, mixed or otherwise, now owned or hereafter acquired by
the City, through purchase, construction or otherwise, and used in connection with the
Sewer Enterprise of the City, and in any way pertaining thereto, whether or not located
within or without or both within and without the boundaries of the City; and such defined
term includes any other utility or other income - producing facilities added to the Sewer
Enterprise and to which the lien and pledge herein provided or provided in the Loan
Agreement are extended by ordinance adopted by the City Council or the qualified
electors of the City or by Charter amendment adopted by such electors.
"State" means the State of Colorado.
Section 3. Issuance of Series 2009 Bond. For the purpose of providing moneys
with which to finance the Project and pay the costs of issuance of the Series 2009
Bond, the Sewer Enterprise shall issue its Series 2009 Bond in an aggregate principal
4829- 4954- 7012.4 6
amount of $1,500,000. The Series 2009 Bond shall be payable as to both principal and
interest solely out of Net Pledged Revenues derived from the operation and use of the
Sewer Enterprise.
Section 4. Series 2009 Bond Details.
(a) The Series 2009 Bond shall be dated, shall be subject to
repayment in the amounts and on the dates, and shall be subject to prior
redemption, as set forth in the Loan Agreement and the Series 2009 Bond. The
maximum net effective interest rate authorized for the Series 2009 Bond is 0%
per annum (or in the event that a late charge is imposed pursuant to Section 3.03
of the Loan Agreement, a maximum net effective interest rate equal to the
greater of 12% per annum or the prime rate plus 0.5 %, not to exceed the
maximum rate permitted by law), and the actual net effective interest rate of the
Series 2009 Bond shall not exceed such rate. The final principal amount of the
Series 2009 Bond, its actual interest rate, its net effective interest rate, and the
payment schedule for the Series 2009 Bond shall be set forth in a certificate to
be executed on behalf of the Sewer Enterprise by the President or Vice President
of the City Council, as the Sewer Enterprise's Agent, to whom the power to make
such determinations, subject to the parameters set forth in this Ordinance, is
delegated by the City Council pursuant to the Supplemental Public Securities
Act. The President or Vice President shall execute and deliver the Series 2009
Bond to the Authority as evidence of the Loan Repayments (as defined in the
Loan Agreement). The actual Loan Repayments are (or will be) attached to the
Loan Agreement and shall be an integral part of this Ordinance. The Series
2009 Bond shall be substantially in the form set forth as Exhibit D to the Loan
Agreement.
(b) The Series 2009 Bond shall not constitute a debt or other
indebtedness or multi - fiscal year direct or indirect debt or other financial
obligation of the City within the meaning of any constitution, charter or statutory
provision or limitation; the Series 2009 Bond shall not be payable from the
proceeds of general property taxes; and the Series 2009 Bond shall not be
considered or held to be general obligations of the City. The Series 2009 Bond is
a special revenue obligation of the Sewer Enterprise, payable and collectible
solely out. of and secured by a pledge of the Net Pledged Revenues from the
Sewer Enterprise.
Section 5. Delivery of Series 2009 Bond. Upon the execution of the Series
2009 Bond, the Sewer Enterprise shall deliver it to the Authority against payment of the
purchase price. The proceeds of the Series 2009 Bond shall be used exclusively for
payment of the cost of the Project and the costs of issuing the Series 2009 Bond.
Section 6. The Loan Agreement. The form of Loan Agreement presented at this
meeting has been reviewed and discussed by the City Council, the Sewer Enterprise's
attorney and staff members in attendance. The President or Vice President of the City
Council and the City Clerk are hereby authorized and directed to execute and deliver
4629- 4954 - 7012.4 7
the Loan Agreement on behalf of the Sewer Enterprise with whatever changes are
approved by the Sewer Enterprise's attorney and the President or Vice President;
provided, that such changes shall not violate any of the provisions or conditions of this
Ordinance. The execution by the President or Vice President and City Clerk of the Loan
Agreement shall be deemed to show approval of any changes. After execution of the
Loan Agreement, the Sewer Enterprise shall perform its obligations under the Loan
Agreement in a timely fashion.
Section 7. Pledge and Application of Net Pledged Revenues.
