HomeMy WebLinkAboutAgenda Item - 2020-03-03 - Number 14.1 - LORA Resolutions 20-01 and 20-02 Full Faith and Credit Bonds
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us
Subject: Resolutions 20-01 and 20-02, approving indebtedness of the Agency relating to
refunding projects within the Lake Grove District
Meeting Date: March 3, 2020 Staff Member: Shawn Cross, Director
Department: Finance
Action Required Advisory Board/Commission Recommendation
☒ Motion ☐ Approval ☐ Public Hearing ☐ Denial ☐ Ordinance ☐ None Forwarded
☒ Resolution ☐ Not Applicable ☐ Information Only Comments:
☐ Council Direction ☐ Consent Agenda
Staff Recommendation: Adopt Resolutions 20-01 and 20-02
Recommended Language for Motion: Move to adopt LORA Resolutions 20-01 and 20-02.
Project / Issue Relates To:
☐Council Goals/Priorities
☐Adopted Master Plan(s)
☐Not Applicable
BACKGROUND
LORA is beginning the process to issue the second planned and budgeted debt in connection
with phase one of the Boones Ferry Road project.
DISCUSSION
The City can maximize LORA’s debt capacity and minimize its financing costs, by acting as
intermediary between the lender and LORA. As such, the City becomes the primary borrower
and makes the debt service payments; LORA becomes the secondary borrower and reimburses
the city for such payments. With this arrangement, the City can take LORA under its Triple-A
rating umbrella, enter into an Intergovernmental Agreement for the reimbursement
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503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us
requirements, and afford the agency and citizens the lowest possible borrowing costs. The City
and LORA have already done this kind of transaction back in 2011 and 2018.
The urban renewal financing would be around $16-17 million and is proposed to be a Full Faith
& Credit (FF&C) issue through the City. Benefits of this kind of arrangement are they require no
debt reserve, and are backed by the City’s FF&C instead of a Letter of Credit. If LORA were the
primary borrower, it would most likely issue revenue bonds bearing interest of around one
percentage point or more higher, with a maturity of 10 or 15 years, and a one-year debt reserve
requirement.
This will be the second debt issuance for phase one of the Boones Ferry Road project. The
primarily reason for this approach is the available resources available to pay the debt service
and the City’s policy for coverage ratio requirement.
FISCAL IMPACT
For the bonds issued for the urban renewal projects debt service payments will be made by the
City with a timely reimbursement in full from LORA. Annual debt service payments are
estimated to start at $700,000 and then grow by 3% per year for the next 25 years.
RECOMMENDATION
Adopt LORA Resolutions 20-01 and 20-02.
ATTACHMENTS
1.LORA Resolution 20-01, with Exhibit A – Intergovernmental Agreement to Repay City
Borrowing for the Lake Grove District
2.LORA Resolution 20-02
ATTACHMENT 1
LORA RESOLUTION 20-01
A RESOLUTION OF THE LAKE OSWEGO REDEVELOPMENT AGENCY APPROVING
INDEBTEDNESS OF THE AGENCY IN THE FORM OF AN INTERGOVERNMENTAL
AGREEMENT WITH THE CITY OF LAKE OSWEGO RELATING TO PROJECTS WITHIN THE
LAKE GROVE DISTRICT
WHEREAS, the Lake Oswego Redevelopment Agency (the “Agency”) is authorized by
ORS Chapter 457 to incur indebtedness to carry out its urban renewal plan, by ORS Chapter 190
to enter into intergovernmental agreements; and
WHEREAS, the Agency wishes to finance urban renewal projects in the Lake Grove District
in an amount of not more than $16,650,000 (the “ “Project”); and
WHEREAS, the Agency has requested that the City of Lake Oswego (the “City”) borrow
money to finance the Project (the “Obligations”); and
WHEREAS, the Agency projects that it will have sufficient tax increment revenues from
the Lake Grove District to pay the debt service on the Obligations allocable to the Lake Grove
District, and to pay all other City costs; and
WHEREAS, the Lake Grove Village Center Urban Renewal Plan establishes a maximum
indebtedness limit of $36,000,000, the Agency has previously incurred $12,026,542 of
indebtedness that is subject to that maximum indebtedness limit, and the Agency has at least
$23,973,458 of indebtedness that it may incur in the future; and
WHEREAS, the Agency has a sufficient amount remaining under the maximum
indebtedness limit to finance the Projects.
NOW, THEREFORE, IT IS HEREBY RESOLVED AS FOLLOWS:
Section 1. Intergovernmental Agreement Authorized.
