HomeMy WebLinkAboutFS 2009-07-07 Item 2B - Resolution - Bond Issue Certificates with Cascade Water AllianceTO:
ISSUE
BACKGROUND
DISCUSSION
RECOMMENDATION
City of Tukwila
INFORMATIONAL MEMORANDUM
Mayor Haggerton
Rhonda Berry
Finance and Safety Committee
FROM: Shawn Hunstock, Finance Director
DATE: June 30, 2009
SUBJECT: Cascade Water Alliance Bond Issue Certificates and Resolution
Jim Haggerton, Mayor
The Cascade Water Alliance (CWA) will soon be issuing approximately $96 million in
bonds this summer. As a member of CWA, Tukwila must consent to continuing
disclosure requirements that are typically part of a bond offering such as this.
In the coming months CWA will be issuing bonds for several projects, as listed in the
attachment titled Cascade Water Alliance bond planning: funding needs summary. The
bulk of this money will be used for the purchase of Lake Tapps from Puget Sound
Energy, and for the settlement of water rights issues with the Muckleshoot and Puyallup
tribes.
The attached Resolution authorizes the Mayor to execute the two included Certificates.
The first Certificate, Certificate of City of Tukwila, essentially acknowledges that the City
has provided certain operating information to be used in CWA's Offering Statement,
Appendix A (Tukwila's Appendix A information is attached, for your information). This
Certificate also requires the City to abide by continuing disclosure requirements. These
include filing yearly Comprehensive Annual Financial Reports, which the City has to file
anyway for our own bonds, and disclosure of certain significant material events, such as
annexations. The second Certificate, Closing Certificate of the City of Tukwila,
essentially acknowledges the City has disclosed to the bond underwriter material
changes, if any, to the information already provided.
Repayment of the $96 million in debt to be issued has already been included in the rate
model for purchased water. As such, there will be no additional rate increase related to
the debt service for this bond issue.
The Council is being asked to approve the attached Resolution authorizing the Mayor to
sign the two Certificates related to the CWA bond issue.
INFORMATIONAL MEMO
Page 2
This item is scheduled to be discussed at the July 7, 2009 Finance and Safety
Committee meeting, the July 13, 2009 Committee of the Whole meeting and
subsequent July 20, 2009 Regular Meeting.
ATTACHMENTS
Draft Resolution
Certificate of the City of Tukwila
Closing Certificate of the City of Tukwila
Appendix A (for informational purposes only)
Cascade Water Alliance bond planning (for informational purposes only)
C:ltemp\XPg rpwiselI nfoMemoCWACertificates. doc
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, EXECUTING A CERTIFICATE AND APPROVING
FINANCIAL AND OPERATING INFORMATION OF THE CITY OF
TUKWILA FOR THE CASCADE WATER ALLIANCE OFFICIAL
STATEMENT FOR THE CASCADE 2009 BONDS.
WHEREAS, Cascade Water Alliance "Cascade anticipates the issuance in
August 2009 of its Water System Revenue Bonds, 2009 (the "Cascade 2009 Bonds and
WHEREAS, under the Interlocal Contract effective April 1, 1999, as amended and
restated on December 15, 2004, that established Cascade, the City of Tukwila (the
"Member has agreed to provide "such certificates or verifications as are reasonably
requested" in connection with the issuance of bonds by Cascade, including a written
undertaking (an "Undertaking to provide continuing disclosure pursuant to
paragraph (b)(5) of Securities and Exchange Commission Rule 15c2 -12; and
WHEREAS, Member representatives have assisted Cascade in providing financial
and operating information about the Member for inclusion in the official statement for
the Cascade 2009 Bonds (the "Cascade Official Statement
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
Section 1. The Mayor of Tukwila, as the Member's representative to and board
member of Cascade, in connection with the issuance of the Cascade 2009 Bonds, is
authorized to execute a certificate or certificates constituting the Undertaking,
approving financial and operating information about the Member in the Cascade
Official Statement, and including such other certifications or verifications as Cascade
may reasonably request.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
at a Regular Council Meeting thereof this day of 2009.
