Notice of Intent & Right of Referendum

WHEREAS, the City anticipates it will obtain funding for the Project from the Michigan Drinking Water Revolving Fund (DWRF), a low interest loan financing program administered by the State of Michigan Department of Treasury and the Michigan Finance Authority; and 

WHEREAS, in order to obtain loans from the DWRF Program, the City must issue bonds, and the Revenue Bond Act, Act 94, Public Acts of Michigan, 1933, as amended (“Act 94”), provides a means for financing the acquisition, construction, and improvement of public improvements such as the Project through the issuance of bonds payable from revenues of the City’s Water Supply System (the “System”); and

WHEREAS, the issuance of bonds under Act 94 payable from revenues of the System in one or more series in an aggregate amount not-to-exceed Three Million Four Hundred Ninety-Five Thousand Dollars ($3,495,000) (the “Revenue Bonds”) for the purpose of financing the Project represents the most practical means to that end, and Section 33 of Act 94 requires the City to publish a notice of intent before the City can issue the Revenue Bonds.  

NOW, THEREFORE, BE IT RESOLVED THAT:

1. The City Clerk is hereby authorized and directed to publish, or cause to be published,  a notice of intent to issue the Revenue Bonds in the Argus-Press, a newspaper of general circulation in the City.  The notice of intent shall be published as a one-quarter (1/4) page display advertisement in substantially the following form:

NOTICE TO ELECTORS OF THE CITY OF OWOSSO
AND TO USERS OF THE CITY’S WATER SUPPLY SYSTEM
OF INTENT TO ISSUE REVENUE BONDS
AND THE RIGHT OF REFERENDUM THEREON

PLEASE TAKE NOTICE that the City Council of the City of Owosso, County of Shiawassee, State of Michigan, intends to issue and sell revenue bonds pursuant to Act 94, Public Acts of Michigan, 1933, as amended, in an amount not to exceed Three Million Four Hundred Ninety-Five Thousand Dollars ($3,495,000) for the purpose of paying costs to acquire and construct improvements to the City's Water Supply System including, but not limited to, replacement of water mains and acquisition and construction of improvements and repairs to the water treatment plant, together with any appurtenances and attachments and any related site improvements.
 
The Revenue Bonds may be issued in one or more series and may be combined with bonds issued for other purposes as shall be determined by the City Council.  Each series of the Revenue Bonds will mature in annual installments not to exceed the maximum permitted by law, with interest on the unpaid balance from time to time remaining outstanding on said bonds to be payable at rates to be determined at sale of the Revenue Bonds but in no event to exceed such rates as may be permitted by law.  

SOURCE OF PAYMENT OF REVENUE BONDS

THE PRINCIPAL OF AND INTEREST ON THE REVENUE BONDS SHALL BE PAYABLE solely from the revenues received by the City from the operations of the water supply system, except as provided below if the revenue bonds are sold to the Michigan Finance Authority.  The revenues will consist of rates and charges billed to the users of the System, a schedule of which is available at www.ci.owosso.mi.us/utilities.  The rates and charges may from time to time be revised to provide sufficient revenues to provide for the expenses of operating and maintaining the System, to pay the principal of and interest on the revenue bonds and other obligations of the System, and to provide reserves for these purposes.  

ADDITIONAL POTENTIAL SOURCES OF PAYMENTS

The City anticipates that it will sell the revenue bonds to the Michigan Finance Authority.  The Michigan Finance Authority may require the City to pledge for the payment of the revenue bonds money received or to be received by the City derived from imposition of taxes by the State and returned to the City as provided by law, except for money the use of which is prohibited for such purposes by the State Constitution.  The City may enter into an agreement providing for the payment to the Michigan Finance Authority or a trustee of taxes collected by the State and returned to the City, and such funds may be pledged for the payment of the revenue bonds.  

