HomeMy WebLinkAboutA014 - Fully Executed Loan and Disbursement Agreement LOAN AND DISBURSEMENT AGREEMENT
$5,700,000 TAXABLE SEWER REVENUE BONDS
This Loan and Disbursement Agreement (the "Agreement") is made and entered into as
of October 19, 2018, by and between the City of Ames, Iowa (the "Participant") and the Iowa
Finance Authority, an agency and public instrumentality of the State of Iowa (the "Issuer").
WHEREAS, the Issuer, in cooperation with the Iowa Department of Natural Resources
(the "Department"), is authorized to undertake the creation, administration and financing of the
Iowa Water Pollution Control Works Financing Program (the "Program") established in Iowa
Code Sections 16.131 through 16.135 and Sections 45513.291 through 455B.299, including,
among other things, the making of loans to Iowa municipalities for purposes of the Program; and
WHEREAS, the Participant desires to participate in the Program as a means of financing
all or part of the construction of certain wastewater treatment facilities serving the Participant
and its residents; and
WHEREAS, to assist in financing the Project (defined herein), the Issuer desires to make
a loan to the Participant in the amount set forth in Section 2 hereof,
NOW, THEREFORE, the parties agree as follows:
Section 1. Definitions. In addition to other definitions set forth herein, the following
terms as used in this Agreement shall, unless the context clearly requires otherwise, have the
following meanings:
(a) "Bonds" shall mean any Mate Revolving Fiend Revenue Bonds that were
or in the future are issued by the Issuer for the purpose of providing moneys to finance
the Loan to the Participant.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
all lawfully promulgated regulations thereunder.
(c) "Project" shall mean the particular construction activities approved by the
Department and being undertaken by the Participant with respect to its Wastewater
Treatment System, as described in the Resolution.
(d) `'Regulation shall mean the administrative rules of the Department
relating to the Program. set forth in Title 567. Chapter 92 of the Iowa Administrative
Code. and the administrative rules of the Issuer relating to the Program set forth in "Title
265. Chapter 26 of the log-va Administrative Code.
(e) "Resolution.. shall mean the resolution of the Council of the Participant.
oil Orfohc_r 9 2018_ ,)nnrovim, and authorizing the execution of this Apreeilacnt
and the issuance of the Revenue Bond (defined herein).
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f
(f) "Wastewater Treatment System" shall mean the wastewater treatment
system of the Participant, all facilities being used in conjunction therewith and all
appurtenances and extensions thereto, including but not limited to the wastewater
treatment system project which the Participant is financing under this Agreement.
Section 2. Loan; Purchase of Revenue Bond. The Issuer agrees to purchase a duly
authorized and issued sewer revenue bond or capital loan note of the Participant (the "Revenue
Bond") in order to make a loan to the Participant, and will disburse proceeds as set forth herein.
The Participant agrees to borrow and accept from the Issuer, a loan in the principal amount of
$5,700,000 (the "Loan").
The Participant shall use the proceeds of the Loan strictly (a) to finance a portion of the
costs of construction of the Project and (b), where applicable, to reimburse the Participant for a
portion of the costs of the Project, which portion was paid or incurred in anticipation of
reimbursement through the Program and which is eligible for such reimbursement under and
pursuant to the Regulations and the Code.
Section 3. Disbursements. Proceeds of the Loan shall be made available to the
Participant in the form of one or more periodic disbursements as provided in this Section. The
Issuer thereafter shall make disbursements of a portion of the Loan for payment of costs of the
Project upon receipt of the following:
(a) a completed payment request on a form acceptable to and available from
the Issuer;
(b) current construction payment estimates;
(c) engineering service statements;
(d) purchase orders or invoices for items not included within other contracts:
and
(e) evidence that the costs for which the disbursement is requested have been
incurred.
Solely with respect to the request for the final disbursement of proceeds of the Loan, the
Participant shall submit to the Issuer (via the Department), in addition to items (a) through (e)
above. a certification of completion and acceptance of the Project by the Participant or evidence
of an acceptable settlement if the Project is subject to a dispute between the Participant and any
contractor.
