HomeMy Public PortalAboutResolution 21-95 Financing of Sewage Treatment FacilitiesRESOLUTION NO. 21-95
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MCCALL, IDAHO,
MAKING FINDINGS AND DECLARATIONS WITH RESPECT TO THE FINANCING OF
SEWAGE TREATMENT FACILITIES; APPROVING AND AUTHORIZING, SUBJECT TO
JUDICIAL CONFIRMATION, THE EXECUTION OF A LOAN AGREEMENT BETWEEN
THE STATE OF IDAHO AND THE CITY OF McCALL FOR THE FINANCING OF THE
FACILITIES; AUTHORIZING THE FILING OF A PETITION FOR JUDICIAL
CONFIRMATION IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DISTRICT
OF THE STATE OF IDAHO, IN AND FOR VALLEY COUNTY; PROVIDING FOR
RELATED MATTERS; AND PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of McCall, Valley 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 sanitary sewage collection, treatment, and disposal
system (the "System"); and
WHEREAS, the City Council of the City has determined that
certain improvements and extensions to the System (the
"Improvements") are required for the continued operation of the
System in compliance with applicable state and federal water
quality and other environmental protection laws, regulations, and
standards; and
WHEREAS, the estimated cost of the Improvements to the City
(exclusive of grants and other state and federal contributions) is
$3,250,000; and
WHEREAS, the City does not have sufficient funds available in
its current fiscal year's budget (nor in its proposed budget for
the 1995-1996 fiscal year) to finance the cost of the acquisition
of the Improvements, and the Council has determined that it is
necessary to finance the cost thereof from future years' sewer
revenues; and
WHEREAS, the Council has further determined that it is in the
best interests of the City to finance the cost of the Improvements
through a loan from the Wastewater Facility Loan Account of the
State of Idaho, Department of Health and Welfare, Division 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 sewer revenues over a
20-year term, subject to the condition that the City first obtain
judicial confirmation of the validity of the proposed loan
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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 Improvements in the
manner described would create an indebtedness or liability of the
City exceeding the current year's revenues; and
WHEREAS, the Council has determined that the cost of the
Improvements, 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 Council, on August 24, 1995, 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 Fourth Judicial District of the State of Idaho, in and
for the County of Valley, 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, following such public hearing, the Council has
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
net sewer system revenues as security for the payment thereof.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF McCALL, 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 Fourth Judicial District of the State of
Idaho, in and for the County of Valley (the "District Court"),
confirming the authority of the City to enter into the transaction,
the Loan Offer, Acceptance and Contract for Wastewater Treatment
Facility Design and Construction, substantially in the form which
is annexed hereto as Exhibit "A" (the "Loan Agreement"), is hereby
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approved, and the Mayor is hereby authorized to execute the same
for 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 & McFadden, Chartered, of
Boise, Idaho, as special counsel to the City, is hereby authorized
to file said 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 said 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 Improvements, 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 and safety of the inhabitants of the City and to
comply with applicable water quality standards and other
environmental laws, regulations, and standards.
B. The proposed expenditure is for the purpose of
rehabilitating, maintaining, and extending existing City
property in order to render it serviceable, as opposed to
the construction of wholly new facilities.
C. The amount of the proposed indebtedness is not
disproportionate to the City's overall budget for the
current or ensuing fiscal years.
D. The proposed Improvements are authorized by the general
laws of the state.
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E. The City has operated the existing sewer treatment
disposal facilities for many years and has determined
that the Improvements are indispensable to the efficient
continued operation of the sewer System.
Section 6: This Resolution shall take effect and be in force
immediately upon its passage and approval.
DATED this 24th day of August, 1995.
ATTEST:
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CITY OF MCCALL
Valley County, Idaho
By L
Mayor
(DRAFT)
STATE OF IDAHO
DEPARTMENT OF HEALTH AND WELFARE
LOAN OFFER, ACCEPTANCE AND CONTRACT
FOR WASTEWATER TREATMENT FACILITY
DESIGN AND CONSTRUCTION
SECTION I. INTRODUCTION
The State of Idaho (State) is authorized by the Water Pollution
Abatement Act (Act), Title 39, Chapter 36 of the 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 Health and Welfare, through the
Department of Health and Welfare (Department), is authorized to
administer the Act. The Department has determined that the City of
McCall (Applicant) has established eligibility for a loan under the
terms of the Act and the Rules and Regulations for Administration of
Wastewater Treatment Facility Loans, Title 1, Chapter 12, Rules and
Regulations of the Department (Regulations).