ATTEST/ AUTHENTICATED:
Christy O'Flaherty, CMC, City Clerk
APPROVED AS TO FORM BY:
Office of the City Attorney
W. \Word Processing\Resolulions \Cascade 2009 Bonds Motion.DOC
SH.ksn 07/01/2009
DRAFT
Joan Hernandez, Council President
Filed with the City Clerk:
Passed by the City Council:
Resolution Number:
CLOSING CERTIFICATE OF THE CITY OF TUKWILA
The City of Tukwila (the "City a code city and a member of the Cascade Water
Alliance "Cascade hereby certifies to Cascade and to Lehman Brothers Inc. (the
"Underwriter as follows (capitalized terms used below but not defined have the
meanings assigned thereto in the Bond Purchase Agreement (the "Purchase
Agreement between the underwriter and Cascade):
1. Each of the representations and warranties of the City contained in its
Member Certificate is true and correct as of the date of this Closing Certificate as if
made on the date of this Closing Certificate, and as of the date of this Closing
Certificate, each of the representations and warranties contained in its Member
Certificate is true and correct assuming that (i) where the phrase "the Preliminary
Official Statement and the Official Statement" and (ii) the term "Member's Documents"
includes this Closing Certificate as well as the member Certificate and the Interlocal
Contract.
2. The City confirms its agreements contained in its Member Certificate,
including in particular, the City's agreements contained in Paragraphs 7, 9 and 11 of the
Member Certificate.
3. The officer of the City signing this Closing Certificate is duly authorized
to sign this Closing Certificate on behalf of the City.
Dated this day of July, 2009.
1
CITY OF TUKWILA
By:
Title: Mayor
Highline water district intertie
Water district 75 intertie
Water district #75 intertie
APPENDIX A:
FINANCIAL INFORMATION REGARDING THE MEMBERS
City of Tukwila
Payments to Cascade
The City of Tukwila's "Tukwila budgeted payments to Cascade for 2009 total $2,175,500, as follows:
Administration Dues $67,222
Demand Share 1,662,900
New Water Surcharge
RCFC 182,717
Conservation 41.697
Total $1,954,536
Tukwila
Tukwila is located in the western portion of King County, just south of the City of Seattle. Tukwila was incorporated as a
city in 1908 and encompasses approximately 8.6 square miles. Tukwila has an estimated population of 18,050, as of April 1,
2009, according to the State's Office of Financial Management. Tukwila is organized as a code city, governed by a mayor
council form of government, with a seven member elected council. Tukwila's city council members are elected to
overlapping four -year terms. The mayor is elected to serve in a full -time capacity, for a four year term. A city administrator
and other officers and department directors are appointed by the mayor with approval of the council members. The city
council has authority to set rates and charges for water service.
Tukwila's Water Utility
Tukwila is actively using reclaimed water for non- potable uses such as irrigation from a separate system supplied by King
County Department of Natural Resources. Tukwila's water transmission and distribution system includes forty miles of
water mains, a two million gallon covered pre stressed concrete reservoir and booster pump station. Tukwila has several
emergency interties with adjoining jurisdictions, cities, and water districts.
Nearly all the water that Tukwila receives is purchased through Cascade. In 2008, Tukwila sold approximately 760 million
gallons of water to approximately 2,100 accounts. The largest account represents 5 percent of the total water consumption
and the top ten accounts represent approximately 27 percent of the total water consumption.
Outstanding Debt
Tukwila has a combined waterworks utility for purposes of financing, which includes water and sewer utilities. Only the
revenues of the water utility are pledged under the Interlocal Contract. The revenues of the sewer utility are not pledged
under the Interlocal Contract. At the end of 2008, the combined utility had $4,808,600 of outstanding water and sewer
revenue bonds, and $4,554,087 of loans from the State's Public Works Trust Fund and $0. The bond ordinance for the water
and sewer bonds currently has a debt service coverage requirement of 135 percent. Tukwila does anticipate incurring
additional debt in the next 12 months.
Debt Repayment Record
Tukwila has promptly met all principal and interest payments of its bonds when due, and has never defaulted on a payment of
principal or interest on any of its bonds. Furthermore, Tukwila has never issued refunding bonds for the purpose of avoiding
an impending default.
Continuing Disclosure
During the previous five years, Tukwila has not failed to comply, in all material respects with any previous undertakings in a
written contract or agreement specified in paragraph (b)(5)(i) of the Rule.