The Agency is hereby authorized to enter into an intergovernmental agreement (the
“Intergovernmental Agreement”) that obligates the Agency to pay to the City all debt service on
the Obligations, to finance the Project, and to pay all related costs of the City. The maximum
principal amount that the Agency will be obligated to pay with respect to the Lake Grove District
is estimated not to exceed $16,650,000. The Intergovernmental Agreement for the Lake Grove
District shall be in substantially the form attached to this Resolution as Exhibit A, but with such
changes as the Urban Renewal District Administrator or the City Finance Director may approve.
Page 2 – LORA RESOLUTION 20-01
Section 2. Security.
The Intergovernmental Agreement shall constitute indebtedness of the Agency, and shall
be secured by a pledge of, and lien on, the Agency’s tax increment revenues as provided in the
Intergovernmental Agreement.
Section 3. Delegation.
The Urban Renewal District Administrator or the City Finance Director may apply
proceeds of the Obligations and to take any actions they determine are desirable to carry out this
resolution.
Section 4. Effective Date.
This resolution is effective immediately upon its passage.
[Remainder of Page Intentionally Left Blank]
Page 3 – LORA RESOLUTION 20-01
Considered and enacted at the regular meeting of the Lake Oswego Redevelopment
Agency held this 3rd day of March, 2020.
AYES:
NOES:
EXCUSED:
ABSTAIN:
_______________________________________
Kent Studebaker, Chair
ATTEST
___________________________________________
Anne-Marie Simpson, Recording Secretary
APPROVED TO FORM
__________________________________________
David Powell, LORA Counsel
EXHIBIT A
INTERGOVERNMENTAL AGREEMENT
TO REPAY CITY BORROWING
FOR THE LAKE GROVE DISTRICT
by and between the
Lake Oswego Redevelopment Agency
and the
City of Lake Oswego, Oregon
Dated as of [_________________], [__], 2020
TABLE OF CONTENTS
Page
SECTION 1. Definitions and Recitals. ............................................. Error! Bookmark not defined.
(1) Definitions. ................................................................... Error! Bookmark not defined.
(2) Recitals. ........................................................................ Error! Bookmark not defined.
SECTION 2. Agency Payments. ...................................................... Error! Bookmark not defined.
(1) The Loan Payments. ..................................................... Error! Bookmark not defined.
(2) Other Costs. .................................................................. Error! Bookmark not defined.
(3) Refinancings. ................................................................ Error! Bookmark not defined.
SECTION 3. Security for the Obligation of the Agency to Make Payments. ... Error! Bookmark not
defined.
SECTION 4. Tax Covenant ............................................................. Error! Bookmark not defined.
SECTION 5. Miscellaneous ............................................................ Error! Bookmark not defined.
(1) Maximum Indebtedness. .............................................. Error! Bookmark not defined.
(2) Binding Effect. .............................................................. Error! Bookmark not defined.
(3) Severability. .................................................................. Error! Bookmark not defined.
(4) Amendments. This Intergovernmental Agreement may be amended only by
a writing signed by both parties. .................................. Error! Bookmark not defined.
(5) Execution in Counterparts. ........................................... Error! Bookmark not defined.
(6) Applicable Law. ............................................................. Error! Bookmark not defined.
(7) Rules of Construction. .................................................. Error! Bookmark not defined.
(8) Headings. ...................................................................... Error! Bookmark not defined.
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Intergovernmental Agreement
to Repay City Borrowing for the Lake Grove District
This Intergovernmental Agreement to Repay City Borrowing of the Lake Grove District is
dated as of [_____________, 2020], and is entered into by and between the Lake Oswego
Redevelopment Agency, (the “Agency”) and the City of Lake Oswego, 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 which are defined in this Section (1) shall have the following
meanings:
“Loan Payments” means the principal and interest payments the City is required to make under
the Obligations.
“Obligations” means the Full Faith and Credit Obligations related to the Projects that are being
issued by the City. The Obligations are being issued in the aggregate principal amount of
$[_________], and are dated as of [_______________] [__], 2020.
“Projects” means the designing and construction of road improvements in the Lake Grove
District.
“Tax Increment Revenues” means all revenues which the Agency collects under the provisions of
Article IX, Section lc of the Oregon Constitution and ORS Chapter 457 in connection with the Lake
Grove District.
(2) Recitals.
(A) The City has issued the Obligations to finance costs of the Projects.
(B) The Projects comply with all applicable laws and are properly described as urban
renewal projects in the Lake Grove District.
(C) The Agency is authorized to spend Tax Increment Revenues to pay for the costs of
financing the Projects.
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(D) Financing the Projects through the City will lower the Agency’s costs and assist the
Agency in carrying out its urban renewal plan.
