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HomeMy WebLinkAboutItem 16 Authorization to Incur Debt for Franklin Blvd. Improvement Project Phase 1 AGENDA ITEM SUMMARY Meeting Date: 10/19/2015 Meeting Type: Regular Meeting Staff Contact/Dept.: Bob Duey/Finance Staff Phone No: 541.726.3740 Estimated Time: 10 Minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and Innovative Government Services ITEM TITLE: AUTHORIZATION TO INCUR DEBT FOR FRANKLIN BLVD IMPROVEMENT PROJECT PHASE 2. ACTION REQUESTED: Adopt/not adopt the following resolution: A RESOLUTION OF THE CITY OF SPRINGFIELD, OREGON AUTHORIZING FINANCING OF CAPITAL PROJECTS DESCRIBED IN THE URBAN RENEWAL PLAN FOR THE GLENWOOD URBAN RENEWAL DISTRICT. Approve/not approve Intergovernmental Agreement to Make Financing Payments. ISSUE STATEMENT: The City’s decision to seek Tiger 7 matching funds for the Franklin Blvd Project Phase 2 has resulted in the combined match of the City for Phases 1 and 2 to increase from $3.6M to $9.6M. The award of the additional grant funds has not yet been determined but staff is recommending that action be taken by the Council at this time to put the financing plan in place so that if awarded in the near future the City will be more readily able to move into the grant award negotiation phase. To be able to fund the required $9.6M in matching funds for the combined project it will be necessary for the City to borrow $3.6M from an external source. This amount is the same as what the City had originally intended to borrow as part of Phase 1, but that requirement has now been met through internal resources. An Intergovernmental Agreement to Make Financing Payments between the City and SEDA will allow for the repayment of the loan with tax increment financing. If the Tiger 7 grant is not awarded to the City, the borrowing of any resources from this action for Phase 2 will be tabled. ATTACHMENTS: Attachment 1. Council Briefing Memorandum Attachment 2. Resolution Exhibit A: Intergovernmental Agreement to Make Financing Payments DISCUSSION/ FINANCIAL IMPACT: See Council Briefing Memorandum Attachment 1 Page 1 of 2 M E M O R A N D U M City of Springfield Date: 10/13/2015 To: Gino Grimaldi COUNCIL From: Bob Duey BRIEFING Subject: Intergovernmental Loan to SEDA MEMORANDUM ISSUE: The City’s decision to seek Tiger 7 matching funds for the Franklin Blvd Project Phase 2 has resulted in the combined match of the City for Phases 1 and 2 to increase from $3.6M to $9.6M. The award of the additional grant funds has not yet been determined but staff is recommending that action be taken by the Council at this time to put the financing plan in place so that if awarded in the near future the City will be more readily able to complete the grant award negotiation phase. To be able to fund the required $9.6M in matching funds for the combined project it will be necessary for the City to borrow $3.6M from an external source. This amount is the same as what the City had originally intended to borrow as part of Phase 1, but that requirement has now been met through internal resources. A Intergovernmental Agreement to Make Financing Payments between the City and SEDA allowing for the repayment of the loan with tax increment financing has been drafted. If the Tiger 7 grant is not awarded to the City, the borrowing of any resources from this action for Phase 2 will be tabled. COUNCIL GOALS/ MANDATE: Financially Responsible and Stable Government Services BACKGROUND: The current estimate of costs for the Franklin Blvd Improvement Project that has been submitted as part of the Tiger 7 grant request is $31.225M. The City’s required match within this amount would be $9.6M. Phase 1 ($10.3225M total project including $3.6M match requirement) of this project is already committed and underway. The inclusion and timing of Phase 2 and the possibility of the Tiger 7 grant award has resulted in the staff requesting the Council taken this action for identifying the resources for the additional matching funds. The following table indentifies the recommended staff allocation of resources and recommended appropriations: Phase 1 Interfund Loan from City to SEDA $ 3,000,000 Current SEDA Cash on Hand 600,000 Total Phase 1 Match Required $ 3,600,000 Phase 2 External Borrowing by City $ 3,600,000 Storm Water Capital Funds 2,000,000 Urban Renwal Revolving Fund Loan 400,000 Total Phase 2 Match Required $ 6,000,000 TOTAL REQUIRED MATCHING FUNDS $ 9,600,000 The award of the Tiger 7 grant is still pending and although the proof of the City’s capability to supply the required match would not be required until that time, staff is recommending that the Council takes action on this to to begin the process. Once awarded the time line for grant award negotiations to signed contract runs very quickly and there is concern that deadlines could be missed if additional action was required during the holidays. Attachment 1 Page 2 of 13 For both Phase 1 and Phase 2 of the project the City is the lead agency for all aspects of the road improvements, but because Franklin Blvd is located within the urban renewal district the City is partnering with the Glenwood Urban Renwal District to access tax increment dollars for the servicing of debt related to the project. Tax increment