Approved by the Board:
MINUTES OF THE BOARD OF COMMISSIONERS'
RESCHEDULED MEETING
_________________________
___________________________
The
Board of Commissioners met in the Boardroom of the Administrative Offices,
|
Present: |
Commissioners Robert Cochran ( |
|
Absent: |
None. |
The
Acting Secretary declared a quorum present.
Chairperson
James called the meeting to order at
APPROVAL OF MINUTES
Motion
by Commissioner Joseph Graves, seconded by Commissioner Peter Kramer, to
approve the minutes of the regular meeting held
Carried
unanimously.
PUBLIC COMMENTS
THE
CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON
ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING.
Phil
Lemke, BWL employee, thanked Commissioners and staff for the support he has
received since his accident.
John
Pollard spoke against the proposed rate increase. He believes that the Board of Water and Light
(BWL) are losing its customer base because of the utility costs in this
area. He cited the number of home
vacancies in Lansing, the number of people living in poverty, and the senior
citizen discount. Mr. Pollard also
thinks that rates for BWL customers outside of the City of
Jim
Harken of
Steve
Rulison,
Dorothy
Alagna spoke against the proposed rate increase. She and her husband are retired and on a
fixed income and noted that the 7% increase is way out of line.
Steve
Goodwin of
Leonard
Wilson,
Michael
Cole of
COMMUNICATIONS
Letter
from Robin M. Smith dated
Received
and placed on file.
Letter
from Rev. Joe Huston, Sr., Minister of Central United Methodist Church dated
Received
and placed on file.
E-mail
received from Mark Mitchell,
Received
and placed on file.
Letter
from the State of
Received
and placed on file.
Message
from Marilyn Ford, 1501 Shubel, Lansing dated
Received
and placed on file.
COMMITTEE REPORTS
FINANCE COMMITTEE REPORT
Finance
Committee met at the Executive Offices, Lansing beginning at
Acting
Finance Committee Chair, Semone James called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Semone James and Peter Kramer (arrived
at
Absent: None.
Public Comments
There
were no public comments.
Water Bonding Resolution
Susan
Devon, Chief Financial Officer (CFO) introduced Warren Creamer, Bond Financial
Advisor with Robert W. Baird and William Danhof, Bond Counsel with Miller,
Canfield, Paddock & Stone. Staff
sought Board approval of the proposed tenth supplement to the Amended and
Restated Bond Authorizing Resolution, dated
In
response to a Commissioner question, Mr. Baird clarified that rating agencies
tend to rate overall performance and not just legal covenants. Reducing the rate covenant to 125% increases
the BWL’s rate flexibility as it looks towards more significant capital
improvements, by removing antiquated covenants that require the BWL to set
rates to produce revenues in excess of normal operational maintenance
administration at levels, which would provide recovery of 150% of maximum
annual debt service requirements. In
response to another question, it was noted that the BWL is fairing
extraordinarily well against other public utilities. It was further advised that AAA ratings
amongst electric utilities is typically an indication that an organization has
more funds in the bank than necessary and could make better decisions with
respect to rates and ratepayer money. In
addition, the significant benefit between negotiated and open bonds is its
flexibility. Investors tend to pay more
money for bonds if they have particular features; the more complicated the
transaction the more often one would see a negotiated sale. Mr. Baird suggested that the BWL consider
selling the proposed bond on a negotiated basis, which would give the BWL an
opportunity to re-familiarize itself with the process. It is not a decision that the BWL must make
right now. However, the process tends to
be very open and fluid in that it is real time whereas, one is allowed to
adjust rates based on demand and supply for given maturities.
On
motion by Commissioner Graves, seconded by Commissioner Cochran, the
Committee of the Whole agreed to forward the Tenth Supplemental Revenue Bond
resolution to the full Board for consideration.
Action:
Carried unanimously.
Internal Audit Reports
Susan
Pifer, Director of Internal Audits provided an update with respect to internal
audit reports issued to date. In
response to a Commissioner question, Ms. Pifer noted that any issues that arise
during the course of an audit are typically presented to and addressed by the
CFO. More specifically, she spoke to
issues regarding the coal book inventory and shipping and receiving of the coal
entries into the general ledger.
Although, both issues are currently being addressed, the first one is
relative to coal scales being used by the BWL and its vendor in determining
their accuracy with respect to current standards. The second item is primarily an issue of
internal control whereas; the buyer is making entries into the system and may
need support and training in this regard.
It was noted that the Associate Internal Auditor and Manager of Internal
Controls and Tariff Administration could be sent to provide additional training
and oversight relative to this issue. In
addition, Ms. Pifer also asked the Board of Commissioners to consider the
addition of an Audit Specialist to assist the Internal Audits and Metrics
Department (IAD) and to also perform the most perfunctory audits. The additional position would not exceed a
variance of $25,000.
On
motion Commissioner Graves, seconded by Commissioner Kramer, the
Committee of the Whole agreed to add an Audit Specialist position to the
Department of Internal Audits and Metrics at a variance not to exceed $25,000.
Discussion: Commissioner Cochran asked if the variance
amount was sufficient?
Ms.
Pifer noted that IAD currently has a positive variance but it should be noted
that the Board would see a larger amount next year.
Action:
Carried unanimously.
Sarbanes-Oxley Update
Susan
Pifer noted that external auditor audit fees are expected to increase due to
the implementation of Sarbanes-Oxley standards.
The update noted an estimated increase of approximately 15 – 20% in
audit fees. In response to a
Commissioner question, Ms. Pifer advised that she expects to receive a firm
number from the BWL’s auditors as to what they should expect to receive for the
next audit cycle scheduled to begin in March/April 2008.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Semone M.
James, Chair
Finance
Chair
The
report will be filed with the minutes of the
COMMITTEE
OF THE WHOLE
The
Committee of the Whole of the Board of Water and Light met at the Executive
Offices, Lansing beginning at
Committee
of the Whole Chair, Julee Rodocker called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Tony DeLuca, Joseph Graves (teleconference), Semone James, Peter Kramer, Frank Lain,
Julee Rodocker and Sandra Zerkle.
Absent: None
Public Comments
Lansing
City Mayor Virg Bernero commented on the Ottawa Station project by highlighting
the tremendous historic opportunity of such a development. He also thanked the Accident Fund, Christman
Company and the Board of Water and Light (BWL) for their partnership efforts in
this endeavor. The project will bring
five hundred new jobs, $130 million in private investments, riverfront
reinvention, and downtown rejuvenation.
It was noted that it has been a long process but it is a testament to
the possibilities and talent of the community.
Mayor Bernero went onto urge support and thanked the BWL for what they
have done thus far.
Kelly
Rossman-McKinney of the Rossman Group and Secretary of the Lansing Economic
Development Corporation (EDC) made remarks regarding the Ottawa Station
project. Ms. Rossman advised that the
Ottawa Station building is a huge landmark for those persons who have lived in
By
unanimous consent the Committee of the Whole agreed to change the order of the
agenda items. As such, an Update on
Ottawa Station Facility was moved to the first agenda item.
Update on
J.
