DISCLAIMER

 

05-042-O

REPLACEMENT

ORDINANCE NO. __________


AN ORDINANCE AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF $7,600,000 GENERAL OBLIGATION REVENUE BONDS OF THE CITY OF DULUTH FOR THE IMPROVEMENT OF THE MUNICIPAL SEWER UTILITY UPON TERMS AND CONDITIONS TO BE PROVIDED BY RESOLUTION OF THE CITY COUNCIL AND PLEDGING REVENUES FOR THE PAYMENT THEREOF.


BY COUNCILOR STAUBER:

The city of Duluth does ordain:

     Section 1.     BOND PURPOSE AND AUTHORIZATION.

     1.01     Under and pursuant to the provisions of Section 55 of the City Charter, Sections 115.46 and 444.075 and Chapter 475 of Minnesota Statutes, and other pertinent provisions of said Charter and Statutes, the city is authorized to issue its general obligation bonds to provide funds for the improvement of the municipal sewer utility plant, which bonds shall be a specific lien upon such plant and are payable primarily from net revenues, as hereinafter defined, to be derived from operation of the municipal sewer utility pledged for their payment.

     1.02     The city has requested and the state of Minnesota has approved a $4,950,000 grant to the city for design and construction of sanitary sewer overflow storage facilities at selected sites within the city. This grant from the state will be available when matched by $1 of money secured or provided by the city for each $1 of state money. The city intends to provide its matching funds for such grant through the issuance of general obligation sewer utility revenue bonds in an approximate amount of $5,080,000, to be sold in two or more series.

     1.03     The city council hereby determines that it is in the best interest of the city and it is necessary to improve the municipal sewer utility, and determines it is necessary to issue general obligation sewer utility revenue bonds in the maximum amount of $7,600,000 for the purposes of paying costs of the improvement program, including (i) a portion of the Morgan Park sanitary sewer projects, Phase I; (ii) the Morgan Park sanitary sewer projects, Phases II and III; and (iii) sanitary sewer overflow storage facilities, and paying for a portion of the interest cost of the issue, as allowed by Minnesota Statutes, Section 475.56.

     1.04     The city has heretofore issued and sold the following: general obligation water and sewer refunding bonds dated May 1, 1998, the sewer utility portion of such bonds now outstanding in the amount of $220,000; general obligation sewer and steam utility revenue bonds dated December 1, 1998, the sewer utility portion of such bonds now outstanding in the amount of $490,000; general obligation sewer utility revenue bonds dated December 1, 1999, now outstanding in the amount of $1,305,000; general obligation water and sewer utilities revenue bonds dated December 1, 2000, the sewer utility portion of such bonds now outstanding in the amount of $460,000; general obligation gas and sewer utilities revenue bonds dated December 1, 2001, the sewer utility portion of such bonds now outstanding in the amount of $1,125,000; general obligation improvement note dated August 8, 2002, authorized in the amount of $364,195; general obligation utilities facility bonds dated September 1, 2002, the sewer utility portion of such bonds now outstanding in the amount of $1,794,000; general obligation utilities revenue bonds dated December 1, 2002, the sewer utility portion of such bonds now outstanding in the amount of $1,640,000; general obligation water and sewer utilities revenue refunding bonds dated March 1, 2003, the sewer utility portion of such bonds now outstanding in the amount of $915,000; general obligation sewer utility revenue note dated December 12, 2003, authorized in the amount of $1,179,115; and general obligation sewer utility revenue bonds dated December 1, 2004, now outstanding in the amount of $4,045,000. Under the provisions of the ordinances authorizing said bonds, the city reserved the privilege of issuing additional bonds payable from said net revenues on a parity with the bonds and notes dated May 1, 1998, December 1, 1998, December 1, 1999, December 1, 2000, December 1, 2001, August 8, 2002, September 1, 2002, December 1, 2002, March 1, 2003, December 12, 2003, and December 1, 2004.

