HomeMy WebLinkAbout07/15/2008, C8 - EXECUTION OF I-BANK $10 MILLION LOAN AGREEMENT FOR TANK FARM PROJECT council M mvDft July 15,2008
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CITY OF SAN LUIS OBISPO
FROM: Gary Henderson, Acting Utilities Director wlli`41�
Prepared By: Kathe Bishop, Senior Administrative Analyst 0
SUBJECT: Execution of I-Bank$10 Million Loan Agreement for Tank Farm Project
CAO RECOMMENDATION
Adopt a resolution authorizing the execution and delivery of the Installment Sales Agreement by
and between the City of San Luis Obispo and the California Infrastructure and Economic
Development Bank (I-Bank) to fund the Tank Farm Gravity Sewer, Lift Station and Force Main
Project.
DISCUSSION
To assist in funding the Tank Farm Gravity Sewer, Lift Station and Force Main project, on
February 12, 2008 Council adopted a resolution authorizing staff to submit a loan application to
the I-Bank in the amount of $10 million (net proceeds of $9,915,000 based on loan fees of
$85,000), which is the maximum loan amount available through I-Bank per project. Financing
for the Tank Farm Sewer Project is comprised of three funding sources:
Tank Farm Gravity Sewer, Lift Station and Force in Project
Funding Sources Amount
"Pay-As-You-Go"Financing 1,000,000
Debt Financing-I-Bank Net Proceeds 9,915.000
Debt Financing-Private Placement Net Proceeds 1,995.000
Total I $ 12,910,000
The pay-as-you-go financing is directly from the sewer fund. On May 6, 2008, Council adopted
a resolution approving the Installment Sales Agreement for the private placement financing. The
private placement financing was awarded to SunTrust Equipment Finance and Leasing
Corporation with net proceeds of $1,995,000 at 4.2% interest over a term of 15-years. On May
20, 2008, the I-Bank Board unanimously approved the City's loan application in the amount of
$10 million at a favorable interest rate of 3.25% over a term of 30-years. I-Bank legal staff has
drawn up the loan documents, which have been reviewed by the City's bond counsel to ensure
the I-Bank loan qualifies as "Parity Debt" with the Installment Sales Agreement for the private
placement awarded to SunTrust Equipment Finance and Leasing Corporation.
The proposed resolution authorizes the Director of Finance and Information Technology to
execute and deliver the proposed Installment Sales Agreement to be entered into by the City of
San Luis Obispo and the California Infrastructure and Economic Development Bank (I-Bank),
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Execution of I-Bank$10 Million Loan Agreement for Tank Farm Project Page 2
for and on behalf of the City of San Luis Obispo and further authorizes the Director of Finance
and Information Technology and/or the Utilities Director to execute and deliver any and all
certificates, contracts and other documents which would be necessary or appropriate in order to
consummate the delivery of the Installment Sales Agreement.
FISCAL IMPACT
The installment sale agreement with I-Bank provides $10 million in financing to support the
approved Tank Farm Gravity Sewer, Lift Station and Force Main project. The terms of the loan
include an interest rate of 3.25% over a 30-year term.
ALTERNATIVES
The approved $10 million loan at 3.2.5% is favorable to any other funding option available to the
City for this project, at this time. There are no reasonable alternatives that would be more cost
effective.
ATTACHMENT
Resolution
AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE
Installment Sales Agreement
G:\CAR Reports\2008 Council Agenda Reports\I-Bank Installment Sales Agreement CAR.doc
C8- Z
ATTACHMENT
.RESOLUTION NO. (2008 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AUTHORIZING THE EXECUTION.AND DELIVERY OF THE INSTALLMENT SALE
AGREEMENT BY AND BETWEEN THE CITY OF SAN LUIS OBISPO AND THE
CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK AND
APPROVING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH
WHEREAS, the City of San Luis Obispo (the "City") owns and operates facilities and
property for the collection, treatment and disposal of wastewater within the service area of the
City (the "Wastewater Enterprise"), and is proceeding to finance the acquisition and construction
of improvements to the Wastewater Enterprise known as the Tank Farm Gravity Sewer, Lift
Station and Force Main Project (the "Project"); and
WHEREAS, in order to provide funds to finance the acquisition and construction of the
Project, the City has proposed to enter into an Installment Sales Agreement with the California
Infrastructure and Economic Development Bank (the "I-Bank") under which the I-Bank agrees to
provide financing for the Project to the City in consideration of the agreement by the City to pay
periodic Installment Payments for the Project financing; and
WHEREAS, the Council wishes at this time to approve all proceedings to which it is a
party relating to the financing of the Project;
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. The Director of Finance and Information Technology is authorized and
directed to execute and deliver the Enterprise Fund Installment Sale Agreement (the
"Agreement") proposed to be entered into by the City of San Luis Obispo and the California
Infrastructure and Economic Development Bank, for and on behalf of the City of San Luis
Obispo. As.executed and delivered, such documents shall be in substantially the form presented
at this meeting, with such minor additions thereto or minor changes therein as the officers
executing such document shall require or approve, such approval to be conclusively evidenced by
the execution and delivery thereof.
SECTION 2. The Director of Finance and Information Technology, and the Utilities
Director are hereby each authorized and directed, in the name and on behalf of the City of San
Luis Obispo, to take any and all steps and to execute and deliver any and all certificates, contracts
and other documents which they might deem necessary or appropriate in order to consummate.
the delivery of the Agreement and otherwise to effectuate the purposes of this resolution;
including the execution of a tax certificate, and such actions previously taken by the employees
of the City of San Luis Obispo are hereby ratified and confirmed.
SECTION 3. The City Council acknowledges that subsequent to the execution and
delivery of the Agreement, the I-Bank may determine to issue bonds to fund all or a portion of
the City's Project, as defined in the Agreement. In such event, the City Council hereby
authorizes the Director of Finance and Information Technology to execute any necessary
documentation, as requested by the I-Bank, including a new agreement, so long as such
R
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- - ATTACHMENT
Resolution No. (2008 Series)
Page 2
documentation is consistent with this Resolution and substantially identical to the terms and
conditions of the Agreement.
SECTION 4. This resolution shall take effect from and after its passage, approval and
adoption.
Upon motion of seconded by
and on the following vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of 2008.
Mayor David F. Romero
ATTEST:
Audrey Hooper
City Clerk
APPROVED AS TO FORM:
natha . Lowell
City Attorney