Peter Lark, General Manager advised that there are two resolutions before the
Committee of the Whole. The first
resolution declares the entire
Dick
Peffley, Executive Director of Operations proceeded with the Ottawa Station
update and acknowledged Robert Trezise and Karl Dorshimer of the Lansing
Economic Development Corporation and Jim Cash and Anthony Pecchio of the
Christman Company. Mr. Peffley provided
the Board of Commissioners with a project summary sheet that gave specific
details pertaining to the expenditures, savings and revenue of the
project. He also offered the
Commissioners a copy of the survey and complete appraisal if needed or so
desired. In addition, Mr. Peffley noted
that the Ottawa Station project is an opportunity for the BWL to turn a cost
center into a revenue source. By request
of Commissioner James, Mr. Peffley gave an overview of the summary sheet and
provided explanation regarding various components of the project as well as
additional information. Listed below are
the highlights of said discussion. (See
Attachment)
·
Expenditures
to date total $313,000. This includes
outside attorney charges for the development agreement, stack removal, BWL sign
removal, and BWL engineering labor for the chiller. All parties agreed to assume responsibility
for their individual attorney fees. Last
fall $50,000 was allotted for stack maintenance. However, due to the budgeted temporary
repairs and the lack of value relative to the future development. It was decided to remove the stack at a cost
of $218,000, which is included in the total cost of $313,000.
·
Expenditures
after sale total $1,910,000. This
includes outside attorney charges to close the deal and construction of the new
steam facility, which is the BWL’s responsibility to fund.
·
Negotiated
property sale price of $275,000 (adjusted original $1.00 price to offset exit
costs).
·
Capitol
budget reduction totals $6,525,000. The
budget reduction includes replacing the boiler and turbine room roofs, exterior
maintenance, lead paint, asbestos abatement and soil removal, stack repairs,
and pigeon dropping cleanup. The
negotiated property sale price ($275,000) and the capitol budget reduction
($6,525,000) equates to a onetime savings to the BWL of $6,800,000.
·
Annual
budget savings total $87,000. This
includes maintenance and security, utilities, and insurance premiums.
·
New
annual revenue totals $635,000. This
includes estimated revenue figures for electric ($195,000), water ($16,000),
steam ($117,000; negotiations in progress), and chilled water ($307,000;
negotiations in progress).
·
The
Accident Fund development agreement will not be signed until September
2008. However, chiller construction will
begin spring 2008.
·
There
are two facilities currently within Ottawa Station that consist of chilled
water and steam. The BWL has been
allocated $20 million to relocate the chilled water facility to Pine and
Allegan, which is the site of the State of
·
Building
a new chilled water facility will improve the BWL’s rates and structure for
that respective utility. Thereby,
allowing the BWL to possibly add new customer load with a prospective customer
currently building a new facility in the City of
·
The
BWL will incur the cost associated with relocating the steam facility to an
underground vault outside of Ottawa Station.
The cost to relocate the steam service is $1.9 million. It is the BWL’s intent to use in-house labor
to complete the bulk of the steam relocation project and possibly farm out some
of the construction work.
Following
the presentation, Commissioner Graves advised that he understood the project
required incentives and he agreed with Mayor Bernero in that it is a great
project for the City of aware of
the origin of the incentives.
Commissioner Graves wanted confirmation that the ratepayers would be
responsible for the $1.9 million steam relocation cost, as he wants to assure
customers that the BWL has done due diligence as it relates to minimizing cost
to the ratepayer. Commissioner Graves
also inquired about the appraisals relative to the sell of the property and
environmental remediation issues.
Dick
Peffley agreed with Commissioner Graves’ sentiment regarding the steam
relocation cost relative to ratepayers and advised that there were two
appraisals in 2005 and one in 2001. The
three appraisals totaled $1.9 million relative to the value of the land. However, the appraisal excluded the power
plant and did not address the environmental liability. As such, once the plant is factored into the
equation, the other property then has a negative value of $21 million. In response to an additional question, Mr.
Peffley advised the committee that the capital budget reduction of $6 million
had not yet been included in the capital budget. However, the budget reduction is a cost
avoidance slated for somewhere in the future.
In
response to Commissioner James’ question regarding the construction budget, Mr.
Peffley noted that they received two chiller construction estimates for $21 and
$24 million respectively.
In
regards to Commissioner Graves’ question regarding sufficient funding, Robert
Trezise, Jr., President and Chief Financial Officer of the Lansing Economic
Development Corporation noted the following information:
·
There
is $130 million in private investment slated to cover the cost for the entire
project. Revenue calculations and
estimates were done to determine the approximate cost. There is no more funding beyond the $130
million currently allocated for said project.
·
Christman
Company is paying a certain amount of money to replace the chiller and will be
reimbursed through Brownfield Tax Increment Finance (TIF).
·
The
TIF funding belongs to Christman Company and the Accident Fund who will be
reimbursed over a period of 30 years with interest.
In
response to Commissioner James’ question regarding excess funds, Mr. Peffley
confirmed that if the chiller relocation costs come under budget ($20 million)
then the remaining funds could be reallocated to the steam relocation project
to offset costs. In addition, he noted
that the BWL is currently negotiating a 30-year lease term with the State of
On
motion by Commissioner Cochran, seconded by Commissioner Zerkle, the
Committee of Whole agreed to forward the proposed resolutions to the full Board
for consideration. The aforementioned
resolutions are titled as follows: 1)
Proposed Resolution of the Board of the Lansing Board of Water and Light to
Declare Property Surplus and Offer that Property to the City of Lansing and 2)
Proposed Resolution of the Board of the Lansing Board of Water and Light to
Approve the Execution of that Certain Property Purchase and Development
Agreement.
Discussion: Commissioner Graves asked Susan Pifer,
Director of Internal Audit, for assurance that she has reviewed all of the
materials and understands the liability to the BWL; and has agreed that there
is nothing in the documents that should be of concern to the Board. In addition, he also asked Ms. Pifer if she
was comfortable with the compromise previously discussed regarding the
reallocation of funding from the chiller project to the steam project provided
it comes under budget?
In
response, Ms. Pifer noted that she received the documents the day before and
reviewed the estimates with Dick Peffley to the best of their ability. The estimates are reasonable given the
information available and she cannot promise that they will not change as the
project moves forward. Ms. Pifer also
noted that she was comfortable with utilizing rates to spread the cost out over
a period of time as opposed to absorbing the cost in one year. In addition, it is a better scenario if cost
can be abated with some of the surpluses.
Following
brief discussion, staff confirmed that the aforementioned capacity to abate the
steam relocation costs with the chiller surplus is already included in the
resolution brought before the Committee of the Whole.
Commissioner
Kramer abstained from the discussion and subsequent vote regarding both
resolutions.
Action:
Carried unanimously.
Commissioner Graves
departed the meeting at
Discussion on Board Retreat Agenda Items
Commissioner
James spoke to board retreat facilitator, Bryan Singletary who confirmed his
attendance for day one of the retreat.
He also agreed with the existing outline that includes board development
and strategic planning with a minimal amount of time spent discussing board governance.
Peter
Lark confirmed that staff would provide a short outline to facilitate the
discussion held on day two. Some of the
discussion topics will include generation supply and buying on the open
market. Approximately 5-10 key personnel
from the executive team will be present to participate in day two of the
retreat.
Discussion on Agenda Items for Joint Meeting with City
Council
The
committee briefly discussed the tentative agenda items for the joint meeting
with City Council. As such, the
committee agreed to also provide an update on the Pension Plan (VEBA) and
Defined Benefit (DB) Request for Proposal (RFP). In addition, it was noted that the joint
meeting should be held after the board retreat so that the Board would be well
updated on the strategic plan.
Parliamentary Training for Commissioners
A
request to provide parliamentary training to the Board of Commissioners was
sent to nine registered parliamentarians located in the southeastern
On
motion by Commissioner Lain, seconded by Commissioner Cochran, the
Committee of the Whole agreed to award the proposal to provide parliamentary
training to Eleanor A. Siewert.
Discussion: The Commissioners discussed the various
estimates provided in the proposals, which included mileage, prep time and
handouts. Upon further discussion,
Commissioner Lain agreed to a friendly amendment to award the proposal to Eleanor
A. Siewert to provide four hours of parliamentary training at a cost of $600.00
not to exceed a total of $750.00.
