INDIO WATER AUTHORITY AGENDA REPORT March 15, 2004

TO: THRU: FROM: SUBJECT:

President and Commissioners Tom Ramirez, Executive Director Jerry Carter, Treasurer Water Enterprise Revenue Bonds, 2004 Series

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SUMMARY The City leased its Water System to the Indio Water Authority under a Lease Agreement dated May 22, 2001. The first lease payment was $10,000,000, of which $5,000,000 was initially paid to the City and used for street reconstruction. The balance of the first lease payment is secured by a Promissory Note, The Authority has made monthly payments of $32,215 under the Promissory Note, which currently has an outstanding balance of $4,783,732. The Authority also pays the City annual rent. The City now desires that the balance of the Promissory Note be paid so that the street reconstruction program can continue. In addition, the Water System requires the construction of a 10MG reservoir and the acquisition of additional wells. The cost of the reservoir and wells is estimated at $5,000,000.

PREVIOUS BOARD ACTION: None ANALYSIS: For the fiscal year ending June 30, 2003, the Indio Water Authority produced net income of $2,529,000, which included $1,556,000 of connection fees. The Authority's net income can now support the debt service on revenue bonds issued to repay the City's Promissory Note and to fund the reservoir construction and well acquisition. The City and Authority's financing team recommends that the Authority issue Water Enterprise Revenue Bonds, secured by a pledge of net income from the Water

ITEM NO. 2

WATER ENTERPRISE REVENUE BONDS 2004 SERIES INDIO WATER AUTHORITY COMMISSION March 15, 2004 PAGE 2

System. This type of financing requires that the Authority and the City covenant to maintain water rates and charges sufficient to generate net income at least equal to 125% of debt service. The annual debt service is expected to be approximately $760,000 annually for 26 years. Net income would currently provide 332% coverage )) of debt service, including connection fees and 128% coverage of debt service without 9. connection fees. This is sufficient security for the financing to achieve an investment grade rating and a commitment for bond insurance. The average interest rate on the financing is expected to be approximately 4.85% if bond insurance is purchased. # 6;Z /7 c/ _j 6.5;t) 66 A resolution of the Indio Water Authority and of the City is required to approve the financing. The Authority resolution presented approves the forms of the following documents required to issue the revenue bonds: an Indenture of Trust between the City, the Authority and Union Bank of California, N.A.; the Continuing Disclosure Agreement; the Preliminary Official Statement relating to the Water Enterprise Revenue Bonds and the Purchase Contract for the sale of the Bonds pursuant to a negotiated sale with O'Connor Southwest Securities which is scheduled to occur in April 2004 in an amount not to exceed $12,000,000 The forms of the documents are on file with the Authority Secretary.

FINANCIAL IMPLICATIONS: The annual debt service payable from net revenue of the Indio Water Authority is expected to be $760,000 annually for 26 years. RECOMMENDATION: Staff recommends the Water Authority adopt the Resolution authorizing the issuance of Water Enterprise Revenue Bonds and authorizing the execution and delivery of certain documents in connection with the financing. ACTION: MOVE APPROVAL OF THE RESOLUTION OF THE INDIO WATER AUTHORITY AUTHORIZING THE ISSUANCE AND DELIVERY OF ITS WATER ENTERPRISE REVENUE BONDS, 2004 SERIES, APPROVING A BOND PURCHASE CONTRACT, AN INDENTURE OF TRUST, A CONTINUING DISCLOSURE AGREEMENT, A PRELIMINARY OFFICIAL STATEMENT AND A FINAL OFFICIAL STATEMENT, AND AUTHORIZING OFFICIAL ACTIONS AND EXECUTION OF DOCUMENTS RELATED THERETO List of Attachments: A. Resolution authorizing issuance of Indio Water Authority Water Enterprise Revenue Bonds, 2004 Series

