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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 Page 1 e I *"� !01*1\ 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 Page 2 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. Page 3 h DATED this 28`h day of July, 2009. ATTEST: e. 4�r7�j , City Clerk Page 4 CITY OF CHUBBUCK Bannock County, Idaho Well i't EXHIBIT A i�N W 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 /'`-I E. Estimated Project Budget: 1. Engineering Fees n $ 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 /'N i"-, 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 ,^N i"N 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 /'\ 1� 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 /�. 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: W 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 ?`i 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 ,eN, /"'%\ 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 /-N "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 � � 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 n /'111 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. PETITION FOR JUDICIAL CONFIRMATION - Page 5 n 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 n 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. 1111///z ? lv= �0-% a s 4 : •.PUB\.\ ;• �0 fl/fill 11111100 Notary Public r the State of I residing at At My Commission ex Tres le Dl PETITION FOR JUDICIAL CONFIRMATION - Page 9