Action:
Carried unanimously.
Rate Hearing Presentation
The
Committee of the Whole received a draft copy of the rate hearing presentation
materials, which are subject to change.
It was noted that the public hearing would be held on Tuesday, January
22nd at
·
Include
graphs/pie charts explaining the cost of the CSO Project relative to the BWL.
·
Move
slide 17 to the beginning of the presentation, as the remaining slides will
clarify the slide and substantiate its findings.
Commissioner Graves
re-entered the meeting via teleconference at
Update on CSO Project
Doug
Wood, Director of Engineering provided an update on the CSO Project. As such, Mr. Wood noted that a letter was
sent to Chad Gamble, Director of Public Service Department (PSD) with the City
of
Peter
Lark advised the committee that he has had several conversations with Mr.
Gamble who assured the BWL that they would give serious consideration on a
going forward basis. It is optimistic
that the BWL may receive some work this year but definitely next year. In response to Commissioner Graves’ question,
Mr. Lark confirmed that he was aware of the damage done to BWL equipment by the
City’s CSO contractors as well as issues with the quality assurance inspector
relative to BWL equipment. It was noted
that Jim Draventstatt-Morceri, Doug Wood and Mr. Lark would have further
discussion regarding the matter after the release of the aforementioned report.
Six-Month General
Manager Performance Review and Performance Factors/Goals
J.
Peter Lark, General Manager and Board appointee requested an executive session
for the purpose of receiving his six-month performance review as permitted by
Open Meetings Act exemption MCL 15.268(a).
Moved
by Commissioner Cochran, seconded by Commissioner Zerkle to go into executive
session. (
Yeas: Commissioners Cochran, DeLuca,
Nays: None.
Absent: None.
Carried
unanimously.
Moved
by Commissioner James, seconded by Commissioner Cochran that the Committee of
the Whole returns to open session.
Carried
unanimously.
The
Committee of the Whole meeting reconvened in open session at
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Julee
M. Rodocker, Chair
Committee
of the Whole
The
report will be filed with the minutes of the
FINANCE COMMITTEE
The
Finance Committee met at the Executive Offices, Lansing beginning at
Finance
Committee Chair, Joseph Graves called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Joseph Graves, Semone James, and Peter
Kramer. Commissioner Frank Lain,
alternate committee member was also present.
Absent: None.
Public Comments
There
were no public comments.
Capital Budget Update:
Eckert Station
Dick
Peffley, Executive Director of Operations gave a brief overview of the Eckert
Station Unit #1 Condenser Retubing project.
The project cost for the fiscal year 2008 capital budget is $361,700. The original tubes currently in place are
approximately 50 years old and have outlived their normal life expectancy by 10
years. It was recommended that the tubes
be replaced now while unit #1 is down for a turbine overhaul. If not completed at this time, then the next
cycle outage will be in two years of which the Production Utility has concerns
regarding the tubes reliability. Mr.
Peffley requested that the Finance Committee consider moving the resolution
forward in order to allow for the replacement of the condenser tubes within the
current fiscal budget.
On
motion by Commissioner James,
seconded by Commissioner Cochran, the Finance Committee agreed to move the
Eckert Unit #1 Condenser Retubing resolution to the full Board for
consideration.
Action:
Carried unanimously.
Update on Solicitation of DB & VEBA RFP
Susan
Devon, Executive Director and Chief Financial Officer gave a brief update on
the solicitation process for the Defined Benefit (DB) and Retiree Benefit Plan
and Trust (VEBA) request for proposal (RFP).
The committee members included Director of Internal Audit Susan Pifer,
Charles Moore of C.L. Moore & Associates and Susan Devon. In addition to the committee members,
Commissioners Robert Cochran and Joseph Graves composed a panel of five and
conducted interviews with the following vendors: Asset Consulting Group, Citizens Bank, LCG
Associates and Merrill Lynch. Upon
conclusion of the interviews and follow-up work completed by Susan Pifer, the
committee recommended that the RFP be awarded to Merrill Lynch. The value of the assets included in the DB
and VEBA plan total $165 million. Staff
and the Finance Committee members agreed that there is no committee action
necessary relative to the RFP update on the solicitation of the DB and VEBA
plans.
Update on Pension Advisory and Banking Services
Susan
Devon provided an update on the pension advisory services relative to the
Defined Contribution (DC) and 457 plans as well as banking services. It was noted that a RFP for the DC and 457
plans were sent to different vendors in an attempt to determine if it would be
beneficial for the Board of Water and Light (BWL) and its employees to combine
services. The RFP was sent on
In
addition, a request for information (RFI) was sent for banking services to help
the BWL determine what is available and how it might combine services and
receive improved cost savings and services.
Once the responses have been evaluated then staff will prepare a RFP
based on the information received from the respective RFI’s. In response to a Commissioner question, Ms.
Devon advised that the RFP for banking services would be separate from that of
the pension advisory services (DC and 457 plans).
Capital Budget Update:
Tom
Marlow, Manager of Delivery Services presented an overview of the mobile
resource management project. The total
project cost is $2,353,000 that includes capital project cost of $1,840,000 and
internal labor expenses of $513,000. The
original budget estimate of $855,000 developed in 2005 did not take into
account all related expenses. Therefore,
the resolution proposes that the capital project budget be increased from
$855,000 to $1,840,000 to accommodate cost.
The
mobile resource management (MRM) project will allow for more efficient work
planning, scheduling, and dispatch of BWL crews. Three major components of the project are
hardware and software for the office and vehicles as well as
communication. Combined these components
will allow field workers the opportunity to communicate with the office electronically. It will also increase productivity, reduce
the paper process, utilize a global positioning system (GPS), and provide
access to future technologies. General
Electric was recommended as the primary vendor to lead the project and other
vendors will be utilized as needed. In
response to a Commissioner question, Mr. Marlow noted that GE’s system is being
utilized by over twenty (20) other utilities including Consumers Energy. GPS will track the vehicles location, which
covers the BWL’s entire service territory, while the automotive vehicle
locating (AVL) software will communicate potential problems and/or maintenance
issues to Fleet Services. The benefit of
the system is increased safety, productivity and security. The BWL outage management system will also be
linked to the new product, which enables BESOC to know where trucks are located
in order to route the proper resources and also allow employees to communicate
when service work is complete. In
response to a Commissioner question regarding the operating system, Mr. Marlow
noted that the tracking system would be located at the BWL and the only outside
component is that of the AVL satellite.
It was also advised that annual recurring operations and maintenance
(O&M) cost are $239,000 with a payback period of 4 years. In response to other Commissioner questions,
Mr. Marlow noted that the fiscal year 2008 O&M cost of $563,330 is
comprised of 6-months of O&M cost and budgeted employee wages. Additionally, the BWL will utilize existing
employees and will not hire new employees for this project. It was also confirmed that the BWL would not
need to build new cellular towers unless the BWL decides to build its own
wireless infrastructure.
On
motion by Commissioner Cochran, seconded by Commissioner Kramer, the
Finance Committee agreed to forward the Mobile Resource Management Project
resolution to the full Board for consideration.
Action:
Carried unanimously.
Other
Audit
Committee. Susan Pifer and Susan Devon will meet to
discuss the merits of the Audit Committee and the need for committee meetings
on a monthly or bi-monthly basis.
There
being no further business the meeting adjourned at
Respectfully
submitted,
Joseph E.