RIGHT OF REFERENDUM

THE REVENUE BONDS WILL BE ISSUED WITHOUT A VOTE OF THE ELECTORS UNLESS A VALID PETITION REQUESTING SUCH A VOTE SIGNED BY NOT LESS THAN 10% OF THE REGISTERED ELECTORS RESIDING WITHIN THE BOUNDARIES OF THE CITY IS FILED WITH THE CITY CLERK WITHIN FORTY-FIVE (45) DAYS AFTER PUBLICATION OF THIS NOTICE.  IF SUCH PETITION IS FILED, THE REVENUE BONDS MAY NOT BE ISSUED WITHOUT AN APPROVING VOTE OF A MAJORITY OF THE QUALIFIED ELECTORS RESIDING WITHIN THE BOUNDARIES OF THE CITY VOTING THEREON.  If such petition is filed and the electors of the City voting thereon approve the issuance of the revenue bonds, then the bonds may be payable from revenues or from ad valorem taxes that may be levied on all taxable property in the City without limitation as to rate or amount.

THIS NOTICE is given pursuant to the requirements of Section 33, Act 94, Public Acts of Michigan, 1933, as amended. 

                                                                                                                        Amy K. Kirkland, City Clerk
                                                                                                                        City of Owosso

2. The City Council does hereby determine that the foregoing form of notice of intent to issue the Revenue Bonds, and the manner of publication directed, is adequate notice to the electors of the City and the users of the System, and is the method best calculated to give them notice of the City’s intent to issue the Revenue Bonds, the purpose of the Revenue Bonds, the source of payment of the Revenue Bonds, the security for the Revenue Bonds and the electors’ right of referendum, and that the provision of forty-five (45) days within which to file a referendum petition is adequate to insure that the City’s electors may exercise their legal rights of referendum, and the newspaper named for publication is hereby determined to reach the largest number of persons to whom the notice is directed.

3. The City may incur expenditures for the Project prior to receipt of proceeds of the Revenue Bonds, and may advance moneys for that purpose from the funds of the water supply system to be reimbursed from proceeds of the Revenue Bonds when available. 
 
4. The City hereby makes the following declaration of intent for the purpose of complying with the reimbursement rules of Treas. Reg. § 1.150-2 pursuant to the Internal Revenue Code of 1986, as amended:

(a) As of the date hereof, the City reasonably expects to reimburse itself with the proceeds of debt to be incurred by the City for costs of the Project that were or will be paid subsequent to sixty (60) days prior to the date hereof.

(b) The maximum principal amount of debt expected to be issued for the Project is $3,495,000.  

(c) The expenditures described above are “capital expenditures” as defined in Treasury Regulation § 1.150-1(b), which are any costs of a type which are properly chargeable to a capital account (or would be so chargeable with a proper election or with the application of the definition of placed in service under Treas. Reg. § 1.150-2(c)) under general Federal income tax principles (as determined at the time the expenditure is paid).

5. The City requests Robert W. Baird & Co., Incorporated to serve as Loan Facilitation Agent to assist the City in preparation and planning for the sale of the Revenue Bonds. 

6. The City requests Miller, Canfield, Paddock and Stone, P.L.C. (“Miller, Canfield”) to continue as bond counsel to the City for the Revenue Bonds.  The City recognizes that Miller, Canfield has represented from time to time, and currently represents, the Michigan Finance Authority and various underwriters, financial institutions and other potential participants in the financing process for unrelated projects, any of which might offer to purchase the Revenue Bonds.  The City requests Miller, Canfield to continue as bond counsel, notwithstanding the potential concurrent representation of any such potential participant regarding any unrelated matter.

7. The Finance Director is authorized to apply to a rating agency for a credit assessment if necessary to comply with requirements to participate in the Michigan Drinking Water Revolving Fund program.

8. The officers, administrators, agents and attorneys of the City are authorized and directed to take all other actions necessary and convenient to facilitate preparation of the Revenue Bonds for sale.  The Revenue Bonds will be sold only after the City Council approves a resolution or ordinance authorizing issuance and sale of the Revenue Bonds. 

9. All resolutions and parts of resolutions, insofar as they conflict with the provisions of this resolution, are hereby rescinded.