revenue for the Glenwood District has risen steadily over the past years with $811,434 in property tax revenue received in fiscal year 2014-15. The accompanying resolution would authorize the City Manager, the Finance Director or their designee to solicit and arrange for the borrowing not to exceen $3.7M on behalf of the City for the purpose of the reconstruction of Franklin Blvd. Prior to the issuance of the debt, the City Council and the SEDA Board will have both authorized the Intergovernmental Agreement to Make Financial Payments that would obligate SEDA to make any and all debt service payments related to this borrowing. If the Tiger 7 grant is not awarded to the City, the borrowing of any resources from this action for Phase 2 will be tabled. RECOMMENDED ACTION: Approve Resolution authorizing the City to issue debt as part of the required match for Frankilin Blvd Improvement Project Phase 2. Approve Intergovernmental Agreement to Make Financing Payments between the City and SEDA for the repayment of funds loaned. Page 1 of 3 – Resolution Attachment 2 RESOLUTION NO. 2015-________ A RESOLUTION OF THE CITY OF SPRINGFIELD, OREGON AUTHORIZING FINANCING OF CAPITAL PROJECTS DESCRIBED IN THE URBAN RENEWAL PLAN FOR THE GLENWOOD URBAN RENEWAL AREA WHEREAS, the City of Springfield, Oregon (the “City”) is authorized by Oregon Revised Statutes Section 271.390 to enter into financing agreements to finance or refinance real or personal property which the Common Council of the City determines is needed; and, WHEREAS, it is desirable to obtain up to $3,700,000 of financing to pay for projects described in the Glenwood Urban Renewal Plan, including providing the match funding for reconstruction of a portion of Franklin Boulevard if the City is awarded a Transportation Investment Generating Economic Recovery (Grant) from the US Department of Transportation (collectively, the “Projects”); and, WHEREAS, all of the Projects will be located within the Glenwood Urban Renewal Area and owned by the City or the Springfield Economic Development Agency (“SEDA”) and, WHEREAS, SEDA is projected to have sufficient tax increment revenues to pay the amounts due from the City in connection with the financing of the Projects, and will enter into an intergovernmental agreement with the City to use tax increment revenues to pay those amounts. NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF SPRINGFIELD, OREGON AS FOLLOWS: SECTION 1. DETERMINATION OF NEED. The Common Council of the City hereby determines that the Projects are needed. SECTION 2. FINANCING AGREEMENT AUTHORIZED. The Common Council hereby authorizes the City to obtain up to $3,700,000 in principal amount of financing (the “Financing”) for the Projects pursuant to Oregon Revised Statutes Section 271.390. The Financing may be in the form of a financing agreement, credit facility, or other structure. Proceeds of the Financing may be used to finance the Projects and to pay costs related to the Financing. SECTION 3. DELEGATION. The City Manager, the Finance Director of the City or a person designated by the City Manager to act under this resolution (each of whom is referred to herein as a “City Official”) is hereby authorized, on behalf of the City and without further action by the Common Council of the City, to: (1) Issue the Financing from time to time in one or more series. (2) Select one or more other purchasers and negotiate the sale of each series of the Financing with those purchasers. Subject to the limitations in this resolution, each Financing may be in such form and contain such terms as the City Official may approve. (3) Determine the final principal amount, interest rates, payment dates, prepayment rights and all other terms for each series of the Financing. Page 2 of 3 – Resolution Attachment 2 (4) Negotiate, execute and deliver a note to evidence amounts due under each series of the Financing. (5) Execute and deliver one or more financing agreements, credit facilities or other documents that describe the terms and administrative provisions relating to each series of the Financing. (6) Enter into additional covenants for the benefit of the purchaser of each series of the Financing that the City Official determines are desirable to obtain favorable terms of each series of the Financing. (7) Renew or extend the Financing. (8) Covenant for the benefit of the owners of the Financings to comply with all provisions of the Internal Revenue Code of 1986, as amended (the “Code”) which are required for the interest paid under the Financings to be excluded from gross income for federal income tax purposes. (9) Designate the Financings as “qualified tax-exempt obligations” pursuant to Section 265(b)(3) of the Code, if applicable. (10) Execute and deliver any other certificates or documents and take any other actions which the City Official determines are desirable to carry out this resolution. SECTION 4. PAYMENTS FROM TAX INCREMENT REVENUES. The City Official is authorized to enter into an intergovernmental agreement with SEDA under which SEDA agrees to provide tax increment revenues in sufficient amounts to pay all amounts due from the City under the Financings. The intergovernmental agreement shall be in substantially the form attached to this resolution