Disbursements shall be made in a timely fashion following the receipt of the information
Lis set forth above. Unless other%v ise agreed to in writing by the Issuer. funds shall be payable to
the Participant via automated clearin11house system transfer to the account specified by the
i-'articipant.
Section 4. Completion of'Project. The Participant covenants and agrees (i) to exercise its
best efforts in accordance with prudent wastewater treatment utility practices to complete the
Project; and (ii) to provide fi-om its own fiscal resources all monies, in excess of the total amount
of Loan proceeds it receives under the Agreement, required to complete the Project.
Section 5. Repayment of Loan: Issuance of Revenue Bonds. The Participant's obligation
to repay the Loan and interest thereon shall be evidenced by the Revenue Bond in the principal
amount of the Loan, complying in all material respects with the Regulations and being in
substantially the form set forth in the Resolution. The Revenue Bond shall be delivered to the
Issuer as the original purchaser and registered holder thereof at the closing of the Loan. The
Revenue Bond shall be accompanied by a legal opinion of bond counsel, in form satisfactory to
the Issuer, to evidence the legality, security position and tax-exempt status of interest on the
Revenue Bond. The parties agree that a payment of principal of or interest on the Revenue Bond
shall be deemed to be a payment of the same on the Loan and a payment of principal of or
interest on the Loan shall be deemed to be a payment of the same on the Revenue Bond. Unless
otherwise agreed to in writing by the Issuer, all payments of principal and interest due under the
Loan shall be made via automated clearinghouse transfer, from an account specified by the
Participant.
The Revenue Bond shall be dated the date of delivery to the Issuer, with interest and the
Servicing Fee (together, the "Interest Rate" as set forth in Section 6 hereof) payable
semiannually on June 1 and December 1 of each year (unless the resolution authorizing a
previous series of outstanding bonds on a parity with the Revenue Bond requires interest to be
paid on other interest payment dates, in which case such other dates shall apply) from the date of
each disbursement of a part of the Loan from the Issuer to the Participant (which are initially
expected to be on approximately the dates set forth on Exhibit A attached hereto and
incorporated herein). The first repayment of principal of the Loan shall be due and payable not
later than one year after substantial completion of the Project and payments of principal, interest
and the Servicing Fee shall continue thereafter until the Loan is paid in full. Following the final
disbursement of Loan proceeds to the Participant, Exhibit A shall be adjusted by the Issuer, with
the approval of the Participant. based upon actual disbursements to the Participant under the
Agreement. Such revised Exhibit A thereafter shall be deemed to be incorporated herein by
reference and made a part hereof and shall supersede and replace that initially attached hereto
and to the Revenue Bond.
The Revenue Bond shall be subject to optional redemption by the Participant at a price of
Par plus accrued interest (1) on any date upon receipt of written consent by the Issuer, or (ii) in
the event that all or substantially all of the Project is damaged or destroyed. Any such optional
redemption of the Revenue Bond b% the Participant may be made from any funds regardless of
source. in whole or from time to time in part. upon not less than thirty (30) days notice of
redemption by e-mail. facsimile. certilled or registered mail to the Issuer (or any other registered
owner of the Revenue Bond). The Revenue Bond is also subject to mandatory redemption in the
event the costs of the Project are less than initially projected. in which case the amount of-Ile
1. cck-1 to - ,t - I to thy-, act"I'd Pr`'Ject costs disbursed. The P.rticipInt
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and the Issuer agree that following such adjustment, the principal amount due under the Revenue
Bond shall be automatically reduced to equal the principal amount of the adjusted Loan.
The Revenue Bond and the interest thereon and any additional obligations as may be
hereafter issued and outstanding from time to time under the conditions set forth in the
Resolution shall be payable solely and only from the Net Revenues (as defined in the Resolution)
of the Wastewater Treatment System of the Participant, a sufficient portion of which has been
and shall be ordered set aside and pledged for such purpose under the provisions of the
Resolution. Neither this Agreement nor the Revenue Bond is a general obligation of the
Participant, and under no circumstance shall the Participant be in any manner liable by reason of
the failure of the aforesaid Net Revenues to be sufficient to pay the Revenue Bond and the
interest thereon or to otherwise discharge the Participant's obligation hereunder.
