HomeMy WebLinkAbout2009-004 Sewer System Improvements/'N' ^.
RESOLUTION NO. 4-2009
A RESOLUTION OF THE 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 TO 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 certain
improvements and extensions to the System (the "Project ") 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 Project is currently planned in five stages and Phase 1 is further planned
into multiple portions, and
WHEREAS, the Mayor and the Council of the City in conjunction with the Idaho
Department of Environmental Quality have determined that the first Phase should be financed
and constructed over multiple fiscal years; and
WHEREAS, the first half of Phase 1 is in the process of being completed and the City is
ready to proceed with the second half of Phase 1; and
WHEREAS, the estimated cost of the second half of Phase 1 of the Project to the City
(exclusive of grants and other state and federal contributions) is $11,000,000; and
WHEREAS, the City does not have sufficient funds available in its current fiscal year's
budget to finance the cost of the second half of Phase 1 of the Project, 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 through a loan from the Water Pollution Control
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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
WHEREAS, the financing of the costs of the Project 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, 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 14, 2009, 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, Idaho 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 Judicial 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
WHEREAS, 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.
Section 2: 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
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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.
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, 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 construction of 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. The proposed Project is authorized by the general laws of the State.
D. Petitioner has operated the existing System for many years and has determined
that the Project is 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 is not grossly disproportionate to the Petitioner's overall
budget.
Section 6: This Resolution shall take effect and be in force immediately upon its
passage and approval.
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DATED this 28`h day of July, 2009.
ATTEST:
e. 4�r7�j ,
City Clerk
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CITY OF CHUBBUCK
Bannock County, Idaho
Well
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EXHIBIT A
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STATE OF IDAHO
DEPARTMENT OF ENVIRONMENTAL QUALITY
LOAN OFFER, ACCEPTANCE AND AGREEMENT
FOR WASTEWATER TREATMENT FACILITY
DESIGN AND CONSTRUCTION
SECTION I. INTRODUCTION
The State of Idaho (State) is authorized by Title 39, Chapter 36 (Act), Idaho Code, to make loans
from the Wastewater Treatment Facility Loan Account (Account) to assist municipalities in the
construction of wastewater treatment facilities. The Idaho Board of Environmental Quality,
through the Department of Environmental Quality (Departm*)' is authorized to administer the
Act. The Department has determined that the City of Chubbuck (Applicant/Borrower) has
established eligibility for a loan under the terms of the Ad and IDAPA 58.01.12, the Idaho Rules
for Administration of Water Pollution Control Loans-(tte Rules).
The Applicant is a public entity with the authority to finance' public improvements. The
Department hereby offers a loan to the Applicant according to the - terms: and conditions contained
in this document and the Rules.
SECTION II. DESCRIPTION OF PROJECT
This loan offer is for design and construction of the following project:
A. Loan Project Number: WW100X
B. Name and Address of.Applicant: City of Chubbuck
P.O. Box 5604
Chubbuck, Idaho 83202
C. Project Description: This project will enable the completion of the first phase of
construction of the Chubbuck Northwest Sewer Interceptor,
consisting of new trunk lines along the Hi Line Road, major
lift stations, and gravity sewer mains and force mains
connecting to the Pocatello wastewater treatment plant.
D. Terms: $11,000,000 at 1.75% (interest of 0.75% and loan fee of
1.00 %) to be repaid in biannual installments over 20 years.
City of Chubbuck, WW100X
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E. Estimated Project Budget:
1. Engineering Fees
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$ 997,000
2. Collection 10,003,000
3. Land Acquisition 0
4. Total $ 1111 000 ( 0( 0
SECTION III. 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 shall become 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 beneficial interest in this Agreement to any other
person or entity without the prior written consent of the Director of the Department of
Environmental Quality (Director). To not enter into sale, lease or transfer of any of the
property related to the Agreement. To not make any additional material encumbrances to
the project without the prior written consent of the Director. 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 useful in such operation, without the prior written
consent of the Director._
B To enter into such contractual arrangements with third parties as it deems advisable to
assist it in meeting its responsibilities under this Agreement.
C. To fulfill all declarations, assurances, representations and statements in the application
and all other documents, amendments and communications filed with the Department by
the Borrower in support of the request 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.
City of Chubbuck, WW100X
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E. To make efforts to award subagreements to Minority and Women -owned businesses
(MBE/WBE). The fair share goals, I% and 1% respectively, will be in bid solicitations
and documentation of efforts to obtain MBEIWBE participation will be required of any
contractor who fails to attain the goals. Semi - annual reports of MBEIWBE utilization
will be prepared on forms supplied by the Department.
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 completion 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 and whatever interest
and fees are due to the date of payment may be 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.
I That any waiver by the Department at any time 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 remedy specified 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 this Agreement is binding upon the Borrower and the Department, and any person,
office or entity succeeding the Borrower or the Department.
