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HomeMy WebLinkAbout2007-006 Sewer System Improvements- ~' RESOLUTION NO. ~ °' Z dd ~ A RESOLUTION OF THR CITY COUNCIL OF THE CITY OF CHUBBUCK, IDAHO, MAKING FINDINGS AND. DECLARATIONS WITH RESPECT TO FINANCING IMPROVEMENTS TO THE CITY'S PUBLIC SEWER SYSTEM FACILITIES; APPROVING AND AUTHORIZING, SUBJECT T4 JUDICIAL CONFIRMATION, THE EXECUTION OF A LOAN AGREEMENT BETWEEN THE STATE OF IDAHO, DEPARTMENT OF ENVIRONMENTAL QUALITY, AND THE CITY OF CHUBBUCK FOR THE FINANCING OF THE IMPROVEMENTS; AUTHORIZING THE FILING OF A PETITION FOR JUDICIAL CONFIRMATION IN ,THE DISTRICT COURT OF THE SIXTH JUDICIAL DISTRICT OF THE STATE OF IDAHO,' IN AND FOR BANNOCK COUNTY; PROVIDING FOR RELATED MATTERS; AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City of Chubbuck, Bannock County, Idaho (the "City"), is a municipal corporation duly organized and operating under the laws of the State of Idaho, and has for many years. owned and operated a public sewer system (the "System"); and WHEREAS, the ..Mayor and Council of the City have determined that acquisition of engineering services far :the .design, survey and location of certain improvements and extensions to the System (the "Project Services") are required in order for the System to remain functional and adequate to meet .the current and projected future needs of the City and to comply with currently applicable state ':and federal sewer treatment and discharge requirements and drinking water standards; and WHEREAS, the estimated cost of the Project Services to the City (exclusive of grants and other state and federal contributions} is $1,400,000; and WHEREAS,.the City does not have sufficient funds available in its current fiscal year`s budget to finance the cost of the acquisition of the Project Services, and the Mayor and Council have determined that it "is necessary to finance the cost thereof from future years' System revenues and other lawfully,available funds of Petitioner; and WHEREAS, the' Mayor and Council have further determined that it is in the best interests of the City to finance"the: cost of the Project Services through a loan from the Wastewater Treatment Facility Loan Account of-the State of Idaho, Department of Environmental Quality (the "State"}, and the City has made application to the State for such loan; and WHEREAS, the State has tentatively approved such loan application, to be repaid by the City from System revenues over a 20-year term, subject to the condition that the City first obtain judicial confirmation of `the validity of the proposed loan agreement pursuant to the Idaho Judicial Confirmation. Law, .the same being Title 7, Chapter 13, Idaho Code; and Page 1 . -- WHEREAS, the financing of the costs of the Project Services in the manner described would create an indebtedness or liability of the City exceeding the current year's revenues; and WHEREAS, the Mayor and Council have determined that the cost of the Project Services, and the proposed loan obligation to be incurred to finance the same, constitute "ordinary and necessary'expenses" of the City authorized by the general laws of the State within. the meaning of Article 8 Section 3, _of the Idaho Constitution, for which no approving vote of the electors is required; and WHEREAS, the Mayor and Council, on July 24, 2007, held and conducted a public hearing, pursuant to at least fifteen (15) days' published notice in the manner required by Sections 7-1304 and 7-1306, Ydaho Code, on the question of whether the Council should adopt a resolution authorizing the filing of a petition with the District Court of the Sixth 3udicial District of the State of Idaho, in and for the County of Bannock, seeking judicial confirmation of the proposed loan agreement and the incurring of such indebtedness as an "ordinary and necessary expense" within the meaning of Article 8, Section 3, of the Idaho Constitution, pursuant to the Judicial Confirmation Law; and WHEREt~S, at least fourteen (14) days have elapsed following such public hearing, and the Mayor and Council have determined that it is in the best interests of the City and the public health, safety, and welfare for the City to file a petition for judicial confirmation pursuant to the Judicial Confirmation Law upon the question of the. authority of the City to incur such indebtedness, to enter into the proposed loan agreement, to issue its promissory note or other evidence thereof, and to:pledge its System revenues and other lawfully available funds of the City as security for the payment thereof. NOW, THEREFORE., BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CHUBBUCK, IDAHO, as follows: Section 1: The foregoing recitations are hereby adopted as findings of fact by the Council. Sectio Subject to the entry of a final order of the District Court of the Sixth Judicial. District of the State of Idaho, in and for the County of Bannock (the "District Court"), confirming the authority of the. City to enter into the transaction, the Loan Offer, Acceptance and Contract, substantially in the form which is annexed hereto as Exhibit "A" (the "Loan Agreement"), is hereby approved, .and the Mayor is hereby authorized to execute