Graves, Jr., Chair
Finance
Committee
The
report will be filed with the minutes of the
MANAGER’S RECOMMENDATIONS
Resolution 2008-1-1
|
A. |
Tenth Supplement Revenue Bond Resolution |
WHEREAS, the City of Lansing acting by and through the Board of Water and Light has previously issued its revenue bonds payable from revenues of the Water Supply, Steam, Chilled Water and Electric Utility System under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution amended and restated on October 24, 1989 and further amended and supplemented as described under the definition “Bond Resolution” below; and
WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and
WHEREAS, it is necessary for the public health, safety and welfare of the residents of the City and the users of the System to acquire and construct the Series 2008 Project (as defined below); and
WHEREAS, the City, acting by and through the Board, took action on July 25, 2006 to declare official intent to reimburse expenditures for certain costs associated with acquisition and construction of the Series 2008 Project with proceeds of revenue bonds, in compliance with Treasury Regulation Section 1.150-2 issued by the Internal Revenue Service pursuant to the Internal Revenue Code of 1986, as amended; and
WHEREAS, on October 12, 2007, the City published a Notice of Intent to Issue Revenue Bonds and Right to Petition for Referendum in the Lansing State Journal describing revenue bonds to be issued in one or more series to finance costs of the Series 2008 Project, and no petitions requesting referendum as described in the Notice were filed with the City Clerk within the referendum period; and
WHEREAS, Section 18(a) of the Bond Resolution as amended by Section 6 of the Second Supplemental Revenue Bond Resolution permits the issuance of Additional Bonds of equal standing and priority of lien with the Outstanding Senior Lien Bonds (defined below) for repairs, extensions, enlargements and improvements to the System and costs of issuing such Additional Bonds, including deposits which may be required to be made to a bond reserve account, if the average actual or augmented Net Revenues of the System for the fiscal year of the System ending not more than 15 months prior to the sale of the Additional Bonds shall be equal to at least one hundred fifty (150%) percent of the maximum Aggregate Debt Service Requirement in any current or future fiscal year on the Outstanding Bonds and on the Additional Bonds then being issued; and
WHEREAS, the conditions and requirements of Section 18(a) of the Bond Resolution have been met for the issuance of the proposed revenue bonds, and the City is ready to authorize issuance of the first series of bonds to finance the Series 2008 Project.
NOW, THEREFORE, BE IT RESOLVED THAT:
Section 1. Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings:
(a) “Additional Bonds” means any Additional Bonds of equal standing with the Series 2008A Bonds issued pursuant to Section 18(a) of the Bond Resolution as amended by this Tenth Supplemental Revenue Bond Resolution.
(b) “Bond Resolution” means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989 and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993, the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, and this Tenth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution.
(c) “Bonds” means the Series 2008A Bonds and any Additional Bonds of equal standing hereafter issued.
(d) “Chief Financial Officer” means the Chief Financial Officer of the Board.
(e) “Notice of Intent” means the Notice to Electors of the City
of
(f) “Outstanding Senior Lien Bonds” means the Outstanding portion of: the Water Supply and Electric Utility Bonds, Series 1994B, the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 1999A, the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, and the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A.
(g) “Reserve Requirement” shall mean the Reserve Requirement established by Section 11 of this Tenth Supplemental Revenue Bond Resolution.
(h) “Series 2008A Bonds” means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A issued pursuant to this Tenth Supplemental Revenue Bond Resolution.
(h) “Series 2008A Construction Fund” shall mean the Series 2008A Construction Fund established pursuant to this Tenth Supplemental Revenue Bond Resolution.
(i) “Series 2008 Project” means the acquisition and construction of improvements to the System, together with any appurtenances and attachments thereto and any related site acquisition or improvements, described in the Notice of Intent including, but not limited to, renovation, improvement and equipping of water conditioning plants; construction, improvement, and renovation of water transmission and distribution lines and related water utility system facilities; renovation, improvement and equipping of electric generating stations; and construction, improvement and renovation of electric transmission and distribution lines and related electric utility system facilities.
(j) “System” means the complete facilities of the City for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties, used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat and all additions, extensions and improvements thereto existing or hereafter acquired by the City.
Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(a) of the Bond Resolution as amended and supplemented through the date of issuance of the last series of the Outstanding Senior Lien Bonds, the City hereby determines that the Series 2008A Bonds shall be issued only if: (a) the average actual or augmented Net Revenues of the System for the fiscal year ending June 30, 2007 are equal to at least 150% of the maximum Aggregate Debt Service Requirement in any current or future fiscal year on the Outstanding Bonds and the Series 2008A Bonds, and (b) the City is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund.
Section 3. Ratification of Notice of Intent. The Board hereby ratifies and confirms the actions taken by the Corporate Secretary of the Board to publish the Notice of Intent, and hereby determines that the form of notice and the manner of publication is the method best calculated to give notice to the electors of the City of the intent to issue the Series 2008A Bonds and the purpose therefore, the source of payment of the Series 2008A Bonds, and the right of referendum relating thereto, and the manner of publication is hereby determined to reach the largest number of persons to whom the notice is directed.
Section 4. Necessity; Preliminary Approval of Plans; and Statement of Purpose. It is hereby determined to be a necessary public purpose of the City to acquire and construct the Series 2008 Project in accordance with the plans and specifications prepared by the City’s consulting engineers, which plans and specifications are hereby approved.
Section 5. Costs; Useful Life. The total cost of the Series 2008 Project is estimated to be not-to-exceed Forty Million Dollars ($40,000,000) including the payment of incidental expenses as specified in Section 6 of this Resolution, which estimate of cost is hereby approved and confirmed, and the period of usefulness of the Series 2008 Project is estimated to be not less than thirty (30) years.
Section 6. Payment of Cost of Project; Bonds Authorized; Applicable Law. To pay part of the cost of acquiring and constructing all or a portion of the Series 2008 Project, including payment of all legal, engineering, financial and other expenses incident thereto and incident to the issuance and sale of the Series 2008A Bonds, the City shall borrow the sum of not-to-exceed Forty Million Dollars ($40,000,000) and shall issue the Series 2008A Bonds therefore pursuant to the provisions of Act 94. The remaining cost of the Series 2008 Project, if any, shall be defrayed from funds on hand and legally available for such use, or, if the principal amount of the Series 2008A Bonds is less than $40,000,000, from an additional series of bonds to be issued upon approval of a future resolution. The Series 2008A Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94.
Section 7. Series 2008A Bond Details, Registration and Execution. The Series 2008A Bonds shall be designated as the “Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A” and shall be payable solely out of the Net Revenues of the System. City Council shall not be requested to pledge the full faith and credit of the City for payment of the Series 2008A Bonds. The Series 2008A Bonds shall be issued as fully registered bonds registered in the denomination of $5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Series 2008A Bonds shall be dated as of the Date of Delivery thereof or such other date as determined at the time of sale of the Series 2008A Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time of sale of the Series 2008A Bonds but not-to-exceed thirty (30) annual maturities.
The Series 2008A Bonds shall be subject to optional or mandatory redemption prior to maturity at the times and prices finally determined at the time of sale of the Series 2008A Bonds.
The Series 2008A Bonds shall bear interest at a rate or rates to be determined on sale thereof not exceeding 6.00% per annum, payable on July 1, 2008, or such later date as provided at the time of sale of the Series 2008A Bonds, and semi-annually thereafter on January 1st and July 1st of each year.
The Series 2008A Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Series 2008A Bond shall be valid until authenticated by an authorized representative of the Transfer Agent. The Series 2008A Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Series 2008A Bonds in accordance with the bid therefore when accepted. Executed blank bonds for registration and issuance to transferees shall be delivered to the Transfer Agent for safekeeping from time to time as necessary.
Section 8. Registration and Transfer. The Chief Financial Officer is hereby authorized to appoint as transfer agent for the Series 2008A Bonds a bank or trust company qualified to act as bond registrar, paying agent and transfer agent (the “Transfer Agent”). The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the City. The City reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Series 2008A Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the City maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the City to conform to market practice in the future.