A completed application for a Wastewater Treatment Facility Design and
Construction Loan has been submitted to the Department by the
Applicant. The Department hereby offers a loan to the Applicant
according to the terms and conditions contained in this document and
the Regulations.
SECTION II.DESCRIPTION OF PROJECT
This loan offer is for design and construction of the following
project:
A. Loan Project Number: 1894-04
1. Planning Grant Number: 202-2-000-1
B. Project Description:
Design and Construction of improvements to the
existing wastewater treatment facility,
effluent storage reservoir, pump station and
pipeline to farms south of McCall, and
improvements to farm irrigation systems.
C. Terms: $3,140,850 at 4.5% interest, to be repaid in
semi-annual installments over 20 years.
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EXHIBIT "A"
D. Estimated Project Budget
Total
1. Engineering Fees $345,494
2. Construction 2,795,356
3. Total $3,140,850
SECTION III. GENERAL CONDITIONS
On the Applicant obtained, pursuant to Idaho Code
Section 7-1301 to 1312, judicial confirmation of the debt to be
incurred by this loan contract. This offer is made contingent
upon no appeal of the judicial confirmation being filed within
the time limit allowed by law.
This offer may only be accepted by signature of an authorized
representative of the Applicant. Upon acceptance by the
Applicant, this offer shall become a loan contract and the
Applicant shall become a Borrower. The effective date of this
loan contract shall be the date of acceptance by the Borrower
after this loan contract has been duly authorized by ordinance
of the Borrower. By accepting this offer, the Borrower agrees
to all terms and conditions set forth in this document and the
Regulations:
The Borrower agrees:
A. To not transfer, assign or pledge any beneficial interest
in this contract to any other person or entity without the
prior written consent of the Director of the Department. To
not enter into sale, lease or transfer of any of the
property related to the project. To not make any
additional material encumbrances to the project without the
prior written consent of the Director of the Department.
To not incur any liabilities that would materially affect
the funds pledged to repay this loan without the prior
written consent of the Director of the Department. To not
delegate legal responsibility for complying with the terms,
conditions, and obligations of this contract without the
prior written consent of the Director of the Department.
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 of the
Department.
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B. To enter into such contractual arrangements with third
parties as it deems advisable to assist it in meeting its
responsibilities under this contract.
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 Applicant in support of the request for this loan.
D. To comply with applicable State and Federal employment
requirements including, but not limited to, Equal
Employment Opportunity and Civil Rights requirements.
E. To make efforts to award subagreements to Minority and
Women -owned businesses (MBE/WBE). The fair share goals, 9%
and 3% respectively, will be in bid solicitations and
documentation of efforts to obtain MBE/WBE participation
will be required of any contractor who fails to attain the
goals. Quarterly reports of MBE/WBE 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 contract 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 or the interest due under this
contract, or any breach by the Borrower of any of the terms
or conditions of this contract, the entire principal amount
and whatever interest is due to the date of payment may be
declared due and immediately payable. The amount of such
default shall bear the same interest 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.
J. That any waiver by the Department at any time of the
rights or duties under this contract shall not be deemed a
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waiver of any subsequent or additional rights or duties
under this contract.
K. That the use by the Department of any remedy specified in
this contract 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
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 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
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for services, through revenue bonds, or otherwise, for the
purposes of (1) establishing a fund dedicated solely to the
repayment of principal and interest on this loan, (2)
capital replacement and (3) future improvement, betterment,
and extension of such works occasioned by increased
wastewater loadings on the works.
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. Develop and adopt a sewer use ordinance approved by the
Department prior to receiving final payment of State loan
funds.
H. Provide an operation and maintenance manual for the
project approved by the Department prior to receiving final
payment of State loan funds.
I. Provide adequate staffing and qualified operation and
maintenance personnel as specified in the operation and
maintenance manual approved by the Department.
J. 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. He(She)
must be a graduate of an approved wastewater operators
training program or be certified as a Wastewater Treatment
Works Operator in a class equal to or greater than that of
the facility.
K. Assure that treatment 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.
L. Commence satisfactory operation and maintenance of the
sewage treatment facility on completion of the project in
accordance with applicable provisions, rules and
regulations of the Department and any other applicable law,
rule or regulation and not discontinue operation or dispose
of the treatment facility without the written approval of
the Department.