the same for and on behalf of the City.: The Mayor is further authorized to execute, on behalf of the City, a promissory note as evidence of the indebtedness incurred pursuant to the Loan Agreement. The appropriate officials of the City are hereby .further authorized to execute such additional documents and certifications as may be required to carry out the intent of this Resolution. Page 2 Section 3: The Petition for Judicial Confirmation (the "Petition"), substantially in the form. which is annexed hereto as Exhibit "B" and by reference made a part hereof, is hereby approved, and the Mayor is authorized to execute the verification of the same. Section 4; The'law firm of Moore Smith Buxton & Turcke, Chartered, Boise, Idaho, as special counsel to the City, is hereby authorized to file the Petition on behalf of the City in the District Court, and to take. all actions necessary with respect thereto in order to obtain a judgment of the District Court in accordance with the prayer of the Petition. Section 5: The Council hereby finds and declares that the proposed Loan Agreement, the indebtedness incurred thereby, and any evidence of indebtedness .executed pursuant thereto, for the financing of the Project Services, constitute an ordinary and necessary expense of the City authorized by the general laws of the State of Idaho within the meaning of Article 8, Section 3, Idaho Constitution, for which no approving vote of the electors of the City is required, for the following reasons: A. The proposed expenditure is necessary to protect the health, safety, and welfare of the inhabitants of the Petitioner and to comply with state and federal sewer treatment and discharge standards and applicable drinking water standards. B. The proposed expenditure is for the purpose of acquiring needed engineering services to' provide plans for necessary upgrades and improvements to existing City services in order to provide sewer collection and treatment services and protect against groundwater contamination, as opposed to the purpose of undertaking a new endeavor. C. To the extent funds are available after the acquisition of needed engineering services, any remaining funds are needed to acquire right-of--way for the installation of sewer facilities, as needed, and for. the acquisition and construction of necessary. sewer improvements, all for purpose of complying with applicable sewer treatment and drinking water standards. D. The proposed Project Services are authorized by the general laws of the State. E. Petitioner has operated .the existing System for many years and has .determined that the Project Services are indispensable to the efficient continued provision of sewer services in a manner to prevent contamination of Petitioner's public drinking water supply. F. Thecost of the Project Services is not disproportionate to the Petitioner's overall budget. Section 6: Thin Resolution shall take effect and be in force immediately upon its passage and approval. Page 3 DATED this day of August, 2007. CITY OF CHUBBUCK Bannock County, Idaho By Mayor ATTEST: ~~ /~~ City Clerk Page 4 ~ ! STATE OF IDAHO DEPARTMENT OF ENVIRONMENTAL QUALITY LOAN: bF`FER, ACCEPTANCE AND AGREEMENT F4R' WASTEWATER TREATMENT FACILITY DESIGN AND CONSTRUCTION SECTION I. INTRODUCTION The State of Idaho (State) is authorized by the Water Pollution Abatement Act (Act), Title 39, Chapter 36, Idaho Code, to make loans from the Wastewater Treatment Facility Loan Account (Account) to assist munieip~lities in the construction of wastewater treatment facilities. The Idaho Board of Environmental Quality, through the Department of Environmental Quality (Department), is authorized to administer the Act. The :Department has determined that the City of Chubbuck Regional System (ApplcantiBorrower} has established eligibility for a loan under the terms of the Act and IDAPA S8.01.12, the Idaho Rules for Administration of Water Pollution Control Loans {the Rules).: . The Applicant is a public ~tity with the authority to finance public improvements.. The Department hereby offers $ loan to the Applicant according to the terms and conditions contained in this document and the Rules. SECTION II. DESCRIPTLQN OF PROJECT This loan offer is for design and construction of the following project: A. Loan ProjectNt~aber: 1899-XX B. Name and Address`af Applicant: City of Chubbuck P.O. Box 5604 Chubbuck, Idaho 83202 B. Project Description:.. Design and construction of phase I improvements to the region's wastewater collection system. C. Terms: $1,400,000 at 3.00% (interest of 2.00% and loan fee of 1.00%) to be repaid in biannual installments over 20 years. D. Estimated Project $udget: 1. Administrative. Costs $50,000 2. Engineering Fees 200,000 3. Construction 1,15fl,000 City of Chubbuck Regional System 1899-XX EXH~B~T 1 4, Other 0 5. Total $1,400,000 SECTION IIL .GENERAL CONDITIONS This offer may only be accepted by signature by an authorized representative of the Applicant. Upon acceptance by the Applicant, this offer shall become a loan agreement (Agreement) and the Applicant shallbecome a Borrower. By accepting this offer, the Borrower agrees to all terms and conditions set forth in this`document and the