Section 6. Interest Rate, Initiation Fee and Servicing Fees. (a) The Participant agrees
to pay to the Issuer, as additional consideration for the Loan, a loan initiation fee (the "Initiation
Fee") equal to one-half of one percent (0.50%) of the amount of the Loan ($28,500), which shall
be due and payable on the date of this Agreement. Unless the Issuer shall be otherwise notified
by the Participant that the Participant intends to pay such Initiation Fee from other funds, and has
received such other fiends from the Participant on the date hereof, the Issuer shall be authorized
to deduct the full amount of the Initiation Fee from the proceeds of the Loan being made
hereunder, and such deduction by the Issuer shall be deemed to be an expenditure by the
Participant of the Loan proceeds.
(b) The Participant agrees to pay a Loan servicing fee (the "Servicing Fee") to the Issuer
in an amount equal to 0.25% per annum of the principal amount of the Loan outstanding. The
Servicing Fee shall be paid as described in Section 5 and Section 6(c) hereof.
(c) The Loan shall bear interest at 1.75"% per annum (the "RatC). As described in
Section 5, payments hereunder shall be calculated based on the Rate plus the Servicing Fee (such
2.00%, the "Interest Rate").
Section 7. Compliance with Applicable Laws Performance Under Loan Agreement;
Rates. The Participant covenants and agrees (1) to comply with all applicable State of Iowa and
federal laws, rules and regulations (including but not limited to the Regulations), judicial
decisions, and executive orders in the performance of the Agreement and in the financing,
construction. operation, maintenance and use of the Project and the Wastewater Treatment
System: (ii) to maintain its Wastewater Treatment System in good repair, working order and
operating condition; (iii) to cooperate with the Issues- in the observance and performance of their
respective duties. covenants. obligations and agreements under the Agreement; (iv) to comply
with all terms and conditions of the Resolution; and (v) to establish, levy, and collect rents, rates
and other charges for the products and services provided by its Wastewater Treatment System.
which rents. rates and other charucs shall be at least sufficient (A) to meet the operation and
maintenance expenses of such Wastewater- Treatment System. (13) to produce and maintain Net
Revenues at a leVel not less than l of the amount of principal and interest on the Revenue
Bond and any other obli,_,ations secured by a pledge of the Net Revenues falling due in the same
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year, (C) to comply with all covenants pertaining thereto contained in, and all other provisions
of, any bond resolution, trust indenture or other security agreement, if any, relating to any bonds
or other evidences of indebtedness issued or to be issued by the Participant, (D) to pay the debt
service requirements on any bonds. notes or other evidences of indebtedness, whether now
outstanding or incurred in the future, secured by such revenues or other receipts and issued to
finance improvements to the Wastewater Treatment System and to make any other payments
required by the laws of the State of Iowa, (E) to generate fiords sufficient to fulfill the terms of
all other contracts and agreements made by the Participant, including, without limitation, the
Agreement and the Revenue Bond and (F) to pay all other amounts payable from or constituting
a lien or charge on the operating revenues of its Wastewater Treatment System.
Section 8. Insurance• Audits; Disposal of Property. The Participant covenants and
agrees (a) to maintain insurance on, or to self-insure, the insurable portions of the Wastewater
Treatment System of a kind and in an amount which normally would be carried by private
companies engaged in a similar type of business, (b) to keep proper books and accounts adapted
to the Wastewater Treatment System, showing the complete and correct entry of all transactions
relating thereto, and to cause said books and accounts to be audited or examined by an
independent auditor or the State Auditor (1) at such times and for such periods as may be
required by the federal Single Audit Act of 1984, OMB Circular A-133 or State law, and (ii) at
such other times and for such other periods as may be requested at any time and from time to
time by the Issuer (which requests may require an audit to be performed for a period that would
not otherwise be required to be audited under State law), and (c) not to sell, lease or in any
manner dispose of the Wastewater Treatment System, or any capital part thereof, including any
and all extensions and additions which may be made thereto, until the Revenue Bond shall have
been paid in full or otherwise discharged as provided in the Resolution; provided, however, that
the Participant may dispose of any property which in the judgment of its governing body is no
lo-ger LteAfu or l prof cable io use in connection with the operation of the Wastewater Treatment
System or essential to the continued operation thereof.
