Amendments to Loan Agreements_Iowa Finance AuthorityMasterpiece on the Mississippi
January 13, 2011
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Water State Revolving Loan Fund Agreement Amendments
Dubuque
All- America City
2007
Budget Director Jennifer Larson is recommending approval of a resolution providing for
the amendment of the Water fund loan and disbursement agreements with the Iowa
Finance Authority concerning the $8,676,000 State Revolving Loan (SRF) issued on
February 12, 2010 and the $1,037,000 SRF loan issued on October 18, 2007.
During the Fiscal Year 2010 audit, it was brought to the City's attention by Eide Bailly
LLP, the City's auditors, that certain Water related infrastructure improvements could
not be classified as capital expenses and therefore were reclassified as operating
expenses for financial statement purposes.
The reclassification of water main replacement expense has increased the Water
Fund's operating expense to a level in which the City does not meet its existing bond
covenant requirement which requires the Water fund to produce net revenues of at least
125% of the current debt service requirement on existing "senior" water revenue bonds.
To help meet the bond covenant requirement, the Iowa Finance Authority has agreed to
treat the City's $8,676,000 SRF loan issued on February 12, 2010 and the $1,037,000
SRF loan issued on October 18, 2007 as subordinate obligations for purposes of the
rate covenant set forth in Resolution numbers 490 -07 and 18 -10 for a period not to
exceed five years. This will allow the City to exclude the existing Water SRF loans from
the bond covenant requirement, and make it easier for the City to be in compliance in
future years.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MCVM /JML
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Jennifer Larson, Budget Director
Michael C. Van Milligen
Masterpiece on the Mississippi
January 13, 2011
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Budget Director JAL-
SUBJECT: Water State Revolving Loan Fund Agreement Amendments
INTRODUCTION
The enclosed resolution provides for the amendment of the Water Fund loan and
disbursement agreements with the Iowa Finance Authority concerning the
$8,676,000 SRF loan issued on February 12, 2010 and the $1,037,000 SRF loan
issued on October 18, 2007.
DISCUSSION
During the Fiscal Year 2010 audit, it was brought to the City's attention by Eide
Bailly LLP, the City's auditors, that certain Water related infrastructure
improvements could not be classified as capital expenses and therefore were
reclassified as operating expenses for financial statement purposes.
The reclassification of water main replacement expense has increased the Water
Fund's operating expense to a level in which the City does not meet its existing
bond covenant requirement which requires the Water fund to produce net
revenues of at least 125% of the current debt service requirement on existing
"senior" water revenue bonds.
To help meet the bond covenant requirement, the Iowa Finance Authority has
agreed to treat the City's $8,676,000 SRF loan issued on February 12, 2010 and
the $1,037,000 SRF loan issued on October 18, 2007 as subordinate obligations
for purposes of the rate covenant set forth in Resolution numbers 490 -07 and 18-
10 for a period not to exceed five years. This will allow the City to exclude the
existing Water SRF loans from the bond covenant requirement, and make it
easier for the City to be in compliance in future years.
Dubuque
NI- America City
2007
RECOMMENDATION
I respectfully recommend the approval of the attached resolution and loan
agreement amendments to allow the treatment of the existing Water SRF loans
as subordinate obligations.
JML
AMENDMENT TO LOAN AND DISBURSEMENT AGREEMENT
The Loan and Disbursement Agreement (Water Revenue) (the "Agreement ")
entered into as of October 18, 2007, by and between the City of Dubuque, Iowa (the
"Issuer ") and the Iowa Finance Authority, as lender (the "Lender "), relating to a loan
from the Lender to the Issuer in the amount of $1,037,000, is hereby amended as follows:
1. Until December 31, 2015, the Agreement and the Water Revenue Capital
Loan Note (the "Note ") issued to evidence the Issuer's obligations under the Agreement
shall be treated as "subordinate obligations" of the Issuer for purposes of the rate
covenant set forth in Resolution No. 490 -07 of the City Council of the Issuer, approved
on October 1, 2007, and be deemed to be Subordinate SRF Bonds under said Resolution.
Unless earlier action by the City Council of Issuer is taken, on January 1, 2016, the
Agreement and Note shall automatically be deemed to be Senior SRF Bonds under said
Resolution.
2. Except as amended herein, all of the other terms and conditions of the
Agreement and Note are in all respects ratified, confirmed and approved and shall remain
in full effect.