The Series 2008A Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York (“DTC”), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Series 2008A Bonds in book-entry-only form and to make such changes in the form of the Series 2008A Bonds within the parameters of this Resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Series 2008A Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Series 2008A Bonds shall be made in the manner prescribed by DTC.
The Series 2008A Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner’s duly authorized attorney, upon surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the City shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC.
Upon payment by the City of all outstanding principal of and interest on the Series 2008A Bonds, the registered owner thereof shall deliver the Series 2008A Bonds to the City for cancellation.
Section 9. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Series 2008A Bonds, the City shall deposit into the Bond Reserve Account any amount necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. The City may meet the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated AAA by Moody’s Investors Service and Standard and Poor’s Corporation or any successor to either, and the Chief Financial Officer is hereby authorized to execute an agreement with the provider or issuer of the letter of credit, surety bond, or insurance policy.
Section 10. Series 2008A Bond Proceeds. From the proceeds of sale of the Series 2008A Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Series 2008A Bonds, and the City may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Series 2008A Bonds; provided, however, that at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Series 2008A Bonds may be deposited in the Bond Reserve Account or the Series 2008A Construction Fund in consultation with Bond Counsel.
There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Series 2008A Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement.
The remaining proceeds of the Series 2008A Bonds shall be deposited in the Series 2008A Construction Fund which shall be established by the Chief Financial Officer in a bank or banks qualified to act as depository of the proceeds of sale under the provisions of Section 15 of Act 94. Monies in the Construction Fund shall be applied solely in payment of the portion of the cost of the Series 2008 Project being financed with proceeds of the Series 2008A Bonds and any costs of engineering, legal, financial, bond insurance premiums and other expenses incident thereto and to the issuance of the Series 2008A Bonds.
Any unexpended balance of the proceeds of sale of the Series 2008A Bonds remaining in the Construction Fund after completion of the Series 2008 Project may, in the discretion of the Chief Financial Officer, be deposited to the Bond Reserve Account in order to meet the Reserve Requirement, or for further improvements, enlargements and extensions to the System. Any balance remaining after such expenditure shall be paid into the Redemption Fund for the purpose of purchasing Series 2008A Bonds on the open market at not more than the fair market value thereof but not more than the price at which the Series 2008A Bonds may next be called for redemption or used for the purpose of calling Series 2008A Bonds for redemption.
Section 11. Amendment of Reserve Requirement. Until payment or defeasance in full of the Outstanding Senior Lien Bonds, the City must comply with the Reserve Requirement as defined in Section 1 of the Bond Resolution as amended and restated on October 24, 1989, which is the lesser of (a) the maximum Aggregate Debt Service Requirement for the then current and any subsequent operating year and (b) ten percent of the aggregate proceeds of all Outstanding Bonds. After payment or defeasance in full of the Outstanding Senior Lien Bonds, “Reserve Requirement” shall mean the lesser of (i) the maximum annual debt service requirements on the Outstanding Bonds, (ii) 125% of the average annual debt service requirements on the Outstanding Bonds, or (iii) the total of 10% of the original aggregate face amount of each series of the Outstanding Bonds, reduced by the net original issue discount, if any; provided, however, that the Reserve Requirement shall not at any time exceed the amount allowed to be invested at an unrestricted yield pursuant to Treas. Reg. Section 1.148 2(f)(2) or any successor provision thereto as applicable to the Bonds.
Section 12. Amendment of Rate Covenant. Section 9 of the Bond Resolution, as previously amended by Section 5 of the Second Supplemental Revenue Bond Resolution, is amended to provide:
After payment or defeasance in full of the Outstanding Senior Lien Bonds and the Water Supply, Steam and Electric Utility System Subordinate Lien Revenue Bonds, Series 1999B, the Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 125% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period.
Section 13. Amendment of Additional Bonds Test. Until payment or defeasance in full of the
Outstanding Senior Lien Bonds, the City must comply with the additional bonds
test imposed by Section 6 of the Second Supplemental Revenue Bond
Resolution adopted
The right is reserved, in accordance with the provisions of Act 94, to issue additional bonds payable from the Net Revenues of the System which shall be of equal standing and priority of lien on the Net Revenues of the System with the Series 2008A Bonds, but only for the following purposes and under the following terms and conditions:
(a) For repairs, extensions, enlargements and improvements to the System or for the purpose of refunding a part of any Outstanding Bonds (unless such partial refunding is done in compliance with (b) below) and paying costs of issuing such Additional Bonds, including deposits which may be required to be made to a bond reserve account. Bonds for such purposes shall not be issued pursuant to this subparagraph (a) unless the actual or augmented Net Revenues of the System for the fiscal year of the System ending not more than 15 months prior to the sale of Additional Bonds shall be equal to at least one hundred twenty-five (125%) percent of the maximum Aggregate Debt Service Requirement in any current or future fiscal year on the Outstanding Bonds and on the Additional Bonds then being issued. If the Additional Bonds are to be issued in whole or in part for refunding Outstanding Bonds, the maximum Aggregate Debt Service shall be determined by deducting from the principal and interest requirements for each operating year the annual Aggregate Debt Service Requirement of any Bonds to be refunded from the proceeds of the Additional Bonds.
Net Revenues may be augmented as follows for the purposes of this subsection (a):
(1) If the System rates, fees or charges shall be increased at or prior to the time of authorizing the Additional Bonds, the Net Revenues may be augmented by an amount which in the opinion of the Board’s financial advisor will reflect the effect of the increase had the System’s billings during such time been at the increased rates.
(2) The actual Net Revenues may be augmented by the estimated increase in Net Revenues which in the opinion of the Board’s financial advisor will accrue as a result of new customers which have not been serviced during the fiscal year described in paragraph (a) above or as a result of the acquisition of the repairs, extensions, enlargements and improvements to the System which have been made during or subsequent to the fiscal year described in paragraph (a) above or which will be acquired in whole or in part from the proceeds of the Additional Bonds to be issued.
No Additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in subparagraphs (a) or (c) if the City shall then be in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund.
The remainder of Section 18 of the Bond Resolution shall not be modified or amended by this Section.
Section 14. Covenants. The City covenants and agrees as follows with the holders of the Series 2008A Bonds as long as any of the Series 2008A Bonds remain outstanding and unpaid as to either principal or interest:
(a) The City will cause the portion of the Series 2008 Project being financed with proceeds of the Series 2008A Bonds to be acquired and constructed promptly and in accordance with the plans and specification therefore.
(b) The City covenants and agrees with the Registered Owners of the Series 2008A Bonds that as long as any of the Series 2008A Bonds remain outstanding and unpaid as to either principal or interest, the City shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Series 2008A Bonds pursuant to the Internal Revenue Code in such a manner as to cause the Series 2008A Bonds to be “arbitrage bonds” within the meaning of the Internal Revenue Code. The City hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exemption of interest on the Series 2008A Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Tax Compliance Certificate to be delivered by the City with the Series 2008A Bonds.
(c) The City will not issue additional bonds of prior standing to the Series 2008A Bonds.
Section 15. Series 2008A Bond Form. The Series 2008A Bonds shall be in substantially the following form with such revisions, additions and deletions as the City may deem advisable or necessary to comply with the final terms of the Series 2008A Bonds established upon sale thereof:
Bond No.