M. To comply with all applicable federal, state and local laws.
SECTION IV. PROJECT 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
City of Chubbuck, WW100X
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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 ($100,000) 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 project, whether or not those services are state funded, until the certification
of project performance is accepted by the Department.
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 (100 %) of the contract price. The bond will be released when the
constructed facility is accepted by the Borrower.
C. Assure that contracts 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 engineering consultant provide assurances that the physical and
operational integrity of the works, when constructed, will 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, for 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, betterment, and extension of such works occasioned by
increased usage on the facility.
F. Provide a plan and program for an equitable user charge system for payment of operation
and maintenance. of constructed facilities. Make available on an equitable basis the
services of the project 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. Review and .update the user charge system at least biennially during the life of this
Agreement to assure that all costs including applicable debt retirement, operation and
maintenance are offset by sufficient revenues.
H. Develop and adopt a sewer use ordinance approved by the Department prior to receiving
final payment of State loan funds.
I. Provide an operation and maintenance manual for the project approved by the Department
prior to receiving final payment of State loan funds.
J. Provide adequate staffing and qualified operation and maintenance personnel as specified
City of Chubbuck, WW100X
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in the operation and maintenance manual approved by the Department.
K. Assure that the operator in charge of the treatment facility has a level of competency
commensurate with the nature of the collection and treatment facility per the Wastewater
Rules, IDAPA 58.01.16.
L. Assure that facility personnel shall participate in operator training programs approved by
the Department and designed to assure competence in the operation and 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, Tules of the
Department and any other applicable law, rule or regulatioaand not discontinue operation
or dispose of the treatment facility without the written approval of the Department.
N. Provide for continuing acceptance and treatment of local septage waste, if such facilities
were constructed under this Agreement.
O. Maintain project accounts in accordance with generally accepted accounting principles.
P. Certify whether or not the project is performing in accordance with the design
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:shall complete the attached project schedule and submit to the Department for
approval on or before ' <60: days from the date of this loan offer. No funds shall be disbursed
per this Agreement until'a. project schedule has been approved by the Department. The
Department approved project_ schedule shall be attached to this Agreement as Attachment A
and incorporated by reference as if fully set forth herein. The Borrower shall complete the
project in accordance with the approved project schedule.
B. All amendments to the project schedule must be approved by the project engineer in the
Department's Pocatello Regional Office, prior to becoming effective.
SECTION VI. SECURITY REQUIREMENTS
The Borrower agrees:
A. This loan will be evidenced and secured by a promissory note in the amount of
$11,000,000 (eleven million dollars). The promissory note will be issued upon project
completion and incorporated by reference into this Agreement.
City of Chubbuck, WW100X
B. There will be a reserve fund equal to one year's payment of principal, fees and interest on
the loan established. The Borrower has five years to establish the reserve, setting aside an
amount equal to 20% (twenty percent) of one year's payment into the reserve fund each
year.
SECTION VII. LOAN DISBURSEMENTS
The Borrower agrees:
A. This loan shall be used solely to aid in the financing of the Borrower's project described
in Section II.
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 determined by the Department to be eligible
costs for funding. Some of the costs however, have been estimated, and the actual costs
may differ from such estimated costs. A project review by the Department will determine
final eligible costs for the project.
D. If the actual eligible cost of the project is determined by the Department to be lower than
the estimated eligible cost, the loan amount will be reduced accordingly.
E. An increase in the loanamount as a result of an increase in eligible project costs shall be
considered, providedlimds are available. Documentation supporting the need for an
increase must be submitted to the Department for approval prior to incurring any costs
above the eligible cost ceiling:
F. Payment of the final five percent (5 %) of this loan shall be withheld until the following
requirements are met:
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 project 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. All security requirements of Section VI have been satisfied.
City of Chubbuck, WW100X
G. This offer is subject 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 Department hereby agrees to pay the Borrower the offered sum of
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 SCHEDULE
The Borrower agrees:
A. This loan shall be repaid in the manner set forth in the promissory note, 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 project completion. Interest will begin accruing
with the first disbursement of funds. At the time °of closing, accrued interest will be either
paid to the Department or incorporated into the. _final loan amount if the approved amount
has not been exceeded.
C. At the time of closing, the Department may elect to impose a loan fee (not to exceed
1.00 %) pursuant to the Rules. If a loan fee is imposed, the loan interest rate will be
reduced by the amount of the loan fee. The loan fee will be assessed against the final
loan balance, which shall include the entire principal balance and may include capitalized
interest. Any loan fee shall be due and payable concurrently with scheduled loan
principal and interest repayments over the repayment period.
D. This Agreement shall remain in full force and effect until all loan proceeds, including
principal, interest and loan.fee. have been paid in full or the Agreement is otherwise
suspended or terminated:by the Department.