(SEAL)
Attest:
IN WITNE S WHEREOF, we have hereunto affixed our signatures all as of the
day of
By:
, 2011.
CITY OF DUBUQUE, IOWA
(SEAL)
680708.1 \10422.0091
IOWA FINANCE AUTHORITY
By:
ecu
n Yit--
ive Director
(SEAL)
Attest:
AMENDMENT TO LOAN AND DISBURSEMENT AGREEMENT
The Loan and Disbursement Agreement (Water Revenue) (the "Agreement ")
entered into as of February 12, 2010, by and between the City of Dubuque, Iowa (the
"Issuer ") and the Iowa Finance Authority, as lender (the "Lender "), relating to a loan
from the Lender to the Issuer in the amount of $8,676,000, is hereby amended as follows:
1. Until December 31, 2015, the Agreement and the Water Revenue Capital
Loan Note (the "Note ") issued to evidence the Issuer's obligations under the Agreement
shall be treated as "subordinate obligations" of the Issuer for purposes of the rate
covenant set forth in Resolution No. 18 -10 of the City Council of the Issuer, approved on
January 19, 2010, and be deemed to be Subordinate SRF Bonds under said Resolution.
Unless earlier action by the City Council of Issuer is taken, on January 1, 2016, the
Agreement and Note shall automatically be deemed to be Senior SRF Bonds under said
Resolution.
2. Except as amended herein, all of the other terms and conditions of the
Agreement and Note are in all respects ratified, confirmed and approved and shall remain
in full effect.
IN WITNESS WHEREOF, we have hereunto affixed our signatures all as of the
/o`' day of , 2011.
By:
CITY OF DUBUQUE, IOWA
(SEAL) •
680708.1 \10422.0091
IOWA FINANCE AUTHORITY
By:
NOTICE AND CALL OF PUBLIC MEETING
(This Notice to be posted)
Governmental Body: The City Council of Dubuque, Iowa.
Date of Meeting: January 18, 2011
Time of Meeting: 6:30 o'clock P.M.
Place of Meeting: Historic Federal Building, 350 West 6th Street, Dubuque,
Iowa
PUBLIC NOTICE IS HEREBY GIVEN that the above mentioned governmental
body will meet at the date, time and place above set out. The tentative agenda for said
meeting is as follows:
$1,037,000 Water Revenue Capital Loan Note, Series 2007
$8,676,000 Water Revenue Capital Loan Note, Series 2010C
Resolution approving and authorizing Amendments to Loan and
Disbursement Agreements by and between the City of Dubuque, Iowa and
the Iowa Finance Authority.
Such additional matters as are set forth on the additional 11 page(s) attached hereto.
This notice is given at the direction of the Mayor pursuant to Chapter 21, Code of
Iowa, and the local rules of said governmental body.
,evh-e-(,a
City Clerk, Dubuque, Iowa
City Clerk, Dubuque, Iowa
January 19, 2011
The City Council of Dubuque, Iowa, met in regular session, in the Historic Federal
Building, 350 West 6th Street, Dubuque, Iowa, at 6:30 o'clock P.M., on the above date.