R-__
State of Michigan
Counties of Ingham and Eaton
CITY OF
WATER SUPPLY, STEAM, CHILLED WATER AND ELECTRIC
UTILITY SYSTEM REVENUE BOND, SERIES 2008A
|
Interest Rate |
Date of Maturity |
Date of Original Issue |
CUSIP |
|
__________% |
July 1, 20___ |
__________, 2008 |
___________ |
|
Registered Owner: |
Cede & |
||
|
Principal Amount: |
________________ ($____________) Dollars |
||
The CITY OF LANSING, Counties of Ingham and Eaton, State of Michigan (the “City”), acting by and through the Board of Water and Light of the City, acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money of the United States of America, on the Date of Maturity specified above, unless prepaid prior thereto as hereinafter provided, with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on July 1, 2008 and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of _________________, __________, ________, or such other transfer agent as the City may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the “Transfer Agent”). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. For the prompt payment of principal and interest on this bond, the revenues received by the Board of Water and Light from the operations of the water supply and electric utility systems including the steam, steam heat and chilled water distribution systems (the “System”) after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System (the “Net Revenues”), are irrevocably pledged and a statutory lien thereon has been created to secure the payment of the principal of and interest on this Bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the City of Lansing’s Water Supply and Electric Utility System Revenue Bonds, Series 1994B, Water Supply, Steam and Electric Utility System Revenue Bonds, Series 1999A, Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, and Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A. The pledge of Net Revenues and the statutory lien are senior in priority of lien to the City’s Water Supply, Steam and Electric Utility Revenue Bonds, Series 1999B (Taxable Series) and any additional junior lien bonds issued pursuant to the Bond Resolution (defined below).
This Bond is one of a series of bonds of like tenor, except as to denomination, rate of interest and date of maturity, aggregating the principal sum of $__,000,000, issued pursuant to a Bond Resolution adopted by the Board of Water and Light of the City (the “Board”) on October 24, 1989, as amended and supplemented from time to time, including by a Tenth Supplemental Revenue Bond Resolution adopted by the Board on _______, 200__ (collectively, the “Bond Resolution”), and under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended, for the purpose of financing costs of improvements to the System, making a deposit to a bond reserve account, if necessary, and paying the costs of issuing the bonds.
For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the City, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds then outstanding.
Bonds of this issue maturing on or prior to July 1, 20__ are not subject to redemption prior to maturity.
Bonds or portions of bonds in multiples of $5,000 of this issue maturing on or after July 1, 20__ shall be subject to redemption prior to maturity without a premium, at the option of the City, in such order as the City shall determine and within any maturity by lot, on any date on or after July 1, 20__, at par plus accrued interest to the date fixed for redemption.
[Mandatory redemption provisions to
be inserted if term bonds are issued]
In case less than the full amount of an outstanding bond is called for redemption, the Transfer Agent upon presentation of the bond called in part for redemption shall register, authenticate and deliver to the registered owner a new bond of the same maturity and in the principal amount of the portion of the original bond not called for redemption.
Notice of redemption shall be given to each registered owner of bonds or portions thereof to be redeemed by mailing such notice not less than thirty (30) days prior to the date fixed for redemption to the registered owner at the address of the registered owner as shown on the registration books of the City. Bonds shall be called for redemption in multiples of $5,000, and bonds of denominations of more than $5,000 shall be treated as representing the number of bonds obtained by dividing the denomination of the bonds by $5,000, and such bonds may be redeemed in part. The notice of redemption for bonds redeemed in part shall state that, upon surrender of the bond to be redeemed, a new bond or bonds in the same aggregate principal amount equal to the unredeemed portion of the bonds surrendered shall be issued to the registered owner thereof with the same interest rate and maturity. No further interest on bonds or portions of bonds called for redemption shall accrue after the date fixed for redemption, whether the bonds have been presented for redemption or not, provided funds are on hand with the Transfer Agent to redeem the bonds or portion thereof.
This bond is transferable only upon the books of the City kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner’s attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefore as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. The Transfer Agent shall not be required (i) to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing, or (ii) to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.
THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION. THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED.
The City has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution.
It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law.
This bond is not valid or obligatory for any purpose until the Transfer Agent’s Certificate of Authentication on this bond has been executed by the Transfer Agent.
IN WITNESS WHEREOF, the City, acting by and through the Board of Water and Light of the City, has caused this bond to be signed in the name of the City with the facsimile signatures of the Chairperson and Corporate Secretary of the Board of Water and Light, and a facsimile of the City’s corporate seal to be printed hereon, all as of the Date of Original Issue.
CITY OF
By
Chairperson
Countersigned:
By
Corporate Secretary
Date of Authentication: _________, 2008
CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds described herein.
________________________
Transfer Agent
By_________________________________
Its: Authorized Signatory
[INSERT STANDARD FORM OF ASSIGNMENT]
Section 16. Bond
Counsel. The City recognizes that
Miller, Canfield, Paddock and Stone, P.L.C., has represented from time to time,
and currently represents, various underwriters, financial institutions, and
other potential participants in the bond financing process for unrelated
projects, any of which might offer to purchase the Series 2008A Bonds or
provide services related to issuance and sale of the Series 2008A
Bonds. The City appoints Miller,
Canfield, Paddock and Stone, P.L.C.,
Section 17. Financial
Advisor. Robert W. Baird & Co.,
Section 18. Competitive
Section 19. Negotiated
Section 20. Bond Ratings and Bond Insurance. The Chief Financial Officer is hereby authorized to apply for bond ratings from such municipal bond rating agencies as deemed appropriate, in consultation with the Financial Advisor. If the Financial Advisor or the underwriters recommend that the City consider purchase of municipal bond insurance, then the Chief Financial Officer is hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor and the underwriters, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters.
Section 21. Parameters
of
Section 22. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement describing the Series 2008A Bonds and, after sale of the Series 2008A Bonds, to prepare, execute and deliver a final Official Statement.
Section 23. Continuing Disclosure. The Chief Financial Officer is hereby directed to execute and deliver, prior to delivery of the Series 2008A Bonds, a written continuing disclosure undertaking in order to enable the underwriters of the Series 2008A Bonds to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with Bond Counsel, determine to be appropriate.
Section 24. Other Actions. In the event that the Chief Financial Officer is not available at the time that it becomes necessary to take actions directed or authorized under this resolution, then, then a person designated by the Chief Financial Officer or the General Manager of the Board or a person designated by him is authorized to take the actions delegated to the Chief Financial Officer by this Resolution. The officers, administrators, agents and attorneys of the City are authorized and directed to take all other actions necessary and convenient to facilitate issuance and sale of the Series 2008A Bonds, and to execute and deliver all other agreements, documents and certificates and to take all other actions necessary or convenient in accordance with this Resolution, and to pay costs of issuance including but not limited to bond insurance premiums, transfer agent fees, financial advisor fees, bond counsel fees, rating agency fees, costs of printing the Series 2008A Bonds and the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Series 2008A Bonds.
Section 25. Applicability of the Outstanding Bond Resolutions. Except to the extent amended, supplemented or otherwise provided in this Resolution, all of the provisions and covenants provided in Bond Resolution shall apply to the Series 2008A Bonds issued pursuant to provisions of this Resolution, such provisions of said Resolutions being made applicable to the Series 2008A Bonds herein authorized.
Section 26. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded.
Section 27. Severability and Paragraph Headings. If any section, paragraph, clause or provision of this Resolution shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this Resolution. The paragraph headings in this Resolution are furnished for convenience of reference only and shall not be considered to be part of this Resolution.
Section 28. Publication and Recordation. In accordance with the provisions of Section 6 of Act 94, this Resolution shall be published once in full in The City Pulse, a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and shall be recorded in the minutes of the Board and such recording authenticated by the signatures of the Chairperson and Corporate Secretary of the Board.
Section 29. Effective Date. This Resolution is hereby determined to be immediately necessary for the preservation of the public peace, property, health and safety of the City. In accordance with the provisions of Section 6 of Act 94, this Resolution shall become effective immediately upon its adoption.
I hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Water and Light of the City of Lansing, Counties of Ingham and Eaton, State of Michigan, at a Regular meeting held on Tuesday January 29, 2008, at 5:30 p.m., prevailing Eastern Time, and that said meeting was conducted and public notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act, being Act 267, Public Acts of Michigan, 1976, and that the minutes of said meeting were kept and will be or have been made available as required by said Act 267.
I further certify that the following Commissioners were present at said meeting __________________________________________________________________________________________________________ and that the following Commissioners were absent ____________________________________________________.
I further certify that Commissioner _____________ moved adoption of said Resolution, and that said motion was supported by Commissioner __________________.
I further certify that the following Commissioners voted for adoption of said Resolution ______________________________________________________________ ________________________________________ and that the following Commissioners voted against adoption of said Resolution ____________________________________.
I further certify that said Resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary.
__________________________________ __________________________________
Chairperson Corporate Secretary
--------------------
Staff
comments: The Finance Committee agreed with the proposed
resolution at its
·
Issuance of up
to $40,000,000 of Series 2008A Bonds for improvements to the Water Supply,
Steam, Chilled Water and Electric Utility Systems;
·
Deposit to Bond
Reserve Account and Creation of Construction Fund for deposit of Bond Proceeds;
·
Future Rate
Covenant reduced to 125%;
·
Future
Additional Bonds Test reduced to 125%;
·
Chief Financial
Officer to sell Bonds without further resolution; and
·
Other matters
relative to issuance, sale and delivery of Bonds.
Motion by Commissioner Graves, seconded by
Commissioner Cochran, to adopt the Tenth Supplemental Revenue Bond Resolution.
Action:
Carried unanimously.
--------------------
Resolution
2008-1-2
B. |
Declare |
WHEREAS, the City of Lansing, a Michigan municipal corporation (the “City”), the Lansing Board of Water and Light, an administrative board and agency of the City (“BWL”), and Christman Capital Development Company, a Michigan corporation on behalf of a Michigan limited liability company to be formed (“CCDC”) are exploring options to redevelop the real property commonly known as the Ottawa Power Station as more completely described in the attached Exhibit A (the “Property”), and such parties upon the completion of negotiations anticipate entering into a Property Purchase and Development Agreement (the “Agreement”), which sets forth conditions and terms of redeveloping the Property;
WHEREAS, the Property, except for those certain Steam Facilities and Chilled Water Facilities, is no longer useful or required for the operation of the BWL;
WHEREAS, in connection with the Agreement, the Steam Facilities and Chilled Water Facilities will be exchanged and/or replaced by “New Steam Facilities” and “New Chilled Water Facilities”;
WHEREAS, BWL expects that under the terms of the Agreement, any transfer of Property shall be subject to certain rights of the City and BWL to use the Property from and after any such transfer, including without limitation, BWL shall be granted a “License” for certain “Removal Activities”, which Removal Activities shall include, among other things, the right of entry onto the Property for the purpose of removing, relocating, salvaging, demolishing, operating, maintaining, repairing, and/or disassembling the Steam Facilities and the Chilled Water Facilities;
WHEREAS, the License shall exist for thirty (30) days from and after the later of the date of closing or the date on which the New Steam Facilities and New Chilled Water Facilities are fully operational, and upon such operation, the Steam Facilities and Chilled Water Facilities will no longer be useful or required for the operation of the BWL or the Property; and
WHEREAS, in connection with the Agreement, it is in the
best interest of the BWL ratepayers that the Property be transferred to the
City for public purposes, which include, among other things, the acquisition of
new facilities and obtaining new customers by BWL, and the redevelopment of the
Property.
RESOLVED, that (a) subject to the terms and conditions of the Agreement, including but not limited to, the License and Removal Activities; and (b) contingent upon the satisfaction of the conditions precedent to the effectiveness of this Resolution which are set forth in the below paragraph, the Board finds that the Property is no longer useful or needed for the operation of the BWL and declares the same surplus and offers to transfer such surplus property and release jurisdiction of such surplus property to the City.
FURTHER RESOLVED, that the conditions precedent to the effectiveness of this Resolution shall include: (i) the full execution and delivery of the Agreement, which Agreement shall be in substantially such form and substance authorized and approved by the BWL; and (ii) the acquisition of an interest in land by BWL for the New Steam Facilities and New Chilled Water Facilities.
FURTHER RESOLVED, in furtherance of the best interests of the BWL ratepayers and for the public purposes recited above, the surplus property shall be transferred at a future time to the jurisdiction of the City, via such documents, affidavits and/or quit claim deeds, if any, which are required or appropriate in order to vest title to the Property in the City in the manner contemplated under the Agreement, when and if the Mayor of the City accepts such transfer and the City passes a resolution accepting jurisdiction over the Property pursuant to the terms and conditions of the Agreement.
FURTHER RESOLVED, that J. Peter Lark, as the General Manager of BWL, is hereby authorized to execute and deliver, for and on behalf of BWL, any such documents, affidavits and/or quit claim deeds which are appropriate to complete such transfer to the City.
FURTHER RESOLVED, that any proceeds which belong to BWL in connection with the above transactions shall remain with the funds and accounts of the BWL.
FURTHER RESOLVED, the conveyance of the Property to the City, as set forth above, is hereby approved.
--------------------
Staff Comments: the
Committee of the Whole agreed with the proposed resolution at its
--------------------
Motion by Commissioner Rodocker seconded by
Commissioner Graves, to declare Ottawa Station property as surplus and offer
that property to the City of
Discussion: For the record, Commissioner Peter Kramer announced that he would abstain from the discussion and vote on this item.
Action: Carried unanimously.
Resolution 2008-1-3
|
C. |
Enter into a
Property Purchase and Development Agreement |
WHEREAS, the City of Lansing, a Michigan municipal corporation (the “City”), the Lansing Board of Water and Light, an administrative board and agency of the City (“BWL”), and Christman Capital Development Company, a Michigan corporation (“CCDC”) have negotiated the terms and conditions of that certain Property Purchase and Development Agreement, a copy of which is attached hereto as Exhibit C, wherein the parties have agreed, subject to the conditions and terms of the Agreement, to, among other things, redeveloping the real property lying east of Grand Avenue at the easterly termini of Ottawa Street and Ionia Street as more completely described in the attached Exhibit A.
WHEREAS, all capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.
WHEREAS, it is in the best interest of the BWL
ratepayers for BWL to execute and enter into the Agreement for public purposes,
which include, among other things, the acquisition of new facilities and
obtaining new customers by BWL, all as set forth in the Agreement.
RESOLVED, that subject to and contingent upon the execution of the
Agreement by the City, BWL shall, and is
authorized and directed to enter
into the Agreement.
FURTHER RESOLVED, that J. Peter Lark, as the General Manager of BWL, is hereby authorized to execute and enter into the Agreement, for and on behalf of BWL, in substantially such form as is attached hereto as Exhibit C for, among other things, the purposes set forth above and to acquire the New Steam Facilities and New Chilled Water Facilities in accordance with the terms of the Agreement.
FURTHER RESOLVED, that any proceeds which belong to BWL under the Agreement, shall remain with the funds and accounts of the BWL.
FURTHER RESOLVED, that BWL is authorized and directed to execute, deliver and perform its obligations under the Agreement.
--------------------
Staff Comments: the
Committee of the Whole agreed with the proposed resolution at its
--------------------
Motion by Commissioner Graves, seconded by
Commissioner DeLuca, to approve the execution of a Property Purchase and
Development Agreement between City of
Discussion: Commissioner Cochran advised that he noted some housekeeping things in the agreement that were passed onto Peter Lark. As such, Dick Peffley spoke to outside counsel, Eric Eggan who then met with the City Attorney. As a result, an erratum will come forth to address those minor matters.
