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.