M. Provide for continuing acceptance and treatment of local
septage waste, if such facilities were constructed under
this loan contract.
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N. Review and update the user charge system at least
biennially during the life of this agreement to assure that
all costs including debt retirement, operation and
maintenance are offset by sufficient revenues.
O. Maintain project accounts in accordance with "generally
accepted government accounting standards." These standards
are usually defined, but not limited to, those contained in
the U.S. General Accounting Office (GAO) publication
"Standards for Audit of Governmental Organizations,
Programs, Activities and Functions" (2/27/81).
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.
SECTION V. SPECIAL CONDITIONS
A. The final loan offer will be issued after the Borrower
submits an environmental information document discussing
the environmental impacts of the project and the Department
has reviewed the document and issued a record of decision.
B. The Borrower shall complete the project in accordance with
the following schedule:
Number of months from Task
Loan Acceptance
10% Design Review
50% Design Review
90% Design Review
Final Plans, Specifications
and Bidding Documents
Bid Summary
Award Construction Contract
Project Management Conference
Plan of Operation Amendment
Draft Operation &
Maintenance Manual
Staffing Plan
Construction Completion
User Charge System Enacted
Sewer Use Ordinance Enacted
Final O&M Manual
Final Inspection
Initiate Operation
Final Payment
Certify Performance
C. The above schedule may be changed by amending the plan of
operation; all amendments to the plan of operation must be
approved by the state project engineer, prior to becoming
effective.
SECTION VI. SECURITY REQUIREMENTS
The Borrower agrees:
A. This loan will be evidenced and secured by a promissory
note in an amount equal to the final approved project cost.
The promissory note shall include, among other things, a
promise to repay all principal and interest on the loan
and, as additional security, a pledge of the revenue and
income of the McCall Wastewater Treatment Facilities,
whether collected or uncollected, on a parity with all
other system debt and in an amount sufficient to repay all
principal and interest on this loan. The promissory note
shall be executed upon project completion.
B. Within five (5) years of project completion, establish a
reserve account in an amount equal to one (1) year's
payment of principal and interest due on this contract. A
minimum of twenty percent (20%) of the total reserve amount
will be deposited annually during the five (5) year period.
In the event Borrower fails to make any payment due on this
contract, Borrower shall immediately use the funds in the
reserve account to pay the past due principal and interest
on this contract. Borrower shall inform the Department in
writing when funds from the reserve account are used.
Within thirty (30) days of using funds from the reserve
account, Borrower shall replenish the reserve account in an
amount equal to the amount borrowed from the reserve
account. The reserve account may be used by the Borrower
solely for the purpose of securing payments on this
contract.
SECTION VII. LOAN DISBURSEMENTS
The Borrower agrees:
A. This loan shall be used solely to aid in the financing of
the Borrower's project.
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.
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C. 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.
D. A project review by the Department will determine final
eligible costs for the project.
E. 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. A final loan repayment schedule has been completed; and
5. A11 security requirements of Section VI have been
satisfied.
F. 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
Applicant the offered sum of money on the basis of the
Applicant'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
Loan Repayment Schedule which will be prepared by the
Department and executed along withthe promissory note by
the Borrower upon project completion. The Loan Repayment
Schedule will be based on the final eligible project costs
at four and one-half percent (4 1/20) interest over twenty
(20) years from the date of project completion. Interest
will begin accruing with the first disbursement of loan
funds.
B. This loan contract shall remain in full force and effect
for the actual service life of the project. At a minimum,
this loan contract shall remain in full force and effect
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until all loan proceeds, including principal and interest,
have been paid in full or the contract is otherwise
suspended or terminated by the Department.
SECTION IX. PROHIBITIONS
The Borrower agrees:
Expansion of collection systems in excess of reserve capacity
of the treatment works will be prohibited unless concurrent
designated construction provisions for adequate treatment are
provided by the Borrower.