SECTION IIi;. PROHIBITIONS''
The Borrower agrees:
Expansion of collection systems in excess of reserve capacity of the treatment works will
be prohibited unless prior to expansion, provisions for adequate treatment are provided in
writing by the Borrower to the Department and approved by the Department.
SECTION X. SUSPENSION OR TERMINATION OF LOAN AGREEMENT
A. The Director may suspend or terminate this Agreement prior to final disbursement for
failure of the loan recipient or its agents, including engineering firm(s), contractor(s), or
subcontractor(s) to perform. This Agreement may be suspended or terminated for good
cause including, but not limited to, the following:
City of Chubbuck, WW100X
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1. Commission of fraud, embezzlement, theft, forgery, bribery, misrepresentation,
conversion, malpractice, misconduct, malfeasance, misfeasance, falsification or
unlawful destruction of records, receipt of stolen property or any form of tortious
conduct; or
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
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 project 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 onpublic work projects funded
by that agency.
B. The Director will notify the Borrower in writing and by certified mail of the intent to
suspend or terminate this Agreement. The notice of intent shall state:
1. Specific acts or omissions which forin.the basis, for suspension or termination; and
2. Availability of a contested case hearing before the Board of Environmental
Quality conducted as provided for in the Rules of Administrative Procedure
Before the Board of Environmental Quality, IDAPA 58.01.23.
C. If the Borrower does not initiate a contested case hearing before the Board by filing a
petition within the time 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 Agreement by written notice to the Borrower. If the Borrower
initiates a contested case, the termination or suspension shall be determined by the Board.
D. The Borrower shall perform no work under the Agreement after receiving a notice of
intent to suspend or terminate until all administrative proceedings and appeals therefrom
are final or the Department reinstates the Agreement as provided herein.
E. Upon written request by the Borrower with evidence that the cause(s) for suspension no
longer exists, the Director may, if funds are available, reinstate the Agreement. If a
suspended Agreement is not reinstated, the loan will be amortized and a repayment
schedule prepared in accordance with the provisions of this 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 Agreement.
City of Chubbuck, WW100X
SECTION XI. ACCESS AND INDEMNIFICATION
The Borrower agrees to:
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A. Provide the Director, or his/her authorized agents, and the U.S. Environmental Protection
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':br indirectly connected
to the Borrower or its agents, employees, contractors, or assignees actions related to the
location, design, construction, operation, maintenance, rep al, failure `ordeactivation of
the project or any part of the project.
City of Chubbuck, WW100X 9
SECTION XII. OFFER
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The offer set forth herein must be accepted, if at all, on or before 60 days from the date of this
loan offer. An acceptance must be accompanied by a resolution of the Applicant's governing
body authorizing the signator to sign on the Applicant's behalf for the purpose of this agreement.
Dated September , 2009
Toni Hardesty
Director
Department of Environmental Quality
SECTION XIII. ACCEPTANCE
The City of Chubbuck, by and through its undersigned representative(s), accepts the foregoing
offer and agrees to discharge all obligations and to comply with all terms and conditions
contained herein.
jSgnature of Represen ive
IS;EVF ! F-jGeAAJLA — INA(IOAt
Name and Title of Representative ' =type or print
019 ylic� aoa�
Date
City of Chubbuck, WW100X 10
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EXHIBIT B
no
STEPHANIE J. BONNEY ISB #6037
MOORE SMITH BUXTON & TURCKE, CHARTERED
950 W. Bannock Street, Suite 520
Boise, Idaho 83702
Telephone: (208) 331 -1800
Facsimile: (208) 331 -1202
e -mail: sjbna.msbtlaw.com
THOMAS J. HOLMES, ISB #2448
JONES, CHARTERED
Chubbuck City Attorney
203 South Garfield
P.O. Box 967
Pocatello, Idaho 83204 -0967
Telephone: (208) 232 -5911
Facsimile: (208) 232 -5962
e -mail: tholmesid@aol.com
Attorneys for Petitioner
In re:
,-,IN.
IN THE DISTRICT COURT OF THE SIXTH JUDICIAL DISTRICT OF THE
STATE OF IDAHO, IN AND FOR THE COUNTY OF BANNOCK
THE CITY OF CHUBBUCK,
an Idaho municipal
corporation,
Petitioner.
Case No.
PETITION FOR JUDICIAL
CONFIRMATION
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
PETITION FOR JUDICIAL CONFIRMATION - Page 1
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 authorized by the general laws of the State, within the meaning of Article 8,
Section 3, Idaho Constitution. In support thereof, Petitioner represents as follows:
I.
This action is in the 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.
II.