Rules: The Borrower agrees: A. To not transfer, assign or pledge any bene~c~al interest in this Agreement to any other person or entity without the prior written~corisent~:of t~eDirector of the Department of Environmental Quality (Director). To not erite~ uito sale`lease or transfer of any of the property related to the Agreement. To not make;~an~ additional material encumbrances to the project without the prior written consent of the:T}treetor. To not incur any liabilities that would materially affect the funds pledged to repay this loan without the prior written consent of the Director, To not delegate legal responsibility for complying with the terms, conditions,: and obligations of this Agreement without the prior written consent of the Director. Notwithstanding any other provision of this paragraph, the Borrower may sell or otherwise dispose of any of the works, plant, properties and facilities of the project or any real or personal property comprising a part of the same which shall have become unserviceable, inadequate, obsolete or unfit to be used in the operation of the project, or no longer necessary, material or u~sefiil in such operation, without the prior written consent of the Director. B To enter into suc,~,.contractual arrangements with third parties as it deems advisable to assist it in meeting its responsibilities under this Agreement. C. T~ filfll all declarations, assurances, representations and statements in the application and a1l~other documents, amendments and communications filed with the Department by the Borrov+ver in support of thexequest for this loan. Which application is attached hereto and incorporated by reference herein. D. To comply with applicable State and Federal employment requirements including, but not limited to, Equal Employment Opportunity and Civil Rights requirements. E. To make effarts'to award subagreements to Minority and Women-owned businesses (MBElWBE). The fair share goals, 1 % and 1 % respectively, will be in bid solicitations and documentatioA of efforts to obtain MBE/WBE participation will be required of any contractor who fails to attain the goals. Quarterly reports of MBE/WBE utilization will be prepared on forms supplied by the Department. City of Chubbuck Regional System 1899-XX 2 F. To provide evidence of ownership in the form of fee simple title or long-term lease and right of access or easements for real property on which the project is to be constructed. Clear title to all real property necessary for the successful operation of the facilities shall be guaranteed by the Borrower for the useful life of the project. G. To take affirmative action to ensure that the project shall be completed and operated in conformance with'federal and state laws relating to occupational health and safety. H. That if prior to conypletion of this Agreement the project is damaged or destroyed, there will be no reduction in the amounts payable by the Borrower to. the Department. I. That in the event there is any default in the payment of either the principal amount, loan fee or the interest due under this Agreement, or any breach by the`Borrower of any of the terms or conditions. of this Agreement, the entire principal~~amount~atid: wl2ateyer interest and fees are due to the date of payment maybe declared due and immediately payable. The amount of such default shall bear the same interest and fee rate as applies to the principal of this loan from the date of default until the date of payment by the Borrower. All costs incurred by the Department due to such default, including court costs and attorney's fees, shall be repaid by the Borrower to the Department. J. That any waiver by the Department ~t:anytime of the rights or duties under this Agreement shall not be deemed a waiver,:of any: subsequent or additional rights or duties under this Agreement. K. That the use by the Department of any remedyspecified in this Agreement for its enforcement is not exclusive and shall not deprive the Department of the right to seek any .other appropriate legal or equitable remedy.. L. That tfiis Agreement is binding upon the Borrower and the Department, and any person, office or-~ntity succeeding the Borrower or the Department. M. To:,comply witli~i~li applicable federal, state and local laws. SECTION IV. ~R4 MANAGEMENT The Borrower agrees to: A. Require the prime engineering firm(s) and their principals retained for engineering. services to carry professional liability indemnification to protect the public from the engineer's negligent acts and errors of omission of a professional nature. The total aggregate of the engineer's professional liability indemnification shall be one hundred thousand dollars ($1 Q0,000) or twice the amount of the engineer's fee, whichever is greater. Professional liability indemnification must cover all services rendered for all phases of the proje,~ct, whether or not those services are state funded, until the certification of project performance is accepted by the Department. City of Chubbuck Regional System 1899-XX B. Comply with the Public Works Contractors License Act and. the Public Contracts Bond Act, Title 54, Chapter 19, Idaho Code, including requiring the prime construction contractor retained for construction to carry performance and payment bonds equal to one hundred percent (1U4%o) of the contract price. T'he bond will be released when the constructed facility is accepted by the Borrower. C. Assure that conttads related to the project which provide for arbitration allow appeal of any resulting arbitration decision to a district court or allow the arbitration to be non-binding on both parties if either party desires not to use arbitration as a method of dispute settlement.