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HomeMy WebLinkAbout1994-50 Implement OMECA Agrmt.RESOLUTION NO. 94-~(:) A RESOLUTION OF THE . CITY OF ASHLAND AUTHORIZING THE CITY ADMINISTRATOR TO EXECUTE THE PROJECT IMPLEMENTATION AGREEMENT WITH THE OREGON MUNICIPAL ENERGY AND CONSERVATION AGENCY (OMECA) AND APPROVING OMECA'S ENTERING INTO THE CONSERVATION PROJECT AGREEMENT WITH THE BONNEVILLE POWER ADMINISTRATOR (BPA). THE CITY OF ASHLAND RESOLVES AS FOLLOWS: SECTION 1. The City Council finds: 1.1 It is in the City of Ashland's interest to secure conservation funding under the OMECA Conservation Project Agreement. 1.2 The conservation funded by the OMECA project will benefit Ashland's electric utility customers and also provide a cost effective conservation resource for BPA. 1.3 To secure funding the City of Ashland needs to execute a Project Implementation Agreement with OMECA and approve OMECA's entering into a Conservation Project Agreement with BPA. SECTION 2. The City Administrator is authorized to execute on behalf of the City of Ashland the Project implementation Agreement with OMECA. SECTION 3. The City council approves OMECA's entering into the Conservation Project Agreement with the Bonneville Power Administration. The foregoing resolution was READ and DULY ADOPTED at a regular meeting of the City Council of the City of Ashland on the ?'~K' day of ~.,~.~ , 1994. Nan E. Franklin, City Recorder SIGNED and APPROVED this _~day of Reviewed as to form: Paul Nolte, City Attorney .,/,~, 1994. Catherine M. Golden, Mayor mnrantium July 21, 1994 ubitd: OMECA AGREEMENTS AND RESOLUTIONS Background The Oregon Municipal Energy and Conservation Agency (OMECA) is an intergovernmental agency organized under the laws of the State of Oregon. It is composed of the City of Ashland, Canby Utility Board, City of Forest Grove, City of McMinnville, City of Milton-Freewater, City of Monmouth and the Springfield Utility Board. On November 16, 1993, the Ashland City Council unanimously approved Ordinance No. 2725, authorizing the City Administrator to execute the Agreement which ratified OMECA's formation and Ashland's participation in OMECA. On January 27, 1994, the City Administrator signed the Agreement on behalf of the City. Initial Purpose of OMECA Initially, OMECA was envisioned as a way to achieve economics of scale and secure a constant source of long term funding 'for electric energy conservation of BPA funded programs. As BPA's reinvention occurred, it evolved into a project which could secure two years of increased conservation funding for member utilities. BPA's reinvention, which is about two-thirds complete, anticipates that after Federal Fiscal Year 1995 (September 30, 1995), BPA will no longer fund conservation programs like it has since the early 1980s. Instead, it expects utilities to fund conservation locally in response to the two tiered wholesale rate system which is scheduled to take effect on October 1, 1995. Our participation in OMECA's bond sale will result in an additional year of BPA funding of conservation in Ashland until September 30, 1996. Budgets Originally, we expected that an agreement with BPA could be reached by June 30, 1994, and funding for conservation programs could be shifted to OMECA funding at that time. Had that happened, Ashland's budget levels would have been: 'AFY 94 (June 30 to Sept. 30, 1994) FY 95 (Oct. 1, 1994 to Sept. 30, 1995) FY 96 (Oct. 1, 1994 to Sept. 30, 1996) = $ 123,000 = $/399,990 = $ 509,801 = $/1,032,791 The total OMECA budget for this period would have been $/12,048,366. Since we are not sure exactly when all of the utilities will approve the Agreement and subsequently when OMECA can meet and execute the Agreement with BPA, we don't know exactly how much FY 94 money will be available under the program. Ashland's budget will be somewhere between $909,791 and $/1,032,751, however. Bond Sale Upon execution of OMECA's Conservation Project Agreement with the Bonneville Power Administration, funding will immediately be provided by a process called direct funding. Not later than 120 days from the effective date of the Project Agreement, Bonneville will file a request with the Internal Revenue Service for a ruling under Section 9F of the Northwest Power Act. This ruling is needed to ensure the tax exempt status of the revenue bonds which will be sold by OMECA. When this ruling is successfully completed, OMECA will offer the bonds for sale. Upon sale of the revenue bonds when bond proceeds are made available to OMECA, OMECA will direct the trustee to reimburse BPA for direct funding expenses and any bond financing costs already incurred by BPA. After bond proceeds are available, the utility will invoice OMECA for conservation costs and OMECA will submit an invoice to the trustee for direct payment to each utility. The Bond Council will be the firm Ater, Wynne, Hewett, Dodson & Skerritt, and the underwriter of the bonds will be the firm of John Nuveen & Company. Bond Reoavment The Conservation Project Agreement and the Trust Indenture ensure that bond payments, including debt service, are payable solely from and secured by Bonneville payments. The bonds shall not in any manner or to any extent constitute a general obligation to OMECA or its members. Therefore, there is no risk to the City in entering into this Agreement with BPA. Future of OMECA While the terms of this Agreement only provide funding to 0MECA members through September 1996, OMEC.A could become a vehicle for subsequent projects after this time. Future activities could include joint purchasing, securing consulting services, contracting with energy service companies, joint funding via future revenue bond sales for additional conservation or resource development, power pooling and scheduling, load management activities, and other related utility needs in the post reinvented BPA and two tiered rates which we will face after September 1995. Successful completion of the project will provide a sound foundation to pursue any of these or other activities as warranted. Staff Recommendation 'If for no other reason than the fact that this project will provide increased conservation funding for FY 95 and also fund FY 96 a year longer than BPA will be funding conservation elsewhere in the Northwest, we feel it is worthwhile to pursue. The additional benefits to our citizens and the City of funding increased conservation, coupled with potential benefits that OMECA could provide to its members in dealing with emerging trends after September 1995, further justify our involvement. Therefore, Staff recommends we pursue the opportunity and authorize the City Administrator to execute all the needed documents to move this program forward. I will be at the August 2, 1994 City Council meeting to provide any additional information or to answer questions. As always, feel free to give me a call at 488- 5306 if you would like to talk to me about this prior to the meeting. Recommended Action That the Council approve the two attached resolutions authorizing the City Administrator to execute the necessary agreements on behalf of the City of Ashland to take part in this program and authorizing issuance by OMECA of revenue bonds.