(a) The Sewer Enterprise hereby irrevocably (but not exclusively)
pledges the Net Pledged Revenues of the Sewer Enterprise to pay the principal
of and interest on the Series 2009 Bond. The Sewer Enterprise hereby agrees to
fix annually and to maintain rates and charges for wastewater services furnished
by the Sewer Enterprise which, together with moneys on hand and available
therefor, will be sufficient to pay operation and maintenance expenses of the
Sewer Enterprise and the principal of, premium, if any, and interest on all
Outstanding Parity Lien Bonds, including the Series 2009 Bond, and other
obligations of the Sewer Enterprise, as they respectively become due, including
the requirements of the Loan Agreement.
(b) The Sewer Enterprise agrees to apply the Net Pledged Revenues
monthly as set forth in Section 11 hereof and in the Loan Agreement.
(c) The creation, perfection, enforcement and priority of the pledge of
the Net Pledged Revenues to secure and pay the Series 2009 Bond and any
other Parity Lien Bonds as provided herein shall be governed by Section 11 -57-
208 of the Supplemental Public Securities Act and this Ordinance. The revenues
pledged for the payment of the Series 2009 Bond and any other Parity Lien
Bonds, as received by or otherwise credited to the Sewer Enterprise, shall
immediately be subject to the lien of such pledge without any physical delivery,
filing or further act. The lien of such pledge on the revenues pledged for
payment of the Series 2009 Bond and any other Parity Lien Bonds and the
obligation to perform the contractual provisions made herein shall have priority
over any or all other obligations and liabilities of the Sewer Enterprise. The lien
of such pledge shall be valid, binding and enforceable as against all persons
having claims of any kind in tort, contract, or otherwise against the Sewer
Enterprise and the City irrespective of whether such persons have notice of such
liens.
Section 8. Covenants. The Sewer Enterprise hereby additionally irrevocably
covenants and agrees with each and every Registered Owner of the Series 2009 Bond
that so long as the Series 2009 Bond remains Outstanding:
(a) The Sewer Enterprise has maintained and shall continue to
maintain itself as an "enterprise" within the meaning of Article X, Section 20 of
the Colorado Constitution for the Sewer Enterprise's 2009 fiscal year.
4829 - 4954- 7012.4 8
Specifically, but not by way of limitation, the Sewer Enterprise covenants and
agrees that it shall not receive 10% or more of its annual revenue in grants from
all Colorado state and local governments combined during its 2009 fiscal year.
Further, the Sewer Enterprise shall use its best efforts to maintain itself as an
"enterprise" within the meaning of Article X, Section 20 of the Colorado
Constitution during the term of the Series 2009 Bond.
(b) The issuance of the Series 2009 Bond and the financing of the
Project, and all procedures undertaken incident thereto, are in full compliance
and conformity with all presently applicable requirements, provisions and
limitations prescribed by the Constitution and laws of the State and the Charter.
Section 9. Disposition of Proceeds from Loan; Authorization of Project. The
proceeds of the Loan shall be applied only to pay the costs and expenses of the Project
which are permitted pursuant to the terms of the Loan Agreement and § 31 -35- 403(2),
C.R.S., including without limitation the reimbursement of funds which may have been
previously advanced for such purpose.
The Project is hereby authorized and approved, and the appropriate officers and
employees of the Sewer Enterprise are hereby authorized and directed to take all
actions necessary for the acquisition, construction, reconstruction, improvement,
betterment or extension of the Project from the proceeds of the Series 2009 Bond and,
to the extent necessary, from any other legally available moneys of the Sewer
Enterprise. It is hereby determined by the Sewer Enterprise that the Series 2009 Bond
matures at such time not exceeding the estimated life of the Project.
Section 10. Affirmation and Continuation of Revenue Account and Debt
Service Account.
(a) The Sewer Enterprise hereby affirms and continues the "Sewer
Enterprise of Pueblo, Colorado, Sewer Revenue Account ", which was
established pursuant to the Series 2003 Ordinance and which will be used for the
collection of the Gross Revenues of the Sewer Enterprise, as set forth in Section
11 hereof and the Loan Agreement.