`. D. Jointly with an engineerir~ consultant provide assurances that the physical and operational integrity of the works, when constructed, v~ill achieve the level of treatment provided for in the design specifications. E. Provide for the accumulation of funds through charges made for services through revenue bonds, or otherwise, far the purposes of (1) establishing a fund dedicated solely to the repayment of principal, interest and loan fee on this loan, (2) capital replacement and (3) future improvement, be~t~rment, and extension of such works occasioned by increased wastewater loading. F. ~ Provide a plan and program for an eguitableuser charge system for payment of operation and maintenance of constructed facilities: Make available on an equitable basis the services of the pro}ect to the residents and commercial and industrial establishments of the area it was designed to serve. The user charge system shall be approved by the Department and enacted by the Borrower prior to receiving final payment. G. Revieva>and:updatr the user charge system at least biennially during the life of this Agreem~nt~to assure that all costs including applicable debt retirement, operation and maintenance=a~~ffsetby sufficient revenues. H. ~: Dnv~lop and ado~# a~sewer use ordinance approved by the Department prior to receiving ~na1.~yment o~~'t8te loan funds. I. Provide an operation and maintenance manual for the project approved by the Department prior to ri~eu'ing final~payment of State loan funds. J. Provide adequate staffing and qualified operation and maintenance personnel as specified in the operation and maintenance manual approved by the Department. K. Assure that the operator in responsible charge of the treatment facility has a level of competency commensurate with the nature of the collection and treatment facility per Wastewater Rules"II7APA 58.01.16. L. Assure that treatment facility personnel shall participate in operator training programs approved by the Department and designed to assure competence in the operation and City of Chubbuck Regional System 1899-XX 4 maintenance of the facility. M. Commence satisfactory operation and maintenance of the sewage treatment facility on completion of the project in accordance with applicable provisions, rules of the Department and any other applicable law, rule or regulation and not discontinue operation. or dispose of the treatment facility without the written approval of the Department. N. Provide for contin~n-g acceptance and treatment of local septage waste, if such facilities were constructed under this loan Agreement. O. Maintain project accounts in accordance with generally accepted accounting principles for state and local governments issued by the Government Accounting. Standards Board. P. Certify whether ar not the project is performing in accordance with the'd~sign;: performance. standards after the project has been in operation for one year: If the project cannot meet these standards, the Borrower must submit a corrective action report and a schedule for bringing the project into compliance to the Department. SECTION V. SPECIAL CONDITIONS A. The Borrower shalt ~mplete and submit to the Department for approval the attached project schedule on or befpre MONTH- XX, 200X. No funds shall be disbursed per this Agreement until :thy: signed project schedule has been approved by the Department. The Department approved p~ject schedule shall be attached to this Agreement as Attachment A and incorporated by reference as if fully set forth herein. The Borrower shall strive to complete ttie<projeet in accordance with the approved project schedule. B. All amendments to the project schedule must be approved in writing by the project engineer in the Department's Pocatello Regional Office, prior to becoming effective. SECTION VI. SECURE REQUIREMENTS The Borrower agrees: A. This loan will be evidenced and secured by a promissory note in the amaunt of $1,400,000 {two million dollars}. The promissory note will be issued upon project completion and incorporated by reference into this Agreement. B. To establish, at tht time of the issuance of the note, a reserve fund in the amount permitted bylaw tc further secure the payment of principal, fees and interest on the loan. City of Chubbuck Regional System 1899-XX 5 ~ ~ SECTION VII. LOAN DISBURSEMENTS The Borrower agrees: A. .This loan shall be used solely t© aid in the financing of the Borrower's project described in Section IL B. Requests for actual disbursement of loan funds will be made by the Borrower using forms provided by the Department. Upon approval of the disbursement request by the Department loans funds shall be released to the Borrower. C. The