Historical Operating Results
The following table shows historical operating results for Tukwila. Tukwila has combined its water and sewer utilities for
purposes of financing. Only the revenues of the water utility are pledged under the Interlocal Contract. For 2008 the water
utility provided approximately 48 percent of the total operating revenues of the combined system.
Statement of Revenues, Expenses, and Changes in Fund Net Assets
Water /Sewer Utility
For the year ended December 31
2008 2007 2006 2005 2004
8,603,765 8,168,646 7,648,522 7,604,133 7,619,234
18.143 6,741 5.437 578 1,338
8,621,909 8,175,387 7,653,959 7,604,711 7,620,572
Operating Revenue
Charges for Services
Other Operating Revenue
Total Operating Revenues
Operating Expenses
Operations and Maintenance
Administrative and General
Taxes
Depreciation Amortization
Total Operating Expenses
Operating Income (Loss)
Non- Operating Revenue (Expenses)
Investment Income
Interest Expense
Amortization of Debt Premium
Amortization of Debt Discount
Other non Operating Rev. /Exp.
Total Non Operating Rev. /Exp.
Income (Loss) Before Contributions and Transfers 1,561,204 1,625,169 697,974 711,753 979,739
Capital contributions
Transfers in
Transfers (out)
Change in Net Assets
Total Net Assets Beginning
Total Net Assets Ending 24,985,487 23,815,031 22,663,265 21,810,505 20,923,361
Source: City of Tukwila.
5,701,671 5,488,380 5,185,919 4,882,923 4,606,999
136,436 128,549 999,398 1,048,963 1,031,643
261,188 245,908 233,290 229,550 237,769
953,552 726,347 697.289 704.709 646,937
7,052,846 6,589,184 7,115,896 6,866,145 6,523,348
1,569,062 1,586,203 538,063 738,566 1,097,224
232,657 399,125 398,891 200,104 125,680
(243,167) (360,491) (231,553) (218,544) (234,791)
10,797 10,807 8,412 8,206 8,205
(6,093) (6,919) (15,557) (16,579) (16,579)
(2,052) (3,556) (282)
(7,858) 38,966 159,911 (26,813) (117,485)
633,415 341,126 184,786 218,519 183,122
97,260
(1.024.163) (911,789) (30.000) (43,128) (200,000)
1,170,456 1,151,766 852,760 887,144 962,861
23,815,031 22,663,265 21,810,505 20,923,361 19,960,500
Cascade Water Alliance bond planning: funding needs summary Funding needed Max. Est. Amount
1. TCP Central and North Segments 2009 and 2010 $2,000,000
2. Eastside Storage Reservoir 2009 $15,000,000
3. Lake Tapps Acquisition September 2009 $43,000,000
4. Tribal settlement costs Sept. Dec. 2009 $19,800,000
5. State Route 900 Road Widening Reach July 2009 $7,132,000
6. Lake Tapps Knowledge Transfer May 2009 December 2010 $1,080,000
Subtotal
$88,012,000
7. Reserve funding requirement $7,000,000
8. Transaction cost: Bond counsel $80,000
9. Transaction cost: Financial advisor $70,000
10. Transaction cost: Rating agencies $70,000
11. Transaction cost: Underwriter ($8/$1000) $705,000
12. Transaction cost: Underwriter's counsel
Total financing $96,000,000
May 8, 2009
Cascade Water Alliance bond planning: funding needs i Estimated need
1.
(EO)
TCP (Central North Segments). The Tacoma Cascade
Pipeline efforts are generally on hold pending the outcome
of the 2009 planning study to update the Transmission and
Supply Plan; 2010 Update. Ongoing work will take place by
HDR for property acquisition and closeout of activities to
enable the restart of the engineering work upon the
completion of the 2009 planning efforts.
Eastside Storage Reservoir. Estimated purchase price. Final
2. cost to be determined based on conditions assessment and
(MG) appraisal. RW Beck's draft report is under review. Reservoir
serves Bellevue and Issaquah only.