(b) The Sewer Enterprise hereby affirms and continues the "Sewer
Enterprise of Pueblo, Colorado, Sewer Revenue Debt Service Account", which
was established pursuant to the Series 2003 Ordinance and which will be used
for the payment of the principal of, premium, if any, and interest on the Series
2009 Bond and on all other Parity Lien Bonds, as set forth in Section 11 hereof
and the Loan Agreement.
(c) Any investment income earned on amounts designated in the
Revenue Account or the Debt Service Account will be credited to the Revenue
Account or the Debt Service Account, respectively.
Section 11. Application of Gross Revenues. So long as the Series 2009 Bond
shall remain outstanding, all Gross Revenues, as they are received, shall be deposited
48294954 -7012 4 9
into the Revenue Account, and the Gross Revenues are hereby appropriated for such
purpose. Moneys on deposit in the Revenue Account shall be transferred from the
Revenue Account and applied to the following purposes and in the following order of
priority:
(a) First, there shall be maintained in the Revenue Account amounts
sufficient to pay Operation and Maintenance Expenses of the Sewer Enterprise
promptly as they become due and payable;
(b) Second, there shall be credited to the Debt Service Account on the
twentieth (20th) day of each month, (i) beginning November 20, 2009, an amount
which, together with any moneys therein and available therefor, is equal to one -
fourth (114) of the interest maturing on the Series 2009 Bond on March 1, 2010,
(ii) beginning March 20, 2010, one -sixth (1/6) of the interest and principal
maturing on the Series 2009 Bond on September 1, 2010, and (iii) beginning
September 20, 2010, (A) one -sixth (1/6) of the interest maturing on the then
Outstanding Parity Lien Bonds (including the Series 2009 Bond) on the next
March 1 or September 1, and (B) one - twelfth (1/12) of the principal of the then
Outstanding Parity Bonds (including the Series 2009 Bond) maturing on the next
September 1; and
(c) Third, monthly after the deposits of Revenue described above,
there shall be paid to the Sewer Enterprise the amount remaining in the Revenue
Account, to be used in any lawful manner by the Sewer Enterprise.
The moneys in the Debt Service Account shall be used solely for the
purpose of paying the principal of and interest on the then Outstanding Parity
Lien Bonds (including the Series 2009 Bond). The Sewer Enterprise shall
forward to the Authority on or prior to each principal or interest payment date on
the Series 2009 Bond, in immediately available funds, amounts sufficient to pay
debt service on the Series 2009 Bond on each such date.
Concurrently with (in the case of Parity Lien Bonds) or subsequent to (in
the case of subordinate lien obligations) the payments required by paragraph (b)
of this Section, any remaining amounts in the Revenue Account shall be used by
the Sewer Enterprise for the payment of principal of and interest on any
additional obligations hereafter authorized to be issued and payable from the Net
Pledged Revenues, including reasonable reserves therefor, as the same accrue.
Section 12. Tax Covenants of Sewer Enterprise. The Sewer Enterprise, having
been fully informed of and having considered all the pertinent facts and circumstances,
does hereby find, determine and declare that:
(a) the Sewer Enterprise covenants that it will make no use of the
proceeds of the Series 2009 Bond at any time during the term thereof which, if
such use had been reasonably expected on the date the Series 2009 Bond are
4829 - 4954 -7012 4 10
issued, would have caused the Series 2009 Bond to be "arbitrage bonds" within
the meaning of Section 148 of the Code; and
(b) the Sewer Enterprise covenants that the gross proceeds of the
Series 2009 Bond shall not be used in a manner which will cause the Series
2009 Bond to be considered a "private activity bond" within the meaning of
Section 141 of the Code.
Section 13. Defeasance. When the Series 2009 Bond and interest thereon have
been duly paid, the pledge and lien and all obligations hereunder shall thereby be
discharged as to the Series 2009 Bond, and the Series 2009 Bond shall no longer be
deemed to be Outstanding within the meaning of this Ordinance. There shall be
deemed to be such due payment when the Sewer Enterprise has placed in escrow and
in trust with a commercial bank located within or without the State and exercising trust
powers, an amount sufficient (including the known minimum yield from Federal
Securities in which such amount may be initially invested) to make all payments of
principal of and interest on the Series 2009 Bond as the same become due. The
Federal Securities shall become due prior to the respective times on which the
proceeds thereof shall be needed, in accordance with a schedule established and
agreed upon between the Sewer Enterprise and the bank at the time of the creation of
the escrow, or the Federal Securities shall be subject to the redemption at the option of
the holders thereof to assure such availability as so needed to meet such schedule.