costs set forth in Section II have been detemuned by the Department to be eligible costs for finding. Some of the costs however,..haye:been estimated, and the actual costs may differ from such estimated costs. A project revew,by the Department will determine final eligible costs for the project. :;.; :: D. If the actual eligible cost of the project is dete~iinecl.by the Department to be lower than the estimated .eligible cast, the loan amount will be reduced accordingly. E. An increase in the loan amount as a result of an increase in eligible project costs will be considered, provided funds are available. Documentation supporting the need for an increase must be subnutted to the Department for approval prior to incurring any costs above the eligible ~o~t ceiling. F. Payment o(:the final five percent (5%) of this Loan shall be withheld until the following requirements ar~:~m~t 1. The Borrower's:'engineer certifies (a) that the project has been constructed according to plans, and specifications previously approved by the Department and (b) that the: proj ect is fully operational; and 2. The Department has inspected the project and verifies the engineer's certification; and 3. The Department has determined that all terms and conditions of this Agreement have been met; and 4. A final loan repayment schedule has been completed; and 5. All security requirements of Section VI have been satisfied; and 6. The environmental review process has been completed per the Rules. F. This offer is sub}eat to the existence of the offered sum of money in the Account at the time of payment. Should the offered sum of money not be available in the Account at the time of payment, the Departrrient hereby agrees to pay the Borrower the offered sum of City of Chubbuck Regional System 1899-XX 6 money on the basis of the Borrower's priority position immediately upon the accrual of said sum in the Account. SECTION VIII REPAYMENT TERMS AND SCIiEDULE The Borrower agrees: A. This loan shall be repaid in the manner set forth in the revenue bond, which shall be attached to this Agreement and incorporated by reference. B. To pay biannual payments of principal, fees and interest and to fully amortize this loan not later than twenty (20) years from pro}ect completion. Interest at 3.00% will begin accruing with the first disbursement of funds. At. the dime of closing accrued interest will be either paid to the Department or incorporated into'th~e:final loan amount if the approved amoun# has not been exceeded: C. At the time of closing, the Department may ~e~ct to impose a loan fee pursuant to the Rules (IDAPA 58.01.12.032). If a loan fee is imposed; the loan interest rate will be reduced by the amount of the loan fee. The loan fee ~vi~ll<be assessed against the final loan balance, which shall include the entire principal~b$larice and the capitalized interest. Any loan fee shall be due and payable concurrently with.scheduled loan principal and interest repayments: aver the repayment period. ~. ~., D. .This loan Agreat shall: remain in fiill force and. effect until all loan proceeds, including principal, interest.:and loan fee, have been paid in full or the Agreement is otherwise suspend+~i or terminatect:by the Department. SECTION.IX: PR4HIBI'!'~D~tS The Borrower agrees: Bxpansion of aollcction systems in excess of reserve capacity of the treatment works will be polYibited un3 prior to expansion, provisions for adequate treatment aze provided in writing-by the Borrower to the Department and approved by the Department. SECTION X. StI~PENS~ON 4R TERMINATION OF LOAN AGREEMENT A. The Director may suspend or terminate this loan Agreement prior to final disbursement for failure of the aan-recipient or its agents, including engineering firm(s), contractors}, or subcontractor(s) to perform. This Agreement maybe suspended or terminated for good cause including, but not limited to, the following: 1. Commission of fraud, embezzlement, theft, forgery, bribery, misrepresentation, conversion, malpractice, misconduct, malfeasance, misfeasance, falsification or unlawfitl destruction of records, receipt of stolen property or any form of tortious conduct; or City of Chubbuck Regional System 1899-XX ~ ~ 2. Commission of any crime for which the maximum sentence includes the possibility of one (1) or more years imprisonment or any crime involving or affecting the project; or 3. Violation(s) of any term of this Agreement; or 4. Any willful or serious failure to perform within the scope of the project, plan of operation and'groject schedule, terms of engineering subagreements, or contracts for construction; or 5. Utilizing a contractor. or subcontractor who has been suspended or debarred by order of any federal or state agency from working on public work projects fixnded by that agency. B. 