SECTION 2. Agency Payments.
(1) The Loan Payments.
In consideration of the City issuing the Obligations, the Agency hereby agrees to pay to
the City, when directed by the City and not later than the dates on which the City is required to
pay the Loan Payments, amounts that are equal to the Loan Payments that are due on those
payment dates. The amounts and dates of the Loan Payments are shown in Schedule A.
(2) Other Costs.
The Agency shall pay to the City any other costs that the City incurs in connection with
financing the Projects, if those costs are not paid from proceeds of the Obligations.
(3) Refinancings.
The Agency agrees to pay all costs of the City associated with any refinancing of the
Obligations or the Projects, including all principal and interest due on that refinancing.
SECTION 3. Security for the Obligation of the Agency to Make Payments.
The Agency hereby pledges its Tax Increment Revenues to pay the amounts described in
Section 2 of this Intergovernmental Agreement, and this Intergovernmental Agreement shall
constitute an indebtedness of the Agency. The pledge of the Tax Increment Revenues made in
this Intergovernmental Agreement shall be equal to any the pledge of Tax Increment Revenues
that the Agency makes to secure the Agency’s obligations under any other agreements that are
similar to this Intergovernmental Agreement, and shall otherwise be superior to all future
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.
SECTION 4. Tax Covenant
The Agency covenants to comply with the applicable provisions of the Internal Revenue
Code of 1986, as amended, (the “Code”) so that interest on the Obligations is excludable from
gross income under the Code.
SECTION 5. Miscellaneous
(1) Maximum Indebtedness.
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The total principal amount of the indebtedness created by this Intergovernmental
Agreement is $[________]. The amount of all indebtedness created by the Agency that is payable
from the Tax Increment Revenues, including this Intergovernmental Agreement, does not exceed
the maximum indebtedness limit for the Lake Grove Village Center Urban Renewal Plan.
(2) 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.
(3) 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
(4) Amendments.
This Intergovernmental Agreement may be amended only by a writing signed by both
parties.
(5) 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.
(6) 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 Washington County, Oregon.
(7) Rules of Construction.
References to section numbers in documents which do not specify the document in which
the section is located shall be construed as references to section numbers in this
Intergovernmental Agreement.
(8) Headings.
Page 4
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.
[SIGNATURE PAGE FOLLOWS]
Page 5
IN WITNESS WHEREOF, the Agency and the City have executed this Intergovernmental
Agreement as of the date indicated above.
CITY OF LAKE OSWEGO
___________________________________
[_________________]
LAKE OSWEGO REDEVELOPMENT AGENCY
___________________________________
[____________________]
Page 1 – Schedule A
SCHEDULE A
LAKE GROVE LOAN PAYMENT SCHEDULE
[insert payment schedule]
A RESOLUTION OF THE LAKE OSWEGO REDEVELOPMENT AGENCY (URBAN RENEWAL AGENCY)
FOR ADJUSTING THE BUDGET FOR BIENNIUM COMMENCING JULY 1, 2019 APPROVING
RESOURCES/REQUIREMENTS, AND MAKING APPROPRIATIONS.
WHEREAS, Certain conditions and situations have arisen since the initial preparation of the
2019-21 budget and necessitate changes in financial planning, now, therefore,
BE IT RESOLVED by the Lake Oswego Redevelopment Agency that:
Section 1. The Lake Oswego Redevelopment Agency Board hereby adjusts the budget for biennium
2019-21 in the amount $6,000,000.
Section 2. The Lake Oswego Redevelopment Agency Board hereby authorizes:
A) The appropriation of resources and approval of requirements listed below;
B) The transfers of funds and transfers of fund appropriations as listed herein.
Lake Grove Village Center
Capital Projects Fund Adopted Revised Difference
Resources:
Intergovernmental 11,000,000$ 17,000,000$ 6,000,000$
Requirements:
Lake Grove Village Center Activities 22,453,000$ 22,573,000$ 120,000$
Contingency 1,028,889 6,908,889 5,880,000
6,000,000$
Explanation of Change:
Need to adjust for additional debt proceeds beyond what was originally anticipated.
Section 3. Effective Date. This Resolution shall take effect upon passage.
The above resolution statements were approved and declared adopted at a regular meeting of
the Lake Oswego Redevelopment Agency held on the 3rd day of March, 2020.
AYES:
NOES:
ABSTAIN:
EXCUSED:
Kent Studebaker, Chair
LORA RESOLUTION 20-02
ATTEST:
Anne-Marie Simpson, Recording Secretary
APPROVED AS TO FORM:
David Powell, LORA Counsel
LORA Resolution #20-02
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