HomeMy WebLinkAboutResolution No. 2023-50I:::Iostlpone ' lndeflnlitelly
Sponsored by: Administrati
CITY OF KENAI
RESOLUTION NO. 2023-50
A RESOLUTION AUTHORIZING THE ISSUANCE OF UTILITY REVENUE BONDS/M A PRINCIPAL
AMOUNT NOT TO EXCEED ONE MILLION TWO HUNDRED THOUSAND DOLLA S ($1,200,000) TO
FINANCE THE COSTS OF PLANNING, DESIGNING AND CONSTRUCTING HE CITY'S WATER
TREATMENT PUMP HOUSE AND RELATED CAPITAL IMPROVEMENTS; D TO SUBMIT THE
QUESTION OF ISSUANCE OF SUCH BONDS TO THE QUALIFIED VOTER F THE CITY OF KENAI
AT THE GENERAL ELECTION IN AND FOR THE CITY OF KENAI ON OC BER 3, 2023.
WHEREAS, the City of Kenai, Alaska (the "City") is a home rul/city d under Section 11 of Article X of
the Alaska Constitution may exercise all legislative power not pd by law or the charter of the City,
and the City has determined that the matters set forth in this Rn are not prohibited by law or the
City's Charter; and,
WHEREAS, Section 6-3 of the City's Charter authorizes e City to borrow money and to issues its
revenue bonds therefor, the principal and interest of whic are payable solely out of, and the only security
of which is, the revenues of revenue -producing utilities nd enterprises but only when authorized by the
City Council for the acquisition, construction, construction, repair, improvement, extension,
enlargement, and or equipment of said utilities and atified at an election by a majority of those qualified
to vote and voting on the question; and,
WHEREAS, the Council views the planning,/designing and constructing of the City's water treatment
pump house ("Project") as necessary and neficial to the community; and,
WHEREAS, the cost of the Project is estimated to be One Million Two Hundred Thousand Dollars
($1,200,000); and,
WHEREAS, City officials secure a condition commitment from the State of Alaska, acting though the
Department of Environmental nservation, Division of Water ("Department"), by letter dated August 1,
2023, which generally states hat the cost of the Project, in the amount of One Million Two Hundred
Thousand Dollars ($1,200, 0), is eligible for funding from amounts held in the Alaska Drinking Water
Fund housed in the AlaskA State Revolving Fund Program and that such Project cost has been allocated
100% loan forgiveness/and,
WHEREAS, City officials are pursing the financing with the Department, to secure the 100% loan
forgiveness and, X successful, anticipate issuance of the utility revenue bonds herein authorized will be
unnecessary, hough determination of the successful financing resolution between the City and
Department i not anticipated to be fully resolved until Project completion; and,
WHERE it is necessary and in the best interest of the City to authorize the issuance of utility revenue
bonds f r the purposes described in this Resolution.
NO , THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KENAI, ALASKA,
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Resolution No. 2023-50
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Section 1. That it is hereby determined to be for a public purpose and in the public interest of the City
incur utility revenue bonded indebtedness in an amount not to exceed One Million Two FHunre
Thousand Dollars ($1,200,000), for the purpose of financing capital improvements to the CittE
treatment pump house, and related capital improvements, and to pay costs of issuance of suchs.
Section 2. That the City is authorized to borrow the sum of not to exceed One Million T o Hundred
Thousand Dollars ($1,200,000) to finance the capital improvements described in Sectio 1 above, and
the borrowing shall be evidenced by the issuance of utility revenue bonds of the City. e revenues of
the City's water and sewer utility shall be pledged for payment of the principal of d interest on the
bonds. The bonds shall not be a general obligation of the City, and neither the full fa' and credit nor the
taxing power of the City shall be pledged to the payment of the principal of or inter st on the bonds when
due.
If the bonds herein authorized are not issued within four (4) years after the/date of voter authorization,
such authorization to issue the bonds shall be null and void as to the bond6 which remain unsold.
Section 3. That the City Clerk is hereby directed to submit the followin proposition to the qualified voters
of the City at the October 3, 2023, regular City election substantially i the following form. The proposition
must receive an affirmative vote from a majority of the qualifie voters voting on the question to be
approved.
PROPOSITION NO. 23-A
WATER AND SEWER UTILITY EVENUE BONDS
Shall the City of Kenai, Alaska incur u ity revenue bonded indebtedness
and issue utility revenue bonds in to principal amount of not to exceed
One Million Two Hundred Thousan ollars ($1,200,000) to finance capital
improvements to the City's wa r treatment pump house, and related
capital improvements, and pay osts of issuance of such bonds?
The bonds shall be paid frop water and sewer utility revenues. The bonds
shall not be a general opfigation of the City, and neither the full faith or
credit nor the taxing po er of the City shall be pledged to the payment of
the principal of or int est on the bonds.
The bond financ 11
project qualifies for financing under the Alaska State
Revolving Fun Program and has been allocated, but is not guaranteed,
100% loan for6iveness.
O YES A "YES" v to authorizes the issuance of not to exceed $1,200,000 of utility revenue bonds
for the 96nstruction of a water treatment pump house.
O NO A " " vote does not authorize the issuance of not to exceed $1,200,000 of utility revenue
b9fids for the construction of a water treatment pump house.
Section 4. That Section 2 of this Resolution shall become effective only if the proposition described in
Section 3 i approved by a majority of the qualified voters voting on the proposition at the regular election
on OctoI. r 3, 2023. The remaining sections of this Resolution shall become effective upon passage and
approv
P SED BY THE CITY COUNCIL OF THE CITY OF KENAI, ALASKA THIS 11T" DAY OF AUGUST,
23.