Section 9. Maintenance of Documents; Access. The Participant agrees to maintain
its project accounts in accordance with generally accepted accounting principles ("GAAP") as
issued by the Governmental Accounting Standards Board, including GAAP requirements
relating to the reporting of infrastructure assets.
The Participant agrees to permit the Issuer or its duly authorized representative access to
all files and documents relating to the Project for purposes of conducting audits and reviews in
accordance with any of the ReOUlations.
Section 10. Continuing Disclosure. As a means of enabling the Issuer to comply with
the "continuing disclosure" requirements set forth in Rule 15c2-12 (the "Rule") of the Securities
and Exchange Commission. the Participant a�orees, during the term of the Loan, to provide the
]suer with (i) the comprehensive Audit report of the Participant. prepared and certified by an
independent auditor or the State Auditor not later than 180 days alter the end of each fiscal year
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may reasonably request from time to time with respect to the Wastewater Treatment System, the
Project or the Participant.
The Participant hereby consents to the inclusion of all or any portion of the foregoing
information and materials in a public tiling made by the Issuer under the Rule. The Participant
agrees to indemnify and hold harmless the Issuer, and its officers, directors, employees and
agents from and against any and all claims, damages, losses, liabilities, reasonable costs and
expenses whatsoever (including attorney fees) which such indemnified party may incur by
reason of or in connection with the disclosure of information permitted under this Section;
provided that no such indemnification shall be required for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by the willful
misconduct or gross negligence of the Issuer in the disclosure of such information.
Section 1 l. Events of Default. If any one or more of the following events occur, it is
hereby defined as and declared to constitute an "Event of Default" under this Agreement:
(a) Failure by the Participant to pay, or cause to be paid, any Loan repayment
(including the Servicing Fee) required to be paid under this Agreement when due, which
failure shall continue for a period of fifteen (15) days.
(b) Failure by the Participant to make, or cause to be made, any required
payments of principal, redemption premium, if any, and interest on any bonds, notes or
other obligations of the Participant (other than the Loan and the Revenue Bond), the
payment of which are secured by operating revenues of the Wastewater Treatment
System.
(c) Failure by the Participant to observe and perform any duty, covenant,
obligation or agreement on its part to be observed or performed under the Agreement or
the Resolution, other than the obligation to make Loan repayments, which failure shall
continue for a period of thirty (30) days after written notice, specifying such failure and
requesting that it be remedied, is given to the Participant by the Issuer, unless the Issuer
shall agree in writing to an extension of such time prior to its expiration or the failure
stated in such notice is correctable but cannot be corrected in the applicable period, in
which case the Issuer may not unreasonably withhold its consent to an extension of such
time up to one hundred twenty (120) days from the delivery of the written notice referred
to above if corrective action is commenced by the Participant within the applicable period
and diligently pursued until the Event of Default is corrected.
Section 12. Remedies on Default. Whenever an Event of Default shall have occurred
and be continuing. the Issuer- shall have the right to take any action authorized under the
Regulations, the ReVellne Bond or this Agreenicnt and to take whatever other action at law or-
equity may appear necessary or desirable to collect the amounts then due and thereafter to
become due under- the Agreement or to enforce the performance and observance of any CILO.
covenant. obliulation or agreement of'theParticipant under the Agreement or the Resolution.
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Section l3. Amendments. This Agreement may not be amended, supplemented or
modified except by a writing executed by all of the parties hereto.
Section 14. Termination. The Participant understands and agrees that the Loan may
be terminated at the option of the Issuer if construction of the Project has not commenced within
one year of the date of execution of this Agreement, all as set forth in the Regulations.
Section 15. Rule of Construction. This Agreement is executed pursuant to the
provisions of Section 384.24A of the Code of Iowa and shall be read and construed as
conforming to all provisions and requirements of that statute.
In the event of any inconsistency or conflict between the terms and conditions of the
Revenue Bond and this Agreement or the Regulations, the parties acknowledge and agree that
the terms of this Agreement or the Regulations, as the case may be, shall take precedence over
any such terms of the Revenue Bond and shall be controlling, and that the payment of principal
and interest on the Loan shall at all times conform to the schedule set forth on Exhibit A, as
adjusted. and the Regulations.