as Exhibit A, but with any changes the City Official may approve. SECTION 5. SECURITY. Pursuant to Oregon Revised Statutes Section 287A.315, the City Official may pledge the City’s full faith and credit and taxing power within the limitations of Sections 11 and 11b of Article XI of the Oregon Constitution to pay the amounts due under the Financing. The City is not authorized to levy additional taxes to pay the amounts due under the Financings. In addition, the City Official may pledge or assign any amounts that the City receives under the intergovernmental agreement described in SECTION 4 of this resolution to pay the amounts due from the City under the Financings. SECTION 6. EFFECTIVE DATE OF RESOLUTION. This Resolution will take effect upon its adoption by the Council and approval by the Mayor. Page 3 of 3 – Resolution Attachment 2 ADOPTED BY THE COMMON COUNCIL OF THE CITY OF SPRINGFIELD AT A REGULAR MEETING HELD ON OCTOBER 19, 2015 BY THE FOLLOWING VOTES: AYES:_____ NAYS:_____ Christine Lundberg, Mayor ATTEST: Amy Sowa, City Recorder Attachment 2, Exhibit A 2533407.2 001092 FILE Intergovernmental Agreement to Make Financing Payments by and between the Springfield Economic Development Agency, Oregon and the City of Springfield, Oregon Dated as of ______________, 2015 Table of Contents Attachment 2, Exhibit A 2533407.2 001092 FILE TABLE OF CONTENTS Section 1. Definitions and Recitals. ......................................................................................... 1 (1) Definitions. ....................................................................................................................... 1 (2) Findings. ........................................................................................................................... 1 Section 2. The Financing Payments. ....................................................................................... 2 (1) The Financing Payments. ................................................................................................. 2 (2) Security for the Obligation of the Agency to Pay the Financing Payments. .................... 2 Section 3. Prepayment. ............................................................................................................. 2 Section 4. Estoppel. ................................................................................................................... 2 Section 5. Title........................................................................................................................... 2 Section 6. Miscellaneous........................................................................................................... 3 (1) Binding Effect. ................................................................................................................. 3 (2) Severability....................................................................................................................... 3 (3) Amendments..................................................................................................................... 3 (4) Execution in Counterparts. ............................................................................................... 3 (5) Applicable Law. ............................................................................................................... 3 (6) Rules of Construction. ...................................................................................................... 3 (7) Headings. .......................................................................................................................... 3 Exhibit A – Financing Payments Page 1 of 4 - Intergovernmental Agreement Attachment 2, Exhibit A 2533407.2 001092 FILE Intergovernmental Agreement to Make Financing Payments This Intergovernmental Agreement to Make Financing Payments (the “Intergovernmental Agreement”) is dated as of _______________, and is entered into by and between the Springfield Economic Development Agency, Oregon (the “Agency”) and the City of Springfield, Oregon (the “City”). The parties hereby agree as follows: Section 1. Definitions and Recitals. (1) Definitions. Unless the context clearly requires otherwise, capitalized terms used in this Intergovernmental Agreement that are defined in this Section 1(1) shall have the following meanings: “Area” means the Glenwood Urban Renewal Area described in the Plan. “Financing Agreement” means the Financing Agreement (Urban Renewal Projects) between the City and __________ Bank in the principal amount of $__________ to finance the Projects, which is dated as of __________, 2015. “Financing Payments” means the principal and interest payments the City is required to make under the Financing Agreement. “Plan” means the Agency’s Glenwood Urban Renewal Plan approved by City Ordinance No. 6103, as that plan may in the future be, amended. “Projects” means projects described in the Plan, including reconstruction of Franklin Boulevard. “Tax Increment Revenues” means all revenues that the Agency collects for the Glenwood Urban Renewal Area under the provisions of Article IX, Section 1c of the Oregon Constitution and Oregon Revised Statutes Chapter 457. (2) Findings. (A) The City has entered into the Financing Agreement to finance