IWA RESOLUTION NO. 2004-

RESOLUTION OF THE INDIO WATER AUTHORITY AUTHORIZING THE ISSUANCE AND DELIVERY OF ITS WATER ENTERPRISE REVENUE BONDS, 2004 SERIES, APPROVING A BOND PURCHASE CONTRACT, AN INDENTURE OF TRUST, A CONTINUING DISCLOSURE AGREEMENT, A PRELIMINARY OFFICIAL STATEMENT AND A FINAL OFFICIAL STATEMENT, AND AUTHORIZING OFFICIAL ACTIONS AND EXECUTION OF DOCUMENTS RELATED THERETO

WHEREAS, the Indio Water Authority (the "Authority") has been formed pursuant to a Joint Exercise of Powers Agreement by and between the City of Indio (the "City") and the Redevelopment Agency of the City of Indio, and is authorized under said Agreement and under the laws of the State of California to finance the acquisition and construction of public capital improvements for any of its members; and WHEREAS, the Authority and the City have entered into a Lease (as amended by the First Amendment to Lease and the Second Amendment to Lease, the "Lease") pursuant to which the Authority has leased from the City the City's water system (the "Enterprise"); and WHEREAS, for the purpose of refinancing a Promissory Note issued for making a lease payment under the Lease and financing certain capital improvements to the Enterprise, the Authority has determined to issue its Water Enterprise Revenue Bonds, 2004 Series (the Bonds"); NOW, THEREFORE, THE AUTHORITY COMMISSION DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The Authority hereby approves the issuance of its Water Enterprise Revenue Bonds, 2004 Series. Section 2. The Authority hereby approves the Indenture of Trust in substantially the form filed with the Secretary of the Commission. The President, the Vice President, the Executive Director and the Treasurer (each, a "Responsible Officer"), are hereby authorized to execute the Indenture of Trust in substantially the form filed with the Secretary, with such revisions, amendments and completions as shall be approved by a Responsible Officer, with the advice of Bond Counsel, such approval to be conclusively evidenced by the execution and delivery thereof Section 3. The Authority hereby approves the Continuing Disclosure Agreement in substantially the form filed with the Secretary of the Commission. Any Responsible Officer is hereby authorized to execute the Continuing Disclosure Agreement in substantially the form filed with the Secretary, with such revisions, amendments and completions as shall be approved

45400425.1

by a Responsible Officer, with the advice of Bond Counsel, such approval to be conclusively evidenced by the execution and delivery thereof Section 4. The Authority hereby approves the Preliminary Official Statement relating to the Bonds, substantially in the form filed with the Secretary of the Commission, with such revisions, amendments and completions as shall be approved by a Responsible Officer with the advice of Bond and Disclosure Counsel, in order to make the Preliminary Official Statement final as of its date, except for the omission of certain information, as permitted by Section 240.15c2-12(b)(1) of Title 17 of the Code of Federal Regulations ("Rule 15c2-12"), and any certificate relating to the finality of the Official Statement under Rule 15c2-12. A Responsible Officer is authorized and directed to execute and deliver a final Official Statement and amendments and updates thereto, as appropriate, in substantially the form hereby approved, with such additions and changes as may be approved by Bond and Disclosure Counsel and the Responsible Officer executing the same, such approval to be conclusively evidenced by the execution and delivery thereof Section 5. The Authority hereby approves the Bond Purchase Contract in substantially the form filed with the Secretary of the Commission. Any Responsible Officer is hereby authorized to execute the Bond Purchase Contract, in substantially the form filed with the Secretary, with such revisions, amendments and completions as shall be approved by a Responsible Officer, with the advice of Bond Counsel, such approval to be conclusively evidenced by the execution and delivery thereof; provided that, the Bond Purchase Contract shall provide for a principal amount of Bonds not greater than $12,000,000, a maximum true interest cost on the Bonds not greater than 6% and an Underwriter's discount not greater than 1.5%. Section 6. The President, the Executive Director, the Treasurer, the Secretary, and any and all other officers of the Authority are hereby authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions, including the publication of any notices necessary or desirable in connection with the sale of the Bonds, procurement of a municipal bond insurance policy and reserve fund surety bond, and execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they, or any of them, deem necessary or advisable in order to consummate the lawful issuance and sale of the Refunding Bonds and the consummation of the transactions as described herein. Section 7. The Secretary shall certify to the adoption of this Resolution, which shall be in full force and effect immediately upon its adoption. Notwithstanding the foregoing, such certification and any of the other duties and responsibilities assigned to the Secretary pursuant to this Resolution may be performed by an Assistant Secretary with the same force and effect as if performed by the Secretary hereunder.