May 8, 2009
$1,000,000 to
$2,000,000,
depending on
plans for Central
Segment and
whether 2008
Stewart property
purchase is
reimbursed from
bond proceeds
$15,000,000
($11m SPU book
value plus $4m
land may be
less)
Estimated
date funds
needed
2009 -2010
2009
Timing, event triggers, requisites,
other considerations
HDR contract #3, Central Segment: $67,235
spent to date in 2009; remainder to be
determined
HDR contract #5, North Segment: $180,759
spent to date in 2009, $167,108 remaining
in contract
Easements ($81,727 total: BPA $73,030;
Goodnight $1,070; Davis $5,645; PSE
$1,582; Issaquah $400)
Construction fund replenishment for
Stewart purchase ($1,015,872)
Noonan property (approx. $235,000;
closing in June 2009)
Timing is not critical for Cascade. Board has
not yet discussed timing. Seattle's rate
model assumes sale in 2009, so may get
pressure from them to do it this year.
December 2009 is possible.
Annual operating costs est. ^'$50,000. Who
will operate?
4.
(MG)
5.
Cascade Water Alliance bond planning: funding needs
$25m due at closing, which is 45 business days from
satisfaction of contingencies /conditions for closing.
3. $5m due when water right is issued with settlement flows
(earlier of issuance or closing)
(MG)
(EO)
May 8, 2009
Lake Tams acauisition.
$7m $7.5m PSE operations from 2004 to mid -2009.
$4m reimbursement to PSE for construction costs.
$1.5m PSE MOU purchase price adjustment.
Puyallup Indian Tribes and Muckleshoot Indian Tribes
settlement costs.
Muckleshoot: $600k due within ten days of closing on asset
purchase agreement; $6.2m due within 60 calendar days
after final appeal.
Puyallup: $13m due within 45 calendar days of final water
right issuance (after appeals).
State Route 900 Road Widenine Reach. The Tacoma Cascade
Pipeline State Route 900 Road Widening contract with the
Washington State Department of Transportation is
approximately $6.5 million, of which $1,390,114.56 has been
spent in 2008 and 2009 (to be reimbursed from bond
proceeds). The balance will be expended in 2009. Other
expenses (contingency, project management, inspections,
etc.) are estimated to total $682,000.
Adjustments
to purchase
price; to be
confirmed
Estimated
Estimated need date funds
needed
$43,000,000
$600,000
September
2009
September
2009
$19,200,000 I December
2009 or
later
$7,132,000 July 2009
Timing, event triggers, requisites,
other considerations
Sixteen boundary line adjustments are in
process.
Approval from UTC pending.
Parties (Pierce Co., homeowners, 4 cities)
may appeal water right. Appeal period is 30
days from issuance.
Payment due per settlement agreements
following issuance of water rights.
Contract has been signed and construction
is underway.
Payment will be in installments from March
2009 to July 2009.
Cascade Water Alliance bond planning: needs
6.
(MG)
May 8, 2009
Lake Tas knowIede transfer. Estimated cost of AECOM
contract for Lake Tapps operations and assessment.
Phase 1: $65,000 to scope the full p ct. Completed.
Phase 2-A: $715,000 evaluation of options and make
recommendations, ends April 2010
12. Transaction cost Underwriter's counsel
14. 1 Total financing
Estimated
Estimated need I date funds
needed I
Phase 2-B: $300,000 implementations of recommended
improvements, May I010 December 2010
Total �s 88,012 �D0O
nc^�rvc/uoux/Hrcqu//cmcx� �//�oo/�uu���
i i
Transaction cost: Bond counue| $80,000 l''�'��(��
9. Transaction
7
10. i Transaction cost: Rating agencies $70,000
11. Transaction cost: Underwriter ($8/$1000)
May 2009
through
December
2010
Timing, event triggers, requisites,
other considerations
Need to confirm that this 15 capitalizable
and therefore eligible for bond funding.
Other notes:
The "Short Term Supplemental Supply Projects" for $1,300,000 that appeared on prior version of this list has been removed. It is no
longer a likely project.
Another potential capital funding need: Lake Tapps powerhouse valve replacement, to occur within two or three years of closing
(2010 probably), per the Compliance Schedule. Estimated cost is $2,000,000 ($1.5m equipment plus $500k installation).
Lake Tapps Dike 3 repair may be done in conjunction with county road repair work, if the county funds it. If not, Cascade must
submit a repair schedule to the Department of Ecology within three years.
Bond proceeds may reimburse prior expenses paid from operating funds that were spent for the above projects, for the period back
to three years prior to closing. These potential reimbursements to the Operating Fund may serve as contingency funding to cover
needs that arise between the two bond phases. Ed Cebron will research reimbursement categories.
May 8, 2009