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Resolution No. 2023-50
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Brian Gabriel Sr., Mayor
ATTEST:
Michelle M. Saner, MMC, City Clerk
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.enai 1210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.7535 1 wwwlenaixity
MEMORANDUM
TO: Mayor Gabriel and Council Members
FROM: Terry Eubank, City Manager
DATE: August 8, 2023
SUBJECT: Resolution 2023-50 Authorizing the issuance of $1,200,000 of Utility
Revenue Bonds before the qualified voters of the City of Kenai.
On August 1, 2023 the City receive notice that a project to construct a pump house at the City's
water treatment facility had been approved for funding through the Alaska State Revolving Fund
- Drinking Water Fund. The estimated cost of the project is $1,200,000. The Alaska State
Revolving Loan Fund provides low interest loans to eligible Alaskan communities to construct
water and sewer improvements. Some programs offered through the Alaska State Revolving
Loan Fund include principal forgiveness provisions. The City's project has been allocated 100%
loan forgiveness.
Because the City's award is structured as a loan it could trigger the provisions of Section 6-3 of
the City's Charter which allows for the issuance of revenue bonds but requires the issuance to be
ratified at an election by a majority of those qualified to vote and voting on the question. It should
be noted that the vote is for those qualified to vote and voting of the City and is not restricted to
utility customers.
Because the loan has been allocated 100% loan forgiveness, the administration has sought a
legal opinion on the applicability of Section 6-3 of the City's Charter and in particular the need for
the loan to be ratified at an election by a majority of those qualified to vote and voting if, because
of the 100% loan forgiveness, the principal balance of the loan is forgiven. In order to proceed
the City's must choose one of two options.
Option 1
The administration has received the attached legal opinion indicating the loan would not require
a public vote per Section 6-3 of the City's Charter. The opinion would require the City to
appropriate and finance the project with Water and Sewer Utility Funds and seek a single
reimbursement upon project completion. Essentially acting as if funding from the State Revolving
Loan Fund is not available until project completion and all eligibility requirements have been met.
Once eligibility has been confirmed the City would be reimbursed, the 100% loan forgiveness
would be applied, and the City would not have incurred any debt.
In order to appropriate the entire project budget and maintain sufficient reserves in the Water &
Sewer Utility Special Revenue Fund, three projects funded in the FY2024 Budget would be
temporarily placed on hold and funding redirected to the pumphouse construction project. These
projects include $100,000 for Disinfectant Generation Equipment Design, $300,000 for Reservoir
#1 Pump House Improvements, and $300,000 for Waste Water Treatment Plant Operations
Building Renovation Design. Construction of the new pump house is the utilities highest priority
project but was contingent upon grant funding in the City's Capital Improvement Plan for Fiscal
Years 2024 — 2028.
It should be noted that the legal opinion provided is based on a draft agreement provided by the
State and any substantive changes to that document could invalidate the opinion requiring at a
minimum a new opinion or submittal of the loan to the voters.
Option 2
With passage of Resolution 2023-50 the decision to approve the City's decision to borrow up to
$1,200,000 would be placed before the voters of Kenai on October 3, 2023. If successful, an
ordinance appropriating the loan proceeds would follow and the project would be constructed
following the City's normal process. If unsuccessful, the State would be notified that the City is
declining the loan offer and the Administration would continue looking for grant funds to construct
the new pumphouse.
Based upon the attached legal opinion, either option is legal and viable path forward. The
administration is seeking Council's direction upon which option to proceed. Either option will
result in the construction of a new water pumphouse, the City's Water and Sewer Utility's number
one capital improvement priority.
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The City of Kenai I wwwLenai.city
T11E, STA'1"T'
August 1, 2023
Scott Curtin, Director of Public Works
City of Kenai
210 Fidalgo Ave
Kenai, AK 99611
Dear. Mr. Curtin:
Department of Environmental
DIVISION OF WATER
Technical Assistance and Financing
555 Cordova Street
Anchorage, Alaska 99501
Main: 907.269.7502
Fax 907.269./509
dec.alaska.gov
The Alaska State Revolving Fund Program's State Fiscal Year 2024 (SFY24) Project Priority List for theAlaska
Drinking Water Fund (ADWF) has been updated and includes the project listed below based on the questionnaire
submitted in February 2023. The complete Project Priority List and the Intended Use 1-11an can be found online at:
10qps,�d c assistarice-and �_d f T,
Alaska Drinking Water Fund
- . . ........ ........... dmng . .... .... . . . .. . . ... .................... . ..... ........ . .. . . . .................... ......... . ....... --- . ............. ........................... ---- ------- . ..... ..
Score XT Requested Loan U Estimated Project
Project ame
Amount oan oxg vertess Start Date
120 Water Treatment Plant Pumphouse $1,200,000 $1,200,000 5/1/2024
. ........... . . ............... - --- ------ . ...... ..... .. . ..... .... . ..
This project has been allocated 1 001/'o loan forgiveness. If a loan application is not submitted by February 29, 2024,
the offer of loan forgiveness may be rescinded and re -allocated to another project that is ready to move forward.
As mentioned in the Intended Use Plan, projects may remain on the Project Priority List for a maximum of two
years. These projects will retain the same score originally assigned unless a revised questionnaire is submitted and
reviewed. If applications have not been submitted for these projects within two years from the date that the project
questionnaires were submitted, the projects will be removed from the list and new questionnaires will be required to
relist the project.
The next step in the financing process is to submit a loan application. If you have questions about the next steps
you need to take to complete the loan application process, please contact the SRF Program.
Sincerely,
Peggy Ulman
SRF Program Coordinator
907-334-2681
peggy.u,lman@alaska.gov