Section 16. Federal Requirements. The Participant agrees to comply with all
applicable federal requirements including, but not limited to, Davis-Bacon wage requirements
and the requirements relating to the use of American iron and steel products.
Section 17. Repayment of Planning and Design Loan. The Participant entered into an
Interim Loan and Disbursement Agreement with the Issuer to provide funds to pay the costs of
planning and designing the Project. The Participant agrees to repay the Interim Loan and
Disbursement Agreement on the date of this Agreement. Unless the Participant notifies the
Issuer that the Participant intends to repay the Interim Loan and Disbursement Agreement from
other funds, and the Issuer has received such other funds from the Participant on the date hereof,
the Issuer shall be authorized to deduct the frill amount due under the Interim Loan and
Disbursement Agreement from the proceeds of the Loan being made hereunder, and such
deduction by the Issuer shall be deemed to be an expenditure by the Participant of the Loan
proceeds.
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IN WITNESS WHEREOF, we have hereunto affixed our signatures all as of the date first
above written.
CITY OF AMES, IOWA
By:
Mayor
Attest:
. y
City Clerk
[Participant SiLIMQurc Page to LUAU
IN WITNESS WHEREOF, I have hereunto affixed my signature all as of the date first
above written.
IOWA FINANCE AUTHORITY
L�L
By:
Its: Executive Director
11FA SILIM urr P WC tO LDA]
EXHIBIT A
ESTIMATED DISBURSEMENTS AND
DEBT SERVICE REPAYMENT SCHEDULE
\-I
Estimated Amortization Schedule
City of Ames
Sewer Revenue Bond
CS-1 920741-01 E
Loan summary Estimated Draw Schedule
2 +
Loan Closing Date Oct 19,2018 Initiation Fee- Oct 19,2018 28,500.00
Final Disbursement Date Jan 11,2019 P&D Payoff- Oct 19,2018 318,750.00
Final Maturity Date Jun 1,2038 Estimated Draw#1- Oct 19,2018 3,000,000.00 STATE
Loan Period in Years 20 Estimated Draw#2- Nov 16,2018 2,000,000.00
...................
Total Loaned Amount $ 5,700,000.00 Estimated Draw#3- Dec 14,2018 347,750.00
0.5%Initiation Fee 28,500.00
Net Proceeds to Borrower $ 5,671,500.00
Annual Interest Rate 1.75%
Total Interest $ 1,071.100.32
Servicing Fee Rate 0.25%
Total Servicing Fees $ 153,014.33
Total Loan Costs $ 1,252,614.65
Held for Final Docs- Jan 11,2019 5,000.00
Total Loaned Amount 5,700,000.00
Payment Beginning Servicing Total Loan Total Annual Debt Ending
Date Balance Principal Interest Fee Payment Service Balance
Dec 1,2018 3,347,250.00 6,833.97 976.28 7,810.25 3,347,250.00
Jun 1,2019 5,700 000.00 235,000.00 51,103.85 7,300.55 293,404.40 301,214.65 5,465,000.00
Dec 1,2019 5,465,000.00 47,818.75 6,831.25 54,650.00 5,465,000.00
Jun 1,2020 5,465,000.00 239,000.00 47,818.75 6,831.25 293,650.00 348,300.00 5,226,000.00
Dec 1,2020 5,226,000.00 45,727.50 6,532.50 52,260.00 5,226,000.00
Jun 1,2021 5,226,000.00 244,000.00 45,727.50 6,532.50 296,260.00 348,520.00 4,982,000.00
Dec 1,2021 4,982,000.00 43,592.50 6,227.50 49,820.00 4,982,000.00
Jun 1,2022 4,982,000.00 249,000.00 43,592.50 6,227.50 298,820.00 348,640.00 4,733,000.00