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PASSED, APPROVED AND ADOPTED this following roll call vote: AYES: NOES: ABSENT: AB STAIN:

day of

, 2004, by the

JACQUELINE BETHEL, PRESIDENT

ATTEST:

CYNTHIA HERNANDEZ Secretary of the Authority

45400425.1

INDIO
CITY OF INDIO AGENDA REPORT
Meeting of March 15, 2004

TO:

Honorable President and Commissioners of the Indio Water Authority Tom Ramirez, Executive Director ti_tio John Corella, Director of Public Works/City Engineer David Merrell, Principal Civil. Engineerp

THRU: FROM:

SUBJECT: Water Quality Laboratory Testing Services DATE: February 19, 2004

Summary Staff solicited cost proposals from qualified testing laboratories to perform water quality tests for 17 well sites contained within the Indio Water Authority service boundary. The water quality testing parameters are extensive and must be accomplished in accordance with both State of California Title 22 and Federal Environmental Protection Agency (EPA) regulations. A total of 2 bids were received. MWH Laboratories is the low bidder in the amount of $42,330.

Background The Indio Water Authority (IWA) recently requested detailed cost proposals for laboratory services for the EPA Unregulated Contaminant Monitor Rule and the State of California Title 22 drinking water monitoring program. The Title 22 testing regime is accomplished on a tri-annual basis (every 3-years) and covers testing for an extensive number of mineral, organic and inorganic chemical compounds. The EPA Unregulated Contaminant Monitor Rule was recently enacted and requires all public water systems to monitor for 11 non-regulated chemical contaminants. The purpose of the monitoring rule is to provide

ITEM NO. 3

Agenda Report, City of Indio Water Quality Testing Services Page 2 statistical data for EPA to deteimine if it is necessary to regulate these additional contaminants in the future. Under the EPA regulation, two rounds of testing will be required, one in the spring and one in the fall, about 7 months apart. Bid results are summarized as follows: MWH. Laboratories E.S. Babcock S 42,330.00 $ 45,317.75

Financial Implications Funding for the water quality testing will be derived from the IWA Water Production Account. Reviewed and concurred:

L.
Jerry Carter,iFinance Director

Recommendation The IWA staff is recommending that the IWA Board authorize the Executive Director to issue a purchase order to MWH Laboratories in the amount of $42,330.00 to perfolin water quality testing in accordance with the California Title 22 and Federal Unregulated Contaminate Monitoring Rule for the active well sites.

CITY OF INDIO AGENDA REPORT

Meeting of March 15, 2004

TO:

Honorable President and Commissioners of the Indio Water Authority Tom Ramirez, Executive Director 4,-John Corella, Director of Public Works/City Engineer David Merrell, Principal Civil Engineer 0014, - .--

THRU: FROM:

SUBJECT: Authorization to solicit engineering proposals for Gravity Water Reservoir System DATE: March 10, 2004

Summary Staff is requesting authorization from the Commission for staff to solicit engineering proposals for a gravity water storage reservoir system for the water system servicing the City of Indio. Background The Indio Water Authority (IWA) staff is requesting authorization to solicit proposals for real estate, environmental and engineering consulting services to provide a gravity water storage reservoir system to serve the IWA jurisdictional boundary. The proposed system would replace the current hydropneumatic water system operational mode. The scope of services included in the solicitation process is summarized as follows: Phase 1 Site Evaluation: the objective of Phase 1 work is to determine the most feasible sites for a reservoir. Ultimately, it is planned that two sites will be selected.