'The Director will notify the Borrower in writing and by certified mail of the intent to suspend or terminate this loan Agreement. The notice of intent shall state: L Specific acts or :omissions which form the basis for suspension or termination; and 2. Availability of a contested.:case: hearing before the Board of Environmental Quality conducted as provided. for iri .the Rules of Administrative Procedure Before the Board of Environmental Quality, TI)APA 58.01.23. C. If the Borrower does-not initiate a contested case hearing before the Board by filing a petition within'theitime period specified by the Rules of Administrative Procedure Before the Board of Environmental Quality, IDAPA 58.01.23., the Department may thereafter terminate or suspend the loan contract by written notice to the Borrower. If the Borrower initiates a contested case, the termination shall be determined by the Board. D. The Bor~wer shall perform no work under the Agreement after receiving a notice of intent to suspend:or-~erminate until all administrative proceedings and appeals therefrom ~are:final or the Dent reinstates the Agreement as provided herein. E. Upori:vi~ritten request by the Borrower with evidence that the cause(s) for suspension no longer exist, the''Direetor may, if funds are available, reinstate the loan Agreement. If a suspended~,2i~an Agreement is not reinstated, the loan will be amortized and a repayment schedule prepared in accordance with the provisions of this loan Agreement. F. No terminated loan shall be reinstated. Terminated loans will be amortized and a repayment schedule prepared in accordance with the provisions of this loan Agreement. SECTION XI. ACCESS AND INDEMNIFICATION The Borrower agrees to: A. Provide the Director, or his/her authorized agents, and the U.S. Environmental Protection City of Chubbuck Regional System 1899-XX 8 Agency, access to all files, records, accountings and books relating to the management and accountability of this loan. B. Indemnify and hold harmless the State of Idaho, its agents and its employees from any and all claims, actions, damages, liabilities and expenses directly or indirectly connected to theBorroweror its agents, employees, contractors, or assignees actions related to the location, design, construction, operation, maintenance, repair,. failure or deactivation of the project or any part of the project. City of Chubbuck Regional System 1899-XX 9 SECTION XII.OFFER The offer sef forth herein. must be accepted, if at all, on or before -MONTH- XX, 200X. An acceptance must be accompanied by a resolution of the Applicant's governing body authorizing the signator to sign an the Applicant's behalf for the purpose of this agreement. Dated -MONTH- ~X, 2t)~X. Toni Hardesty Director Department of Environmental Quality. SECTION XIII. ACCEPTANCE The City of Chubbuck Regional System, by and through its undersigned representatives}, accepts the foregoing offer and agrees ta_ dischazge all obligations and to comply with all terms and conditions contained herein. Signature of Representative Name and Title of Representative - type or print Date City of Chubbuck Regional System 1899-XX 10 MICHAEL C. MOORE, ISB #1188 TAMMY A. ZOKAN, ISB #5450 MOORE SMITH BUXTON & TURCKE, CHARTERED 950 W. Bannock Street, Suite 520 Boise, Idaho 83702 Telephone: (208) 331-1800 Facsimile: (208) 331-1202 e-mail: taz(a7~,msbtlaw.com Attorneys for Petitioner IN THE DISTRICT COURT OF THE SIXTH JUDICIAL DISTRICT OF THE STATE OF IDAHO, IN AND FOR THE COUNTY OF BANNOCK In re: THE CITY OF CHUBBUCK, } an Idaho municipal ) corporation, ) Petitioner. } _- -~ ) Case No. PETITION FOR JUDICIAL CONFIIZMATION Fee Category: G Fee: $82.00 COMES NOW the .Petitioner, City of Chubbuck, Bannock County, Idaho, an Idaho municipal corporation (the "Petitioner"}, by and through its undersigned attorneys, and petitions this Court, pursuant to the Idaho Judicial Confirmation Law, Idaho Code Sections 7-1301 through 7-1312, inclusive, for a judicial examination and determination of the authority of Petitioner to enter into 'a certain loan agreement with the State of Idaho and to issue its promissory note or other evidence of such indebtedness, as an "ordinary and necessary expense" of the Petitioner authoriz,~xl by the general laws of the State, within the meaning of Article 8, Section 3, Idaho Constitution. Ini support thereof, Petitioner represents as follows: EXHIBIT "B" PETITION FOR JUDICIAL CONFIRMATION -Page 1 ~ ~ L This action is in he nature. of a proceeding in rem, and jurisdiction of all parties interested will be obtained by publication and posting as provided in Sections 7-1305 and 7- 1306, Idaho Code. u. Petitioner is an incorporated city duly organized, existing, and operating pursuant to Title 50, Idaho Code, and as such` is a "political subdivision" within the definition contained in Section ?