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
7- 1303(6), Idaho Code. Petitioner is authorized to institute a judicial confirmation proceeding
pursuant to Section 7 -1304, Idaho Code. Petitioner's governing body has adopted a resolution
authorizing the filing of this 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 summary of 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
PETITION FOR JUDICIAL CONFIRMATION - Page 2
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"System "). The System serves the entire City of Chubbuck, Idaho. Petitioner's System serves
approximately 3,517 residential households and businesses.
Petitioner is also authorized by law to own, operate, and maintain, and has for many years
owned, operated, and maintained, a public drinking water supply system that serves
approximately 3,517 residential households and businesses in the City of Chubbuck.
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
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 performed a study entitled "North Bannock County Sewer Feasibility Study" (the
"Study ").
The Study determined that the area of city impact north and northwest of Chubbuck
cannot be accommodated by the existing collection system, and an additional "backbone" system
needs to be constructed to protect groundwater quality from septic tank pollution. Septic tank
pollution is contributing to nitrate and salt contamination in the municipal aquifer. Continued
development of septic tanks will further degrade the City's water supply.
Based upon the Engineer's recommendation contained in the Study, the Mayor and
Council of Petitioner have determined that sewage collection infrastructure must be added to the
System to meet the present and future needs of the City in order for the System to remain
PETITION FOR JUDICIAL CONFIRMATION - Page 3
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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 that additional infrastructure (hereinafter,
the "Project ") is essential to existing and future sewer collection, sewer treatment and public
water supply needs of the City and its residents. The location of these improvements, the sewage
collection and treatment infrastructure and related facilities, are within the City and in the City's
impact area. The improvements must be constructed 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 purpose of the Project is to protect the City's groundwater,
which is the sole source of its drinking water supply, from further degradation caused by septic
tank development.
The construction and installation of the infrastructure needed for the Project has been
planned in five Phases. Phase 1 consists of approximately 5,200 linear feet of 42" sewer pipe;
22,000 linear feet of 8 " -27" sewer pipe; 16,000 linear feet of force main sewer; 11,000 gpm Rio
Vista Lift Station with phased pump configuration, and upgrades to existing Paradise Lift Station
from 680 gpm to 1800 gpm. The first Phase is further planned into three portions, A, B, and C.
The total estimated cost of portions A, B, and C of Phase 1 of the Project, including legal
services, interest on borrowed funds during construction, contingencies, and related costs, has
been estimated by the Engineer as $21,000,000. The State of Idaho, Department of
Environmental Quality (the "State ") and the City determined that the funding and construction
PETITION FOR JUDICIAL CONFIRMATION - Page 4
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for Phase 1 should occur over multiple fiscal years. Accordingly, the City is seeking judicial
confirmation to pay for the second half of Phase 1.
VI.
The total estimated cost of the second half of Phase 1 of the Project, including legal
services, interest on borrowed funds during construction, contingencies, and related costs, has
been estimated by the Engineer as $11,000,000. 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 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.
VII.
Pursuant to Sections 39 -7601 through 39 -7605, Idaho Code, and rules and regulations
promulgated pursuant thereto, the State has established a Water Pollution Control Loan Program
for the purpose, among other purposes, of making loans to municipalities for the financing of
wastewater system improvements to facilitate compliance with national and state treatment and
discharge standards.
VIII.
In order to finance the cost of the Project, Petitioner has made application to the State for
a loan from the Water Pollution Control Loan Program referred to above. The State has
determined that Petitioner is eligible for such loan and has indicated its approval of 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.
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IX.
?^'%,
The Loan Agreement, if entered into by Petitioner, would be in a principal amount not to
exceed $11,000,000, 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 of two- 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...."
F"
Petitioner, by and through its Mayor and Council, has determined that the proposed Loan
Agreement for the financing of the Project constitutes an ordinary and necessary expense of the
Petitioner authorized by the general laws of the State, within the meaning of the 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.
PETITION FOR JUDICIAL CONFIRMATION - Page 6
B. The proposed expenditure is for the construction of 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. The proposed Project is authorized by the general laws of the State.
D. Petitioner has operated the existing System for many years and has determined
that the Project is indispensable to the efficient continued provision of sewer
services in a manner to prevent contamination of Petitioner's public drinking
water supply.
E. The cost of the Project is not grossly 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 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
expense" of 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 of the 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,
PETITION FOR JUDICIAL CONFIRMATION - Page 7
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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 the validity 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 $11,000,000 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
pursuant to such authority, will be valid and binding special obligations of Petitioner, payable in
accordance with their terms.
DATED this day of July, 2009.
MOORE SMITH BUXTON & TURCKE,
CHARTERED
Stephanie J. Bonney
Attorney for Petitioner
PETITION FOR JUDICIAL CONFIRMATION - Page 8
STATE OF IDAHO
County of Bannock
VERIFICATION
) ss.
)
/'N
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 same to be true and correct.
even M. England
SUBSCRIBED AND SWORN TO before me thi&,A day of July, 2009.
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Notary Public r the State of I
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