Dec 1,2022 4,733,000.00 41,413.75 5,916.25 47,330.00 4,733,000.00
Jun 1,2023 4,733,000.00 254,000.00 41 413.75 5,916.25 301,330.00 348,660.00 4,479,000.00
Dec 1,2023 4,479,000.00 39,191.25 5,598.75 44,790.00 4,479,000.00
Jun 1,2024 4,479,000.00 259,000.00 39,191.25 5,598.75 303,790.00 348,580.00 4,220,000.00
Dec 1,2024 4,220,000.00 36,925.00 5,275.00 42,200.00 4,220,000.00
Jun 1,2025 4,220,000.00 264 000.00 36,925.00 5,275.00 306,200.00 348,400.00 3,956,000.00
Dec 1,2025 3,956.000.00 34,615.00 4,945.00 39,560.00 3,956,000.00
Jun 1,2026 3,956,000.00 269,000.00 34,615.00 4,945.00 308,560.00 348,120.00 3,687,000.00
Dec 1,2026 3,687,000.00 32,261.25 4,608.75 36,870.00 3,687,000.00
Jun 1,2027 3,687,000.00 275,000.00 32261.25 4,608.75 311,870.00 348,740.00 3,412,000.00
Dec 1,2027 3,412,000.00 29,855.00 4,265.00 34,120.00 3,412,000.00
Jun 1,2028 3,412 000.00 280,000.00 29,855.00 4,265.00 314,120.00 348,240.00 3,132,000.00
Dec 1,2028 3,132,000.00 27,405.00 3,915.00 31,320.00 3,132,000.00
Jun 1,2029 3,132,000.00 286 000.00 27,405.00 3,915.00 317,320.00 348,640.00 2,846,000.00
Dec 1,2029 2.846,000.00 24,902.50 3,557.50 28,460.00 2,846,000.00
Jun 1,2030 2,846,000.00 292,000.00 24,902.50 3,557.50 320,460.00 348,920.00 2,554,000.00
Dec 1,2030 2,554,000.00 22,347.50 3,192.50 25,540,00 2,554,000.00
Jun 1,2031 2,554 000.00 298,000.00 22,347.50 3,192.50 323,540.00 349,080.00 2,256,000.00
Dec 1,2031 2.256,000.00 19,740.00 2,820.00 22,560.00 2,256,000.00
Jun 1,2032 2,256,000.00 303 000.00 19,740.00 2,820.00 325,560.00 348,120.00 1,953,000.00
Dec 1,2032 1.953,000.00 17,088.75 2,441.25 19,530.00 1,953,000.00
Jun 1,2033 1,953,000.00 310,000.00 17,088.75 2,441.25 329,530.00 349,060.00 1,643,000.00
Dec 1,2033 1,643,000.00 14,376.25 2,053.75 16,430.00 1,643,000.00
Jun 1,2034 1.643,000.00 316,000.00 14,376.25 2,053.75 332,430.00 348,860.00 1,327,000.00
Dec 1,2034 1,327,000.00 11,611.25 1,658.75 13,270.00 1,327,000.00
Jun 1 2035 1,327 000.00 322 000.00 11,611.25 1,658.75 335,270.00 348,540.00 1,005,000.00
Dec 1,2035 1.005,000.00 8,793.75 1,256.25 10,050.00 1,005,000.00
Jun 1,2036 1,005,000.00 328,000.00 8,793.75 1,256.25 338,050.00 348,100.00 677,000.00
Dec 1,2036 677,000.00 5,923.75 846.25 6,770.00 677,000.00
Jun 1,2037 677,000.00 335,000.00 5,923.75 846.25 341,770.00 348,540.00 342,000.00
Dec 1,2037 342,000.00 2,992.50 427.50 3,420.00 342,000.00
Jun 1,2038 342 000.00 342,000.00 2,992.50 427.50 345,420.00 348 840.00 0.00
As of 9/2 612 0 1 8 INVESTING IN IOWA'S WATER
w�jow srf.00m
E) ORSEY
always ahead
JESSICA VAUGHT
Paralegal
(515)699-3282
vaught.jessica@dorsey.com
November 1, 2018
VIA EXPRESS MAIL
Diane R. Voss
City Clerk/City Hall
Post Office Box 811
515 Clark Avenue
Ames, Iowa 50010-0811
Re: Ames, Iowa
$5,700,000 Taxable Sewer Revenue Bond, SRF Series 2018
File No. 419370-63
Dear Diane:
Enclosed please find the fully executed Loan and Disbursement Agreement for issuance
of the above-captioned Bond. Please let me know if you have any questions.
Best regards,
Jessica V ght
JV:
Enclosure