SECTION X. SUSPENSION OR TERMINATION OF LOAN CONTRACT
A. The Director may suspend or terminate this loan contract
prior to final disbursement for failure by the Borrower or
its agents, including architectural/engineering firm(s),
contractor(s) or subcontractor(s), to perform. This loan
contract may be suspended or terminated for good cause
including, but not limited to, the following:
1. Commission by an employee or agent of the Borrower, of
any of the following acts in a manner which materially
affects the Borrower's obligations under this
contract: fraud, embezzlement, theft, forgery,
bribery, misrepresentation, conversion, malpractice,
misconduct, malfeasance, misfeasance, falsification or
unlawful destruction of records, receipt of stolen
property or any crime for which the maximum sentence
includes the possibility of one (1) or more years'
imprisonment; or
2. Violation(s) of any term of this loan contract; or
3. Any willful or serious failure to perform within the
scope of the project, plan of operation and project
schedule, terms of architectural/engineering
subagreements, or contracts for construction; or
4. Utilizing a contractor or subcontractor who has been
debarred for good cause by any federal or state agency
from working on public 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
loan contract. The notice of intent shall state:
1. Specific acts or omissions which form the basis for
suspension or termination; and
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2. Availability of a hearing, conducted by the Director,
or his designee as hearing officer, said hearing being
conducted in an informal manner at a time and in a
place specified by the Director.
C. Upon the proof of the existence of cause(s) for suspension
or termination by substantial evidence or by proof of
judgement or conviction of offense(s), the Director shall
make a written determination, sending the determination to
the Borrower by certified mail within seven (7) days of the
hearing.
D. 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 loan contract.
If a suspended loan contract is not reinstated, the loan
will be amortized and a repayment schedule prepared in
accordance with the provisions of this loan contract.
E. No terminated loan shall be reinstated. Terminated loans
will be amortized and a repayment schedule prepared in
accordance with the provisions of this loan contract.
SECTION XI. ACCESS AND INDEMNIFICATION
The Borrower agrees to:
A. Provide the Department, or its authorized agents, access
to all files, records, accountings and books relating to
the management and accountability of this loan.
B. Indemnify and save harmless the State of Idaho, its
agents, and its employees regardless of fault or.
negligence, from any and all claims, actions, damages,
liabilities and expenses directly or indirectly connected
to the location, design, construction, operation,
maintenance, repair, failure or deactivation of the project
or any part of the project.
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SECTION XII. OFFER
The offer set forth herein must be accepted, if at all, on or
before . 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 this 1995.
Administrator
Division of Environmental Quality
Idaho Department of Health and Welfare
SECTION XIII. ACCEPTANCE
The. City of McCall 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.
Signature of Representative
Name and Title of Representative - type or print
Date
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Michael C. Moore
MOORE & McFADDEN, CHARTERED
999 W. Main Street, Suite 910
Boise, Idaho 83702
Telephone: (208) 331-1800
Facsimile: (208) 331-1202
Attorneys for Petitioner
IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DISTRICT OF THE
STATE OF IDAHO, IN AND FOR THE COUNTY OF VALLEY
In re: )
Case No.
THE CITY OF McCALL, )
an Idaho municipal ) PETITION FOR JUDICIAL
corporation, ) CONFIRMATION
Petitioner. )
COMES NOW the Petitioner, City of McCall, Valley County,
Idaho, an Idaho municipal corporation (the "Petitioner"), by and
through its undersigned attorney, 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 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,
PETITION FOR JUDICIAL CONFIRMATION - Page 1
EXHIBIT "B"
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
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.
PETITION FOR JUDICIAL CONFIRMATION - Page 2
III.
Petitioner is authorized by law to own, operate, and maintain,
and has for many years owned, operated, and maintained, a municipal
sanitary sewage collection and treatment system (the "System").
The System serves the entire City of McCall, Idaho, and also,
pursuant to written agreement between Petitioner and the Payette
Lakes Water and Sewer District, of Valley County, Idaho (the
"District"), accepts, treats, and disposes of sewage effluent for
the District. Petitioner's System serves approximately 2,750
residential households and businesses within the City of McCall and
the District.
IV.
As part of its sewage treatment process, Petitioner has for
many years collected sewage at its municipal sewage treatment
plant, treated the sewage in a biological process consisting of
aerated and facultative lagoons, followed by filtration and
disinfection. The treated effluent is discharged into the North
Fork of the Payette River. This discharge has been identified as
one of the contributors of phosphorous to Cascade Reservoir. High
concentrations of phosphorous in Cascade Reservoir have been
identified by the State as the reason for excessive algae growth in
Cascade Reservoir. The City has been advised by the State that the
current method of treatment and discharge does not meet applicable
state and federal water quality standards. The effect of these
PETITION FOR JUDICIAL CONFIRMATION - Page 3
standards is that the City must find an alternative method of
disposal of sewage effluent.
V.