-1303(6), Idaho Code. Petitioner is authorized to institute a judicial confirmation proceeding pursuant to Section 7-13434, Idaho Code. Petitioner's governing body has adopted a resolution authorizing the filing of "thin Petition for Judicial Confirmation at least fourteen (14) days following a public hearing duly held and conducted pursuant to publication of notice containing. the date, time, and place of such hearing and a summaryof the matter at least fifteen (15) days prior to the date set for the public hearing in a newspaper of general circulation within Petitioner, in the form and content described in Section 7-1306(2), Idaho Code. III. Petitioner is authorized, by law to own, operate, and maintain, and has for many years owned, operated, and maintained, a public wastewater collection/sewer treatment system (the "System"). The System serves the entire City of Chubbuck, Idaho. Petitioner's System serves approximately 3,411 residential households and businesses. Petitioner is also authorized bylaw to own,. operate, and maintain, and has for many years owned, operated, and maintained, a public drinking water supply system that serves approximately 3,411 residential households and businesses in the City of Chubbuck. EXHIBIT "B„ PETITION FOR JUDICIAL CONFIR1vIATION -Page 2 . ~ ~ IV. As owner and operator of the System, Petitioner is charged with the duty of maintaining safe and reliable sewer services for the: City and its residents, and to do so in a manner that does not jeopardize Petitioner's drinking water supply. In furtherance of that responsibility, the City has retained the services of J U-B Engineers, Inc., a professional consulting civil engineering firm duly authorized and licensed to practice in Idaho (the "Engineer"), to conduct a study of the System for the purpose of determining the adequacy of the System for present and future needs. The Engineer has performed a study entitled "City of Chubbuck Sewer Feasibility Study" (the "Study"). Based .upon the Engineer's recommendation contained in the Study, the Mayor and Council of Petitioner have determined that certain components must be engineered and added to the System to meet the present and future needs of the City in order for the System to remain functional and adequate to meet the existing and projected requirements of the System and protect against contamination of Petitioner's public drinking water resource. V. Petitioner's Mayor and Council have identified the following engineering services (hereinafter, the "Project Services") as essential to existing and future sewer collection, sewer treatment and public water supply needs of the City and its residents: Engineering services, including design, survey, and location of improvements to the sewage collection and treatment infrastructure and related facilities within the City and in the City's impact area for the purpose of protecting against groundwater contamination from septic systems to protect and preserve the health and welfare of the Petitioner's population. The EXHIBIT "B" PETITION FOR JUDICIAL CONFIRMATION -Page 3 purpose of the project is to protect the City's groundwater, which is the sole source of its drinking water supply, fre-m further degradation caused by septic tank development. VI. The total cost of the Project Services, including legal services, interest on borrowed funds during design and surveying, contingencies, and related costs, has been estimated by the Engineer as $1,400,000. Petitioner does. not have funds available to it within its present budget or its budget for the next fiscal year to pay for the Project Services and has determined that such cost .must be financed over a'! term of years from the revenues of the System and other lawfully available funds of Petitioner. Petitioner has further determined that if the completed Project Services are less than estimated and to the extent funds are available, any remaining funds are needed and will be used to acquire right-of--way for the installation of sewer facilities and acquire and construct necessary sewer improvements. VII. Pursuant to Sections 39-7601 through 39-7605, Idaho Code, and rules and regulations promulgated pursuant thereto, the State of Idaho, Department of Environmental Quality (the "State"), has established s Wastewater Treatment Facility Loan Account for the purpose, among other purposes, of making loans to municipalities for the financing of community water systems to facilitate compliance' with national and state treatment and discharge standards. VIII. In order to finance the cost of the Projeet Services, Petitioner has made application to the State for a loan from the Wastewater Treatment Facility Loan Account referred to above. The State has determined that Petitioner is eligible for such loan and has indicated its approval of EXHIBIT "B" PETITION FOR JUDICIAL CONFIRMATION -Page 4 ~ ~ such loan, substantially on the terms and conditions. set forth in the draft Loan Offer, Acceptance and Contract (the "Loan Agreement") which is annexed hereto as Exhibit "A" and by reference incorporated herein. IX. The Loan Agreement, if entered into by Petitioner, would be in a principal amount not to exceed $1,400,000, payable over a 20-year period from System revenues and other lawfully available funds of Petitioner,. and would constitute an indebtedness of Petitioner extending beyond the current year's revenues of Petitioner. No approving vote of the electors of Petitioner has been sought or obtained. X. Article 8, Section 3, Idaho Constitution, provides that no county, city, or other political subdivision shall incur any indebtedness or liability, in any manner or for any purpose, exceeding in that year the income and revenue provided to it for such year, without the assent oftwo-thirds (or, in the case of certain revenue bonds, the assent of the majority) of the qualified electors thereof voting. at an election .held for that purpose, but said Article 