Mr. Lark concurred with Commissioner Cochran and advised that before the agreement is executed the errata will come forward and they will execute the changed agreement only.
Action: Carried unanimously.
Resolution 2008-1-4
|
D. |
Budget Increase
for |
WHEREAS, the original project and budget estimates for the Mobile Resource Management Data Project (MRM) were developed in 2005 from Request for Information data and did not address all related expenses including training, BWL labor, maintenance and other expenses; and
WHEREAS, this resulted in an initial budget amount of $855,000; and
WHEREAS, when further research was completed, it was realized from vendor bids received that such a system was under budget and needed to be modified.
BE IT RESOLVED, that the budget for the Mobile Resource Management Data Project be increased from $855,000 to $1,840,000 to accommodate costs for capital project costs ($1,840,000). This coupled with the internal labor expenses of $513,000 equate to a total project cost of $2,353,000.
--------------------
Staff Comments: BWL Delivery Services was actively seeking a solution to scheduled and unscheduled planning for work crews that would result in greater safety, increased productivity and greater security for BWL owned vehicles. It was determined that a significant savings could be realized through the implementation of a Mobile Resource Management System that would allow personnel in the field to utilize data on mobile computers thus getting information out to our employees in the field on a real time basis. It would cut the expense of paper processing and be able to have employees utilize data while on location instead of having to return to the office or workplace to gather information to perform work duties.
In addition to providing information, the AVL System (Automatic Vehicle Location) would provide personnel both in the office and in the field with direct access location that would assist dispatchers and crews in responding to outage and emergency situations as well as integrate their regularly scheduled work into the process. The system would interface with a number of applications such as OMS (Outage Management System), CIS (Customer Information System), and in the future SAP (Systems, Applications and Products in Data Processing).
--------------------
Motion by Commissioner Graves, seconded by Commissioner DeLuca to approve the Budget Increase for the Mobile Resource Management Project.
Action: Carried unanimously.
Resolution 2008-1-5
|
E. |
Addition to Capital
Budget for Eckert Station Unit #1 Condenser Retubing |
WHEREAS, the BWL Production Utility requests the addition of the Eckert unit #1 condenser retubing to the 2007-2008 fiscal year capital budget. The Eckert unit #1 condenser retubing total project cost is estimated and budgeted for $361,700.
BE IT RESOLVED, that the Eckert unit #1 condenser retubing budget of $361,700 be added to the 2007-2008 fiscal year capital budget.
--------------------
Staff Comments: BWL Production Utility has actively requested the replacement of the condenser tubes. The replacement of these tubes has been scheduled twice previously, but was removed from the budget by past management. The existing tubes are original from the early 1950’s installation and have well exceeded their design life expectancy of 30 years. The new replacement tube material has been purchased and delivered for $107,650 through the BWL warehouse facility (MSMRC) but has not been expensed out. Installation of the new tubes can be completed during the present Eckert unit #1 turbine overhaul outage for an estimated cost of $254,000. Installation of the tubes will improve the reliability and improve efficiency of the Eckert unit #1 turbine generator.
This is the optimum time to complete this work since the unit is currently down for a turbine overhaul. The next scheduled opportunity will not occur for another two years. Due to the age and current condition of the existing condenser tubes, there is great concern by the Production Utility that the unit will not operate reliably for an additional two years.
--------------------
Motion by Commissioner Cochran, seconded by Commissioner Rodocker, to approve the Addition to Capital Budget for Eckert Unit #1 Condenser Tubing.
Action: Carried unanimously.
Rate Increase Information
General Manager Peter Lark responded in detail to questions
previously presented by the general public at the public hearing held on
Resolution 2008-1-6
|
F. |
Rate Increases
for Electric, Water, and Steam Utilities |
WHEREAS, the staff of the BWL, in the course of its financial planning process, has determined that the electric, water, and steam utilities will experience significant revenue shortfalls in fiscal year 2008 and beyond; and
WHEREAS, such revenue shortfalls are caused primarily by the combination of very modest revenue growth over the last four years, rising costs due to higher labor, health care, maintenance and environmental costs as well as overall inflation, and reduced steam consumption due to GM plant closings; and
WHEREAS, the last general rate increase in the electric utility occurred in September 2006, the last general rate increase in the water utility occurred in July 2006, and the last general rate increase in the steam utility occurred in September 2006; and
WHEREAS, the staff of the BWL has proposed a general increase of 7% for the electric utility effective March 1, 2008, a general increase of 7% for the water utility effective March 1, 2008, and a general increase of 6% for the steam utility effective March 1, 2008; and
WHEREAS, notice of the proposed increases were communicated to all customers by public notice on December 7, 2007, and a public hearing was held on January 22, 2008 to receive comments on the proposed increases; and
WHEREAS, the Board of Commissioners has considered the comments of the public as well as the recommendations made by the BWL.
RESOLVED, That the electric, water, and steam rate schedules listed below and detailed in the attached rate schedules be adopted and made effective for electric, water, and steam consumption on or after March 1, 2008.
ELECTRIC: (Attachment
A)
Residential Service - Rate 1
General
Service - Rate 3
Large General Service - Rate 4
Primary Service - Rate 5
Municipal Water Pumping Service - Rate 7
Large Capacity Service - Rate 8
Outdoor Lighting Service - Rate 9
Traffic Light Service - Rate 11
Space Conditioning and Electric Water Heating Service - Rate 12
Residential Senior Citizen - Rate 21
Street Lighting Service - Rate 31
Street Lighting Service - Rate 32
STEAM: (Attachment
B)
General
Service - Rate 1
Industrial
Service - Rate 2
Residential
Service - Rate 5
WATER: (Attachment
C)
Residential Water Service – Rate 1
General Water Service – Rate 2
Fire Service – Rate 4
Lawn Sprinkling Water Service – Rate 5
Fire Hydrant Charges – Rate 6
Motion by Commissioner Kramer, seconded by
Commissioner Rodocker, to approve Rate Increases for Electric, Water and Steam
Utilities.
Action:
Carried unanimously.
UNFINISHED BUSINESS
No unfinished business.
NEW
BUSINESS
No
new business.
RESOLUTIONS
No
resolutions.
GENERAL MANAGER’S REMARKS
No
remarks.
COMMISSIONERS’ REMARKS
Commissioner Graves sympathized with ratepayers and acknowledged the current challenging economic times. He also noted that the Commission challenged itself by looking at cost containment strategies and taking into account the plight of under and unemployed persons in the area. It was a difficult decision to make while also keeping in mind the viability of the utility and its competitive edge. Commissioner Graves went on record noting that the Commissioners did listen, hear, debated and challenged themselves; and made the best decision for the utility going forward.
Commissioner
Cochran stated that the rate increase was a compromise and they were not insensitive
to those who spoke against it.
Commissioner
James echoed the comments made by Commissioners Graves and Cochran. She also stated that the Commissioners are
not paid for their service on the board and that they pay the same rates as
other BWL customers. Commissioner James
noted that the BWL is a fine utility and also advised that costs in general are
steadily rising. She complimented Peter
Lark and staff for creating significant efficiencies, moving the company in a
new direction and improving morale.
General
Manager Peter Lark thanked the Commissioners for their support.
EXCUSED ABSENCES
No
excused absences.
PUBLIC
COMMENTS
No
public comments.
ADJOURNMENT
On
motion by Commissioner James, seconded by Commissioner Graves, the meeting
adjourned at
/s/
Rosemary Sullivan Acting Secretary
Filed with