Petitioner, through its Mayor and Council, has considered
several alternative solutions to the problem described above, has
obtained an engineering facility planning study, and has determined
that certain improvements to its existing treatment facility and an
alternative method of disposal of treated sewage effluent are
required in order to continue to operate its system in compliance
with state and federal environmental regulations for water quality
protection. Petitioner has determined that it is necessary to
improve, expand, and alter the existing sewage treatment facilities
of the City to provide for the pumping of treated effluent to a
land disposal site located approximately 4.5 miles from the sewage
treatment plant in order to terminate its direct discharge of
treated effluent into the North Fork of the Payette River.
VI.
The improvements which Petitioner's Mayor and Council have
determined to be necessary for the foregoing purposes consist
generally of the installation of alternative sewage treatment
facilities, including refurbished and extended sand filters,
treated effluent pipeline, storage reservoir, and sprinkler
facilities for the treatment, storage, and discharge of treated
effluent onto a land site, together with related facilities and
PETITION FOR JUDICIAL CONFIRMATION - Page 4
improvements and costs incidental thereto (collectively, the
"Improvements").
VII.
The total cost of the Improvements has been estimated by the
City's engineers as $11,280,000. Approximately 500 of the cost of
the Improvements would be assumed by the U.S. Bureau of
Reclamation, $2,500,000 have been committed by the State of Idaho
and $3,140,000 of the cost would be the responsibility of the City.
Petitioner does not have funds available to it within its present
budget or its budget for the next fiscal year to meet its share of
the cost of the Improvements and has determined that such cost must
be financed over a term of years from the revenues of the System.
VIII.
Pursuant to Sections 39-3602 through 39-3606B, Idaho Code, and
rules and regulations promulgated pursuant thereto, the State of
Idaho, Department of Health and Welfare, Division of Environmental
Quality (the "State"), has established a Wastewater Facility Loan
Account for the purpose,
municipalities for the
treatment facilities.
among other purposes, of making loans to
financing of wastewater collection and
IX.
In order to finance a portion of the cost of the Improvements,
Petitioner has made application to the State for a loan from the
Wastewater Facilities Loan Account referred to above.
PETITION FOR JUDICIAL CONFIRMATION - Page 5
The State
has determined that Petitioner is eligible for such loan and has
indicated its approval of such loan, on the terms and conditions
set forth in the Loan Offer, Acceptance and Contract for Wastewater
Treatment Facility Design and Construction (the "Loan Agreement")
which is annexed hereto as Exhibit "A" and by reference
incorporated herein.
X.
The Loan Agreement, if entered into by Petitioner, would be
payable over a 20-year period from sewer system revenues 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.
XI.
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...."
PETITION FOR JUDICIAL CONFIRMATION - Page 6
XII.
Petitioner, by and through its Mayor and Council, has
determined that the proposed Loan Agreement for the financing of
the Improvements 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 and safety of the inhabitants of the Petitioner
and to comply with state and federal health and
environmental standards.
B. The proposed expenditure is for the purpose of repairing,
rehabilitating, maintaining, and extending existing city
services in order to render them serviceable, as opposed
to the construction of wholly new facilities.
C. The proposed Improvements are authorized by the general
laws of the State.
D. Petitioner has operated the existing System for many
years and has determined that the Improvements are
indispensable to the efficient continued operation of the
System.
PETITION FOR JUDICIAL CONFIRMATION - Page 7
E. The amount of the proposed indebtedness is not greatly
disproportionate to the Petitioner's overall budget for
the year.
XIII.
Petitioner seeks a determination of the validity of the
proposed loan agreement, including the Petitioner's proposed pledge
to repay the loan from sewer 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.
XIV.
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, and to pledge to repay said
PETITION FOR JUDICIAL CONFIRMATION - Page 8
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A t t o r n e y f o r P e t i t i o n e r
P E T I T I O N F O R J U D I C I A L C O N F I R M A T I O N - P a g e 9
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VERIFICATION
STATE OF IDAHO
ss.
County of Valley
DEAN MARTENS, being first duly sworn, deposes and says: That
he is the Mayor of the City of McCall, Idaho; that he has read the
foregoing Petition, knows the contents thereof, and believes the
same to be true and correct.
1995.
Dean Martens
SUBSCRIBED AND SWORN TO before me this day of September,
Notary Public in and for the State
of Idaho, residing at
therein
My Commission expires
PETITION FOR JUDICIAL CONFIRMATION - Page 10