"Federal Securities" within the meaning of this Section shall include only direct
obligations of, or obligations the principal of and interest on which are unconditionally
guaranteed by, the Untied States of America and which are not callable before maturity
by the issuer of such obligations.
Section 14. Additional Obligations. So long as the Series 2009 Bond is
Outstanding:
(a) Limitations Upon Issuance of Parity Lien Bonds. Nothing in this
Ordinance shall be construed to prevent the issuance by the Sewer Enterprise of
additional obligations (including refunding obligations) payable in whole or in part
from the Net Pledged Revenues (or any designated part thereof) and constituting
a lien thereon on a parity with, but not prior or superior to, the lien of the Series
2009 Bond and the Series 2003 Bond; provided, however, that before any such
additional Parity Lien Bonds are authorized or actually issued:
(i) The Sewer Enterprise is then current in all payments
required to have been accumulated in the Debt Service Account, and has
made all payments required on the Series 2009 Bond and any other
Outstanding Parity Lien Bonds.
(ii) The revenues derived from the entire Net Pledged Revenues
for the twelve consecutive calendar months immediately preceding the
month of issuance of such additional Parity Lien Bonds shall have been
sufficient to pay an amount equal to (A) one hundred and ten percent
4829-4954-7012.4 11
(110 %) of the combined maximum annual principal and interest
requirements on the then Outstanding Series 2009 Bond, any then
Outstanding Parity Lien Bonds theretofore issued, and the Parity Lien
Bonds then proposed to be issued, and (B) one hundred percent (100 %)
of the maximum annual principal and interest requirements on all other
indebtedness of the Sewer Enterprise payable from the Net Pledged
Revenues. In determining the amount of such Net Pledged Revenues, the
Net Pledged Revenues shall be adjusted if any new rates, fees and
charges have been established for the Sewer Enterprise prior to the
issuance of the Parity Lien Bonds to be issued, in which case the Net
Pledged Revenues shall be adjusted by applying such new rates, fees and
charges to customer billings for such twelve month period as if such rates,
fees and charges had been in effect during the whole of such twelve
month period.
(b) Certificate of Net Pledged Revenues. A written certification by a
certified public accountant who is not a regular salaried employee of the City or
the Sewer Enterprise that such Net Pledged Revenues are sufficient to pay the
amounts required by paragraph (a)(ii) of this Section shall be conclusively
presumed to be accurate in determining the right of the Sewer Enterprise to
authorize, issue, sell and deliver such additional Parity Lien Bonds.
(c) Subordinate Obligations Permitted. Nothing in this Ordinance
shall be construed to prevent the issuance by the Sewer Enterprise of additional
obligations (including refunding obligations) payable from the Net Pledged
Revenues (or any designated part thereof) and having a lien thereon subordinate
or junior to the lien of the Series 2009 Bond and other Parity Bonds; provided,
however, that no such subordinate obligations shall be issued unless for any 12
consecutive months out of the 18 months prior to the month in which such
subordinate obligations are to be issued, Net Pledged Revenues for the Sewer
Enterprise were at least one hundred percent (100 %) of the maximum annual
debt service on all the then Outstanding Sewer Enterprise indebtedness and the
subordinate obligations proposed to be issued.
(d) Superior Obligations Prohibited. Nothing in this Ordinance shall
be construed to permit the Sewer Enterprise to issue additional obligations
(including refunding obligations) payable from the Net Pledged Revenues (or any
designated part thereof) having a lien thereon prior and superior to the lien of the
Series 2009 Bond and any other Outstanding Parity Bonds.