ITELi la, 4

Agenda Report, City of Indio Authorization to Solicit Engineering Proposals for Gravity Water Reservoir System Page 2

Phase 2 Environmental: This phase of the project will involve preparation of appropriate environmental as ssments andoits for the two sites selected. ."2"-1 P s' '' ----W Phase 3 Engineering Design Services: This phase of the work involves desigrrand preparation of plans, specifications and cost ) estimates for the-two sites. The analysis will include consideration of three potential reservoir design approaches, namely 1) above ground steel reservoir; 2) partiallyried concrete eservoir; and tu 3) full buried concrete reservoir. - " (- --o, ' 47 7 Phase 4 Bidding and Construction: This phase involves providing support services during the bidding and construction phase of the project. . . /11, i'57- 111?" Based on the current schedule, proposals will be due by April 7, 2004. Staff will subsequently review the proposals and make a recommendation to award an engineering contract for the work at the next available IWA meeting in April. Financial Implications Funding for the water quality testing yJi. be derived from the IWA Water Capital Improvement Fund Reviewed and concurred: Jen-y ^ a e F ance Director Recommendation The IWA staff is recommending that the IWA Board authorize staff to solicit proposals for engineering services for real estate, environmental and engineering consulting services to provide a gravity water storage reservoir system to serve the City of Indio service boundary.

CITY OF INDIO AGENDA REPORT

Meeting of March 15, 2004

TO:

Honorable President and Commissioners of the Indio Water Authority Tom Ramirez, Executive Director John Corella, Director of Public Works/City Engineer David Merrell, Principal Civil Engineer /)04..--

THRU: FROM:

SUBJECT: Authorization to solicit engineering proposals for Gravity Water Reservoir System DATE: March 10, 2004

Summary Staff is requesting authorization from the Commission for staff to solicit engineering proposals for a gravity water storage reservoir system for the water system servicing the City of Indio. Background The Indio Water Authority (IWA) staff is requesting authorization to solicit proposals for real estate, environmental and engineering consulting services to provide a gravity water storage reservoir system to serve the IWA jurisdictional boundary. The proposed system would replace the current hydropneumatic water system operational mode. The scope of services included in the solicitation process is summarized as follows: Phase 1 Site Evaluation: the objective of Phase 1 work is to determine the most feasible sites for a reservoir. Ultimately, it is planned that two sites will be selected.

ITEM NO. 4

Agenda Report, City of Indio Authorization to Solicit Engineering Proposals for Gravity Water Reservoir System Page 2

Phase 2 Environmental: This phase of the project will involve preparation of appropriate environmental assessments and reports for the two sites selected. Phase 3 Engineering Design Services: This phase of the work involves design and preparation of plans, specifications and cost estimates for the two sites. The analysis will include consideration of three potential reservoir design approaches, namely 1) above ground steel reservoir; 2) partially buried concrete reservoir; and 3) full buried concrete reservoir. Phase 4 Bidding and Construction: This phase involves providing support services during the bidding and construction phase of the project. Based on the current schedule, proposals will be due by April 7, 2004. Staff will subsequently review the proposals and make a recommendation to award an engineering contract for the work at the next available IWA meeting in April. Financial Implications Funding for the water quality testing yii be derived from the IWA Water Capital Improvement Fund Reviewed and concurred: JerryCar er Finance Director
I

Recommendation The IWA staff is recommending that the IWA Board authorize staff to solicit proposals for engineering services for real estate, environmental and engineering consulting services to provide a gravity water storage reservoir system to serve the City of Indio service boundary.