costs of the Projects and to pay costs of issuance. (B) The Projects are properly described as urban renewal projects in the Plan. (C) The Agency is authorized to spend Tax Increment Revenues to pay for the costs of the Projects. (D) The Projects will assist the Agency in carrying out its Plan. (E) The Agency will only spend the proceeds of the Financing Agreement it receives from the City on the Projects so long as the Projects are described in the Plan, located in the Area, and are owned by the City or the Agency. Page 2 of 4 - Intergovernmental Agreement Attachment 2, Exhibit A 2533407.2 001092 FILE (F) The Agency has $__________ of unused maximum indebtedness available prior to executing this Intergovernmental Agreement. Section 2. The Financing Payments. (1) The Financing Payments. The Agency hereby agrees to pay to the City, not less than five business day prior to the dates on which the City is required to pay the Financing Payments, amounts that are equal to the Financing Payments. The amounts and dates of the Financing Payments are shown in Exhibit A. (2) Security for the Obligation of the Agency to Pay the Financing Payments. This Intergovernmental Agreement shall constitute indebtedness of the Agency in the amount of the Financing Agreement. The Agency is obligated to make the payments due under this Intergovernmental Agreement solely from the Tax Increment Revenues. Pursuant to Oregon Revised Statutes Section 287A.310, the Agency pledges the Tax Increment Revenues to pay the amounts described in Section 2(1) of this Intergovernmental Agreement. The pledge that secures this Intergovernmental Agreement shall be superior to all other pledges or commitments of Tax Increment Revenues that the Agency makes, unless the City agrees in writing to subordinate its claim against the Tax Increment Revenues or to grant a lien on the Tax Increment Revenues on parity. However, the pledge of Tax Increment Revenues to pay amounts described in Section 2(1) of this Intergovernmental Agreement is subordinate to/on parity with the pledge that secures the following Intergovernmental Agreements/borrowings: [To be completed] Section 3. Prepayment. If the City exercises its option to prepay the Financing Payments in whole or in part, unless the Agency consents in advance and in writing, the Agency shall not be obligated to prepay the amounts due from it under this Intergovernmental Agreement. Section 4. Estoppel. The Agency hereby certifies, recites and declares that all things, conditions and acts required by the Constitution and Statutes of the State of Oregon and by this Intergovernmental Agreement to exist, to have happened and to have been performed precedent to and in the execution and the delivery of this Intergovernmental Agreement, do exist, have happened and have been performed in due time, form and manner, as required by law, and that this Intergovernmental Agreement is a valid and binding obligation of the Agency that is enforceable against the Agency in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws or judicial decisions or principles of equity relating to or affecting the enforcement of creditors’ rights or contractual obligations generally. Section 5. Title. Neither the City nor the owner of the Financing Agreement shall have a lien on or security interest in the Projects. Page 3 of 4 - Intergovernmental Agreement Attachment 2, Exhibit A 2533407.2 001092 FILE Section 6. Miscellaneous. (1) Binding Effect. This Intergovernmental Agreement shall inure to the benefit of and shall be binding upon the Agency and the City and their respective successors and assigns. (2) Severability. In the event any provisions of this Intergovernmental Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provisions hereof. (3) Amendments. This Intergovernmental Agreement may be amended only by a written document signed by both parties. (4) Execution in Counterparts. This Intergovernmental Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute the same instrument. (5) Applicable Law. This Intergovernmental Agreement shall be governed by and construed in accordance with the laws of the State of Oregon. Any action regarding this Intergovernmental Agreement or the transactions contemplated hereby shall be brought in an appropriate court of the State of Oregon in Lane County, Oregon. (6) Rules of Construction. References to section numbers in documents that do not specify the document in which the section is located shall be construed as references to section numbers in this Intergovernmental Agreement. (7) Headings. The headings, titles and table of contents in this Intergovernmental Agreement are provided for convenience and shall not affect the meaning, construction or effect of this Intergovernmental Agreement. Page 4 of 4 - Intergovernmental Agreement Attachment 2, Exhibit A 2533407.2 001092 FILE IN WITNESS WHEREOF, the Agency and the City have executed this Intergovernmental Agreement as of the date indicated above. For the Springfield Economic Development Agency, Oregon ______________________________________ Authorized Officer For the City of Springfield, Oregon ______________________________________ Authorized Officer Page 1 of 1 – Attachment 2, Exhibit A 2533407.2 001092 FILE EXHIBIT A Financing Payments