Section 15. General Authorization. The President or the Vice President of the
City Council and the City Clerk shall, and they are hereby authorized and directed to
take all necessary or appropriate actions and to execute and deliver all agreements,
certificates and documents as may be necessary or desirable to effectuate the
provisions of this Ordinance and to comply with the requirements of law. Pursuant to
Exhibit B of the Loan Agreement, the Wastewater Director and the Director of Finance
are hereby designated as the Authorized Officers (as defined in the Loan Agreement)
4829-4954-7012.4 12
for the purpose of performing any act or executing any document relating to the Series
2009 Bond or the Loan Agreement. A copy of this Ordinance shall be furnished to the
Authority as evidence of such designation.
In addition, the appropriate officers and employees of the Sewer Enterprise and
the City are hereby authorized and directed to furnish and supply information
concerning the Sewer Enterprise and the City to the Authority for use in the preparation
of an official statement to be used to market the Authority's bonds.
Section 16. Exercise of Home Rule Power. Pursuant to Article XX of the State
Constitution and to the Charter, the City and the Sewer Enterprise hereby determine
and declare the issuance of the Series 2009 Bond to be a local matter, and therefore all
statutes of the State which might otherwise apply in connection with the issuance of the
Series 2009 Bond are hereby superseded.
Section 17. Severability. If any one or more sections or parts of this Ordinance
shall be adjudged unenforceable or invalid, such judgment shall not affect, impair or
invalidate the remaining provisions of this Ordinance, it being the intention that the
various provisions hereof are severable.
Section 18. Repealer. All ordinances, resolutions or parts thereof in conflict with
this Ordinance are hereby repealed to the extent of such conflict.
Section 19. Ordinance Irrepealable. This Ordinance is, and shall constitute, a
legislative measure of the City Council, sifting as the governing body of the Sewer
Enterprise, and after the Series 2009 Bond hereby authorized is issued and sold and is
Outstanding, this Ordinance shall constitute a contract between the Sewer Enterprise
and the Registered Owner of the Series 2009 Bond, and shall be and remain
irrepealable until the Series 2009 Bond, and the interest accruing thereon, shall have
been fully paid, satisfied and discharged.
Section 20. Recordation and Publication. This Ordinance, immediately on its
passage, shall be recorded in the records of the City Clerk and the Sewer Enterprise
kept for that purpose.
Section 21. Limited Recourse. No recourse shall be had for the payment of the
principal of or interest on the Series 2009 Bond or for any claim based thereon or upon
any obligation, covenant or agreement contained in this Ordinance against any past,
present or future officer, employee or agent of the City or the Sewer Enterprise, or of
any successor public corporation, as such, either directly or through the City or the
Sewer Enterprise or any successor public corporation, under any rule of law or equity,
statute or constitution or by the enforcement of any assessment or penalty or otherwise,
and all such liability of any such officers, employees or agents as such is hereby
expressly waived and released as a condition of and consideration for the passage of
this Ordinance, and the issuance of the Series 2009 Bond.
Section 22. Emergency. The City Council hereby finds, determines and declares
that:
4929-4954-7012.4 13
(a) Based upon the deadline schedule established by the Authority,
this Ordinance, the Series 2009 Bond, and Loan Agreement must be approved,
issued and executed by the City on or before August 29, 2009;
(b) Failure by the City to meet the deadline schedule may result in loss
of financing for construction of a portion of the Project; and
(c) This Ordinance is necessary for the immediate preservation and
protection of the public health, property and safety.
Section 23. Effective Date. This Ordinance shall take effect on August 24, 2009,
upon its final passage and approval.
Section 24. Public Hearing. A public hearing on this Ordinance shall be held on
Monday, August 24, 2009, at 7:00 p.m., in the City Council Chambers, One City Hall
Place, Pueblo, Colorado.