There were present Mayor Pro -Tem Karla Braid, in the chair, and the following named
Council Members:
Mayor Roy D. Buol (via telephone), and Council Members Joyce Connors,
Ric Jones, Kevin Lynch, David Resnick
Absent: Dirk Voetberg
* * * * * * * * *
Council Member Joyce Connors introduced the following Resolution entitled
"RESOLUTION APPROVING AND AUTHORIZING AMENDMENTS TO LOAN
AND DISBURSEMENT AGREEMENTS BY AND BETWEEN THE CITY OF
DUBUQUE, IOWA AND THE IOWA FINANCE AUTHORITY ", and moved its
adoption. Council Member David Resnick seconded the motion to adopt. The roll was
called and the vote was:
AYES: Braig, Buol, Connors, Jones, Lynch, Resnick
NAYS: None
Whereupon the Mayor declared the following Resolution duly adopted:
RESOLUTION NO. 25-11
RESOLUTION APPROVING AND AUTHORIZING
AMENDMENTS TO LOAN AND DISBURSEMENT
AGREEMENTS BY AND BETWEEN THE CITY OF
DUBUQUE, IOWA AND THE IOWA FINANCE
AUTHORITY
WHEREAS, the City of Dubuque, Iowa (the "Issuer ") previously has authorized
execution of a Loan and Disbursement Agreement (the "Series 2007 Agreement ") and
issuance of a $1,037,000 Water Revenue Capital Loan Note, Series 2007 (the "Series
2007 Note "), each dated as of October 18, 2007, pursuant to Resolution No. 490 -07
approved on October 1, 2007; and
WHEREAS, the Issuer also has previously authorized the execution of a Loan and
Disbursement Agreement (the "Series 2010C Agreement" and together with the Series
2007 Agreement, referred to herein collectively as the "Agreements ") and issuance of a
$8,676,000 Water Revenue Capital Loan Note, Series 2010C (the "Series 2010C Note"
and together with the Series 2007 Note, referred to herein collectively as the "Notes ".),
each dated as of February 12, 2010, pursuant to Resolution No. 18 -10 approved on
January 19, 2010; and
WHEREAS, the foregoing Resolutions (together, the "Series Resolutions ") are
"Series Resolutions" as that term is defined in Resolution No. 379 -08, approved on
October 20, 2008 (the "Master Resolution "), said Master Resolution providing for the
terms applicable to the issuance of Water Revenue Bonds by the City of Dubuque under
the provisions of Chapter 384 of the Code of Iowa; and
WHEREAS, the foregoing Notes and Agreements are designated as "Senior SRF
Bonds" under the terms of the Master Resolution; and
WHEREAS, the Iowa Finance Authority, as Original Purchaser and current holder
of the Notes and the Agreements, has authorized the Issuer to treat the Notes and
Agreements as "Subordinate SRF Bonds" under the terms of the Master Resolution until
December 31, 2015; and
WHEREAS, separate forms of amendments to the Agreements (together, the
"Amendments ") have been prepared to reflect such subordinate status, copies of which
are before this Council and which are considered appropriate for the purposes intended.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF DUBUQUE, IOWA, as follows:
ATTEST:
Section 1.
Section 2.
Section 3.
The Series Resolutions, Notes and Agreements are hereby amended
to reflect that such instruments are deemed to be Subordinate SRF
Bonds under the Master Resolution until December 31, 2015, or
until such earlier date as may be determined by subsequent action of
this Council to confirm their status as Senior SRF Bonds under the
Master Resolution.
The Amendments in substantially in the forms attached to this
Resolution are hereby approved and are authorized to be executed
and issued on behalf of the Issuer by the Mayor and attested by the
City Clerk.
Except as amended herein, all of the other terms and conditions of
the Series Resolutions, the Agreements and the Notes are in all
respects ratified, confirmed and approved and shall remain in full
force and effect.
PASSED AND APPROVED this 18 day of Jaquary, 2011.
Mayor
6°4,
STATE OF IOWA
COUNTY OF DUBUQUE
SEAL
680706.1 \10422.000
) SS
CERTIFICATE
I, the undersigned City Clerk of Dubuque, Iowa, do hereby certify that attached is
a true and complete copy of the portion of the corporate records of said Municipality
showing proceedings of the Council, and the same is a true and complete copy of the
action taken by said Council with respect to said matter at the meeting held on the date
indicated in the attachment, which proceedings remain in full force and effect, and have
not been amended or rescinded in any way; that meeting and all action thereat was duly
and publicly held in accordance with a notice of meeting and tentative agenda, a copy of
which was timely served on each member of the Council and posted on a bulletin board
or other prominent place easily accessible to the public and clearly designated for that
purpose at the principal office of the Council (a copy of the face sheet of said agenda
being attached hereto) pursuant to the local rules of the Council and the provisions of
Chapter 21, Code of Iowa, upon reasonable advance notice to the public and media at
least twenty -four hours prior to the commencement of the meeting as required by said
law and with members of the public present in attendance; I further certify that the
individuals named therein were on the date thereof duly and lawfully possessed of their
respective city offices as indicated therein, that no Council vacancy existed except as may
be stated in said proceedings, and that no controversy or litigation is pending, prayed or
threatened involving the incorporation, organization, existence or boundaries of the City
or the right of the individuals named therein as officers to their respective positions.
WITNESS my hand and the seal of said Municipality hereto affixed this 19 day
of January, 2011.
ity Clerk, Dubuque, Iowa