     1.05     Pursuant to the authority herein recited, the city council hereby authorizes and directs the issuance and sale of general obligation sewer utility revenue bonds, in one or more series, of the city of Duluth in the maximum amount of $7,600,000 and pledges the full faith and credit and taxing powers of the city irrevocably for the payment of the principal and interest when due on such bonds, and also pledges and appropriates irrevocably, to the amounts required for the payment of the principal of and interest on the bonds and the maintenance of a reserve, any and all net revenues to be derived from time to time from the operation of the municipal sewer utility. Net revenues are defined as sums from time to time within the sewer utility operating account within the sewer utility fund maintained under Section 54 of the City Charter, in excess of sums required to pay claims duly approved and allowed for payment of expenses which, under generally accepted accounting principles, constitute normal, reasonable, and current expenses of operating and maintaining the municipal sewer utility and to maintain such reasonable reserves for such expenses as the director of public works and utilities shall determine to be necessary from time to time in accordance with the policies established by the city council.

     1.06     The city reserves the right and privilege of issuing additional bonds and of pledging and appropriating the net revenues of the municipal sewer utility for the payment thereof, when authorized in accordance with law and the City Charter and determined by the city council to be necessary for the improvement of the municipal sewer utility or for the refunding of indebtedness payable from said net revenues, provided that no such pledge shall constitute a lien upon the net revenues superior to the pledge thereof for the payment of the bonds issued hereunder.

     Section 2.     TERMS OF BONDS.

     2.01     The city council shall, by resolution or resolutions, provide for the issuance and sale of such bonds in one or more series and shall fix the precise maturities, interest rates, redemption provisions, and other terms and conditions of such bonds, and prescribe the form thereof, and offer to sell such bonds in such manner and at such time or times as shall be deemed in the public interest, all in accordance with the provisions of Minnesota Statutes, chapter 475, and other applicable laws.

     Section 3.     REVENUES AND ACCOUNTS.

     3.01     The city council shall, by resolution or resolutions, provide for the method of imposing and collecting just and equitable charges for all use and for the availability of all facilities of the municipal sewer utility at the times and amounts required to pay the normal, and current operating expenses and to maintain the municipal sewer utility and also to produce net revenues at least adequate at all times to pay the principal and interest due on the bonds issued hereunder and on all other bonds heretofore and hereafter issued and made payable from said net revenues.

     3.02     The city council shall, by further resolution or resolutions, establish appropriate accounts and credit monies from the proceeds of the bonds herein authorized to accounts, all in accordance with Section 54 of the City Charter and Chapter 475 of Minnesota Statutes.

     Section 4.     CERTIFICATION OF PROCEEDINGS.

     4.01     The city clerk is directed to file with the county auditor of St. Louis County a certified copy of this ordinance, and such other information as the county may require, and to obtain from the county auditor a certificate stating that the bonds herein authorized have been duly entered on his register.

     4.02     The officers of the city and the county auditor are authorized and directed to prepare and furnish to the purchasers of the bonds, and to bond counsel, certified copies of all proceedings and records of the city relating to the authorization and issuance of the bonds and such other affidavits and certificates as may reasonably be required to show the facts relating to the legality and marketability of the bonds, as such facts appear from the official books and records in the officers' custody and are otherwise known to them. All such certified copies, certificates, and affidavits, including any heretofore furnished, constitute representations of the city as to the correctness of the facts recited therein and the action stated therein to have been taken.

     Section 5.     EFFECTIVE DATE.

     5.01     This ordinance shall take effect and be in force 30 days from and after its passage and publication.


STATEMENT OF PURPOSE:  This ordinance authorizes the issuance of general obligation revenue bonds in the maximum amount of $7,600,000 for improvements to the municipal sewer utility plant, including:

     (a)      Additional costs for the construction of the Morgan Park sanitary sewer project, Phase I (approximate amount of bonds $450,000);

     (b)      The construction of the Morgan Park sanitary sewer projects, phases II and III (approximate amount of bonds $2,070,000); and

     (c)      The construction of the sanitary sewer storage facilities projects (total amount of bonds $5,080,000, of which project costs of approximately $995,000 plus cost of issuance will be paid with the first series of bonds); this initial project is for improvements of Pump Station No. 1 and construction of storage facilities located at 60th Avenue East between London Road and Superior Street necessary to eliminate sanitary sewer overflow.


The bonds will be payable from net revenues of the municipal sewer utility. The plan is to issue approximately $3,550,000 of the authorized amount in December of 2005 and the balance of the bonds in the future, as needed to match the state grant.