INTRODUCED August 17, 2009:
Randy Thurston
Councilperson
t'•:• _n
President, City Council
Attest:
City k
PASSED AND APPROVED: August 24, 2009
APPROVED AS TO FORM BY CITY ATTORNEY:
City Attorn
4829- 4954 - 7012.4 14
L) 4
Background Paper for Proposed
ORDINANCE
AGENDA ITEM # R -5
DATE: August 24, 2009
DEPARTMENT: WASTEWATER DEPARTMENT
Gene Michael, Director
TITLE
AN EMERGENCY ORDINANCE RECOGNIZING AND CONFIRMING THE CITY OF
PUEBLO, COLORADO'S SEWER ENTERPRISE AS AN ENTERPRISE;
AUTHORIZING THE ISSUANCE BY THE CITY'S SEWER ENTERPRISE OF A
GOVERNMENTAL AGENCY BOND, SERIES 2009, IN A PRINCIPAL AMOUNT OF
$1,500,000, FOR THE PURPOSES OF FINANCING THE CONSTRUCTION OF
FACILITIES TO REMOVE AMMONIA AT THE WATER RECLAMATION FACILITY,
INSTALLING A DEWATERING SYSTEM, INSTALLING AN ULTRVIOLET RADIATION
DISINFECTION SYSTEM, INSTALLING A SOLAR PHOTOVOLTAIC ARRAY AND
PAYING THE COSTS OF ISSUING THE SERIES 2009 BOND; PRESCRIBING THE
FORM, TERMS AND CONDITIONS OF THE SERIES 2009 BOND; PROVIDING FOR
THE SALE OF THE SERIES 2009 BOND; PROVIDING FOR THE APPLICATION OF
THE NET PLEDGED REVENUES OF THE SEWER ENTERPRISE TO PAY THE
PRINCIPAL OF AND INTEREST AND PREMIUM, IF ANY, ON THE SERIES 2009
BOND; DECLARING AN EMERGENCY; AND PRESCRIBING OTHER DETAILS IN
CONNECTION THEREWITH
ISSUE
Should the City Council authorize the Sewer Enterprise to accept a federal loan under
the American Recovery And Reinvestment Act of 2009 in a maximum principal amount
of $1,500,000, for the purposes of financing the construction of a solar photovoltaic
array to provide alternative electric energy to the James R. Dilorio Water Reclamation
Facility.
RECOMMENDATION
Approval of this ordinance
BACKGROUND
Pueblo operates the James R. Dilorio Water Reclamation Facility under a discharge
permit issued by the State of Colorado to treat wastewater generated within the
community. The discharge permit is issued for a period of five years, and contains
numeric limits for maximum concentrations of specific chemicals that can be discharged
in the effluent from the treatment facility. In 2005 the State of Colorado adopted a new
water quality rule establishing more restrictive standards for ammonia. Pueblo's new
discharge permit will contain numeric limits for ammonia that the existing treatment
facility cannot attain reliably. Maintaining compliance will require constructing new
treatment facilities. In addition, Pueblo desires to convert the existing gaseous chlorine
disinfection process to disinfection via ultraviolet radiation in order to eliminate the
potential for toxic gas releases and reduce the likelihood of discharging improperly
treated wastewater to the Arkansas River. Both projects will increase consumption of
electric power at the Water Reclamation Facility. Electric power costs comprise the
single largest cost element of operating the facility. A solar photovoltaic array will
reduce electric power purchases from the electric grid, and help control utility costs for
facility operation.
Due to the current national economic downturn, there is significant pressure to rush
more money into circulation. To accomplish this goal, the United States Congress has
authorized a loan program under the American Recovery And Reinvestment Act
(ARRA) of 2009, providing low interest and principal forgiveness loans for projects that
generate electric power from non - traditional sources. The loan program requires that
construction projects be awarded and started by September 30, 2009. In addition, the
economic downturn has created an extremely favorable bidding environment, and it is
greatly to the City's advantage to move quickly to take advantage of these conditions.
The Colorado Water Resources and Power Development Authority has advised the
Wastewater Department that a loan to Pueblo in the amount of $1,500,000 is likely to be
approved by the U.S. Environmental Protection Agency under the ARRA. These funds
will be used to finance the project
FINANCIAL IMPACT
The loan has been offered as a zero - interest loan, with principal repayment required.
The repayment over 20 years will be $75,000 per year. Initial estimates suggest that
the solar array may provide annual savings between $79,000 and $111,000 per year,
depending on electric rates and reimbursements made under the alternative energy
incentive program. This represents a savings of 17 to 25 percent of annual electric
power costs, based on the 2010 budget request. Under the terms offered it is
anticipated that the City will realize a small net benefit of approximately $4,000 per year
in cost savings. Additional savings may be realized if electric utility rates increase. The
project will be funded as Project No. 09 -067 (WWL02B).