HomeMy WebLinkAboutCC 9 BOND SALES 10-19-92AGEN� DA
OCTOBER 9, 1992
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: RONALD A. NAULT, DIRECTOR OF FINANCE
CONSENT CALENDAR NO. 9
10-19-92
Inter -Com Vx�
SUBJECT: RESOLUTION NO. 92-120, CONFIRMING THE CITY COUNCIL'S INTENT TO
RECOVER CERTAIN WATER SERVICE ADVANCES FROM FUTURE BOND SALES
RECOMMENDATION:
Adopt Resolution No. 92-120 confirming the City Council's intent to
recover certain water service advances from future bond sales.
DISCUSSION:
During the Water Rate Study and Financing Plan Workshop the City
Council was made aware of the completion of the demonstration
period for the Main Street Desalter Plant. Staff has finished
their project cost analysis and will be recommending an
appropriation for the initial payment of $614,542. Under the
Agreement with the Municipal Water District of Orange County
(MWDOC) the balance of the project costs, $748,896 were to be
repaid from future cost savings from the plant operations at eight
(8) percent interest for a period of twenty (20) years. The
Financing Plan, recently approved by the City Council, recommends
that this project and a future desalter project on Seventeenth
Street be considered for inclusion in future bond issues to take
advantage of lower tax exempt rates. Before we finalize the sizing
of the proposed bond financing we will analyze whether or not it
makes sense to include the prepayment of this project. But, we do
want to make sure that we are in a strong legal position to
reimburse ourselves if we do include this project in a future
financing.
You will note that the resolution references a total of $50 million
for all the bond issues. The City Attorney has reviewed this
matter with Bond Counsel and has concluded that it is necessary to
include a total dollar amount for the anticipated bond issues and,
by doing so it becomes a "not to exceed" amount. By stating an
amount above the $40 million addressed in the Financing Plan, the
City protects itself if, in the event our assumptions on
construction cost increases are inadequate, due to some unforseen
event and the total of all four issues were to exceed $40 million.
It in no way obligates the City Council to issue debt to that
limit. If actual costs turn out to be a total of $20 million
that's all the debt financing we have to do. But, if it were to
significantly exceed $40 million and the City Council wanted to
October 9, 1992
Page 2
proceed with the projects we would be limited to the amount stated
in Resolution 92-120.
Per the recommendation of the City Attorney this is a conservative
approach to accomplishing the City Council's goal of completing the
projects addressed in the Rate Study and Financing Plan.
I uav,.�&
Rona d A. Nault
Director of Finance
RAN:ls
Attachment
w agenda.bnd
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RESOLUTION NO. 92-120
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF TUSTIN, CALIFORNIA, AUTHORIZING FUTURE
EXPENDITURES WITH RESPECT TO THE CITY'S WATER
FACILITY IMPROVEMENT PROGRAM TO BE REIMBURSED
FROM FUTURE LONG-TERM FINANCINGS
The City Council of the City of Tustin hereby resolves as
follows:
WHEREAS, the City of Tustin ("City") has undertaken a capital
program to finance ongoing and future costs related to the design,
planning, acquisition and construction of a program to improve the
facilities of its Water Utility, including certain facilities
designed to remove nitrates from groundwater (all the foregoing
hereinafter refered to as the "Project"); and
WHEREAS, the City is beginning to make expenditures with
respect to costs of the Project; and
WHEREAS, the City intends to make arrangements to provide
long-term financing for costs of the Project, which financing may
be structured so as to bear interest which is excluded from gross
income for Federal income tax purposes; and
WHEREAS, the City has not yet finalized the arrangements for
such long-term financing for the Project, but is proceeding with
the Project at this time by expending other funds from sources
other than long-term debt on a temporary basis with the intention
that such amounts be reimbursed to the maximum extent permitted by
law and prudent in the judgment of the City and desires to confirm
its intentions with respect to any such expenditures hereinafter
incurred.
NOW, THEREFORE, the City Council hereby RESOLVES, DETERMINES
AND ORDERS the following to be effective:
Section 1. The City intends that expenditures made by or
on behalf of the City with respect to costs of the Project from and
after the date of adoption of this Resolution are to be financed
with the proceeds received by the City from such long-term
financing arrangements as ultimately are finalized by the City with
respect to the Project.
Section 2. Expenditures made on an interim basis from
other funds by or on behalf of the City with respect to costs of
the Project prior to the consummation of such long-term financing
arrangements are, to the fullest extent possible, to be reimbursed
to the City from the proceeds of such long-term financing upon its
JGR:ARW:cj ♦ :C\2393:10/12/92
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Resolution No. 92-120
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consummation; provided, however, that the maximum amount of debt to
be issued with respect to the Project shall not exceed Fifty
Million Dollars ($50,000,000.00).
Section 3. This Resolution represents the current
intention of the City, but does not in any way obligate the City to
proceed with long-term financing for the Project, or to reimburse
itself from the proceeds of any such long-term financing which may
be undertaken, in the event that the City later determines that
either such action is not in the best interests of the City.
Section 4. The City specifically states that this
Resolution constitutes a statement of the City's intent under and
pursuant to Treasury Regulation Section 1.103-18.
Section 5. This Resolution shall take effect on its date
of adoption.
PASSED AND ADOPTED, at a regular meeting of the City Council
for the City of Tustin on this day of , 1992.
ATTEST:
MARY E. WYNN, City Clerk
LESLIE ANNE PONTIOUS, Mayor