8, Section 3, contains the following exception: "provided, that this section shall not be construed to apply to the ordinary and necessary expenses authorized by the general laws of the state...." XI. Petitioner, by and through its Mayor and Council, has determined that the proposed Loan Agreement for the financing of the Project Services constitutes an ordinary and necessary expense of the Petitioner- authorized by the general laws of the State, within the meaning of the EXHIBIT-"B" PETITION FOR JUDICIAL CONFIRMATION -Page 5 above-quoted proviso to Article 8, Section 3, Idaho Constitution, for which no approving vote of the electors is required. This determination is based upon the following factors: A. The proposed .expenditure is necessary to protect the health, safety, and welfare of the inhabitants of .the Petitioner and to comply with state and federal sewer treatment and discharge standards and applicable drinking water standards. B. The proposed expenditure is for the purpose of acquiring needed engineering services. to provide plans for necessary upgrades and improvements to existing City services in -order to provide sewer collection and treatment services and protect against groundwater contamination, as opposed to the purpose of undertaking a new endeavor. C. To the extent funds are available after the acquisition of needed engineering services, :any remaining funds are needed to acquire, right-of--way for the installation of sewer facilities, as needed, and for the acquisition and construction of necessary sewer improvements, all for purpose of complying with applicable sewer treatment and drinking water standards. D. The proposed Project Services are authorized by the general laws of the State. E. Petitioner has operated the existing System for many years and has determined that the Project Services are indispensable to the efficient continued provision of sewer services in a manner to prevent contamination of Petitioner's public drinking water supply. F. The cost of the Project Services is not disproportionate to the Petitioner's overall budget. XII. Petitioner seeks a determination of the validity of the proposed loan agreement, including the Petitioner's proposed pledge to repay the loan from water System revenues, in view of: A. The legal issue, arising under Article 8, Section 3, Idaho Constitution, as to whether or not the proposed loan agreement and any promissory note or other obligation evidencing such agreement constitutes an "ordinary and necessary EXHIBIT "B" PETITION FOR JUDICIAL CONFIRMATION -Page 6 i • expense" o€ Petitioner, authorized by the general laws of the State, for which an approving vote of the electors is not required. B. The requirement contained in the State's loan offer that judicial confirmation of the validity of the loan agreement be obtained as a condition precedent to the execution ofthe Loan Agreement. XIII. Judicial examination and confirmation pursuant to this Petition would serve an important public purpose by providing an early determination of the validity of the power of Petitioner to enter into the proposed Loan Agreement, to issue its promissory note or other evidence thereof, and to pledge to repay said obligations from the revenues of the Petitioner's System and other lawfully available funds of Petitioner, all as provided by the Judicial Confirmation Act and in particular Section 7-1302, Idaho Code. WHEREFORE, Petitioner prays (1) for an order setting the date and time of a hearing herein and directing the giving of notice hereof as provided by law, and (2) for a judicial examination and determination of thevalidity of the power and authority of Petitioner (a) to enter into the proposed Loan Agreement with the State, (b) to incur indebtedness in the amount not to exceed $1,400,000 thereunder without the approval of the electors of Petitioner at a special election as an "ordinary and necessary expense" authorized by the general laws of the State, and to issue its evidence of such indebtedness to the State, and (c) to pledge its System revenues and other lawfully available funds of Petitioner to the payment of such indebtedness; and a declaration that the Loan Agreement and the evidence of indebtedness thereof, when issued EXHIBIT "B" PETITION FOR 3UDICIAL CONFIRMATION -Page 7 P A, pursuant to such authority, will be valid and binding special obligations of Petitioner, payable in accordance with their terms.. DATED this day of , 2007. MOORE SMITH BUXTON & TURCKE, CHARTERED Tammy A. Zokan Attorney for Petitioner EXHIBIT "B" PETITION FOR JUDICIAL CONFIRMATION -Page 8 VERIFICATION STATE OF IDAHO ) ss. County of Bannock ) STEVEN M. ENGLAND, being first duly sworn, deposes and says: That he is the Mayor of the City of Chubbuck Idaho; that he has read the foregoing Petition, knows the contents thereof, and believes the game to be true and correct. ven M. England ,.~ SUBSCRIBED A1VD SWORN TO before me this l~ day of l~/, 2007. tqn,,. Notary Public in and for the State of Idaho, residing at ~ ~`~~:¢ therein C ~~, ~~b ~~'~ My Commission expires 5 ~~ 7.a i l iy lly~J •• •.. ' Q~~~pTARY ~~. . ~.` pUBE-~G ..gip . S ~. ~ P ,recce EXHIBIT "B" PETITION FOR JUDICIAL CONFIRMATION -Page 9