Ordinance 16-03(S) Amend Loan Agreement with Borough for Natural Gas Assessment District

CITY OF HOMER                                                            

                                                                              HOMER, ALASKA

City Manager

                                                                         ORDINANCE 16-03(S)             

AN ORDINANCE OF THE CITY COUNCIL OF HOMER, ALASKA AMENDING ORDINANCE 13-03(S)(2) TO STATE THE ACTUAL PRINCIPAL AMOUNT OF, AND CHANGE THE PAYMENT DATES FOR, THE NATURAL GAS DISTRIBUTION SPECIAL ASSESSMENT BOND AUTHORIZED BY ORDINANCE 13-02, AND AUTHORIZING AN AMENDMENT TO THE LOAN AGREEMENT BETWEEN THE CITY AND THE KENAI PENINSULA BOROUGH REGARDING THE BOND.

WHEREAS, By Ordinance 13-03(S)(2), adopted February 25, 2013, the City authorized the issuance of a Natural Gas Distribution Special Assessment Bond (“Bond”) in the principal amount of not to exceed $12,700,000, and the execution and delivery of a Loan Agreement between the City and the Kenai Peninsula Borough (“Borough”) regarding the Bond; and

               WHEREAS, All advances that will be made under the Loan Agreement have been made, the aggregate amount of such advances is $12,359,388, and such amount may be documented by issuing a new bond to the Borough in exchange for the original Bond; and

WHEREAS, By Resolution 15-017, adopted March 23, 2015 the City confirmed the assessment roll for the Homer Natural Gas Distribution Special Assessment District (“District”); and

               WHEREAS, Due to delays in the assessment process, the first assessment payments were due on September 1, 2015, and subsequent assessment installment payments will be due on July 1 of each year; and

               WHEREAS, As of the September 1, 2015 assessment payment date, the City had made a payment of principal and interest on the Bond to the Borough from assessment payments received by the City as of that date; and

               WHEREAS, To allow prompter payments under the Loan Agreement the due date for installment payments on the Bond should be changed from April 1 to September 1 commencing with the installment payment that is due in 2016.

NOW, THEREFORE, THE CITY OF HOMER ORDAINS:

Section 1.  Section 2 of Ordinance 13-03(S)(2) is amended to read as follows (added language is underlined; deleted language is stricken through):

For the purpose of providing the funds necessary to pay the costs of designing and constructing the Improvement, to pay interest on the Bond during the construction of the Improvement, the funding of the reserves required herein, and to pay all costs incidental thereto and to the issuance of the Bond, the City shall issue the Bond in a principal amount equal to the aggregate amount of the advances that the Registered Owner makes to the City for such purposes, which is $12,359,388.

Section 2.  The second paragraph of Section 4 of Ordinance 13-03(S)(2) is amended to read as follows (added language is underlined; deleted language is stricken through):

The Bond shall bear interest from its date at a rate of Four Percent (4.0%) per annum, and shall be payable in two payments of interest only on the 1st days of April 2014 and 2015, a payment of principal and interest that was received by the Borough as of the September 1, 2015 assessment due date, and nine equal annual installments of principal and interest, commencing on the 1st day of September 2016 and continuing on September 1 of each year thereafter, until September 1, 2024 when the remaining principal balance of the Bond, plus accrued interest, shall be due and payable.  Interest will be computed on the basis of a 360-day year.

Section 3.  The first paragraph of the form of the bond in Section 7 of Ordinance 13-03(S)(2) is amended to read as follows (added language is underlined; deleted language is stricken through):

The City of Homer (the “City”), a municipal corporation of the State of Alaska, acknowledges itself indebted and for value received promises to pay (but only out of the sources mentioned herein) to the Registered Owner identified above, or its registered assigns, a principal amount equal to the aggregate amount of the advances that the Registered Owner makes to the City to pay the costs of designing and constructing the Improvement, to pay interest on the Bond during the construction of the Improvement, the funding of the reserves required herein, and to pay all costs incidental thereto and to the issuance of the Bond, which is Twelve Million Three Hundred Fifty Nine Thousand Three Hundred Eighty Eight Dollars ($12,359,388), together with accrued interest on the outstanding principal amount of this Bond at a rate of Four Percent (4.0%) per annum.  This Bond is payable in two payments of interest only on the 1st days of April 2014 and 2015, a payment of principal and interest that was received by the Borough as of the September 1, 2015 assessment due date, and nine equal annual installments of principal and interest, commencing on the 1st day of September 2016 and continuing on September 1 of each year thereafter, until September 2024, when the remaining principal balance of the Bond, plus accrued interest, shall be due and payable.  Both principal of and interest on this Bond shall be payable in any lawful money of the United States of America which at the time of payment is legal tender for the payment of public and private debts.  Interest on this Bond shall be computed on the basis of a 365-day year.  Installments of principal and interest on this Bond shall be paid at the office of the Registered Owner in Soldotna, Alaska, or at the option of the Registered Owner at the office of the Treasurer of the City in Homer, Alaska

Section 4.  The third paragraph of the form of the bond in Section 7 of Ordinance 13-03(S)(2) is amended to read as follows (added language is underlined; deleted language is stricken through):

This Bond is issued pursuant to Chapter 46, Title 29 of the Alaska Statutes and Ordinance 13-03(S) of the City duly and regularly adopted February 25, 2013, for the purpose of providing funds to pay the costs of designing and constructing a natural gas distribution system (the “Improvement”) in the City of Homer Natural Gas Distribution Special Assessment District, and is the single registered Bond entitled $12,359,388 City of Homer Natural Gas Distribution Special Assessment Bond, 2013.

Section 5.  The amended Bond shall be executed in the name of the City by the signature of the Mayor, and its corporate seal shall be impressed or otherwise reproduced thereon and attested by the signature of the City Clerk. 

Section 6.  The City Manager is hereby authorized to execute the Second Amendment to Loan Agreement, in substantially the form presented at this meeting, but with such changes, modifications, additions and deletions therein as she shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of approval of any and all changes, modifications, additions or deletions therein from the form and content of said document now before this meeting.  The City Manager also is hereby authorized to deliver the amended Bond to the Kenai Peninsula Borough in exchange for the original Bond.

Section 7.  This Ordinance is not permanent in nature, and shall not be codified.

               ENACTED BY THE CITY COUNCIL OF HOMER, ALASKA, this 25th day of January, 2016.

                                                                                                         CITY OF HOMER

_________________________

                                                                                                         MARY E. WYTHE, MAYOR

ATTEST:

____________________________

JO JOHNSON, MMC, CITY CLERK

YES:

NO:

ABSTAIN:

ABSENT:

First Reading:

Public Hearing:

Second Reading:

Effective Date: 

Reviewed and approved as to form.

Mary K. Koester, City Manager                                                          Thomas Klinkner, City Attorney

Date:                                                                                                             Date:                                                       

Fiscal Note: NA