STATE DIRECT LOAN DUE DILIGENCE REQUEST FORM (Governmental Participant)

Transcription

1 STATE DIRECT LOAN DUE DILIGENCE REQUEST FORM (Governmental Participant) The following information is requested from each participant ( Participant ) that is applying for financial assistance from the Missouri Department of Natural Resources - Water Protection Program Financial Assistance Center. The information is also needed as part of the due diligence review required by federal and state securities laws. It is necessary to obtain the following information for the Missouri Department of Natural Resources to assess loan participant s financial background information. By executing this questionnaire, the Participant certifies that responses provided are true, correct, complete and do not contain material misstatements or omissions. If one of the following questions is not applicable, please indicate so. Attach additional sheets of paper, as needed, or extend the form electronically, as needed, to answer the following questions. Return the completed form to: Joe Boland Missouri Dept. of Natural Resources, WPP FAC P.O. Box 176 Jefferson City, MO Phone: (573) Fax: (573) Please confirm that the following description of project to be financed with the State Direct Loan is accurate: [insert project description from DNR s FNSI] PROJECT DESCRIPTION: Purpose and Need: The Missouri River WWTP is being upgraded in phases in order to increase design flow and wet weather capacity due to expected community growth as well as address maintenance issues due to the age of the plant. The secondary treatment facilities will be expanded in order to match the recently upgraded headworks and primary treatment capacities. This expansion will also allow for process flexibility as a result of potential nutrient effluent limits in the future. In order to meet E. coli effluent limits by December 31, 2013, disinfection will be added to the treatment plant. Description of Project: The District is proposing an activated sludge treatment facility and six final clarifiers for secondary treatment. The existing trickling filters and secondary clarifiers would be removed from service. Ultraviolet (UV) disinfection is proposed to treat bacteria prior to discharging to the Missouri River. Design Factors: The proposed secondary treatment expansion will have the capacity to treat 38 mgd at design flow and 80 mgd at peak wet weather flow. The proposed facility is designed to meet average monthly effluent limits of 30 milligrams per liter (mg/l) Carbonaceous Biochemical Oxygen Demand 30 mg/l Total Suspended Solids, 10 mg/l Oil & Grease, and 206 colonies of E. coli per 100 milliliters of water (col/100ml). Receiving Stream: The Missouri River WWTP will continue to discharge to the Missouri Rivers which is designated for irrigation, livestock and wildlife watering, protection of warm water aquatic life, whole body contact, secondary contact recreation, industrial, and drinking water supply. 6/16/2011

2 I. General Information 1. Legal Name of Participant: Metropolitan St. Louis Sewer District Nature of governmental entity of the Participant (county, city, village, public water district, public sewer district, or combination): Public Sewer District Authorized Representative/Daily Contact Person: Karl J. Tyminski Address: 2350 Market Street St. Louis, MO Phone #: Fax #: Does any member of the Participant's governing body or any of its key administrative personnel have a potential conflict of interest regarding the project to be financed with the Direct Loan by reason of such membership or position? If yes, state whom and the nature of such conflict. 3. Date of Participant s fiscal year end: June Participant s Taxpayer Identification Number: Has the Participant ever defaulted on a bond issue? If yes, please describe: 6. Does the Participant s last annual audit include a finding that the Participant is in non-compliance with any bond covenants contained in any bond ordinances or resolutions? If yes, please describe: 7. Has the Participant ever failed to comply with any of the informational reporting responsibilities contained in any financing document or instrument intended to comply with the requirements of Rule 15c2-12 of the Securities and Exchange Commission (regarding municipal securities disclosure)? If yes, please describe: 6/16/

3 8. Participant s local bond counsel: Name: Gilmore Bell Robert Ballsrud One Metropolitan Square 211 N. Broadway Suite 2350 St. Louis, MO Phone #: (314) Fax #: (314) rballsrud@gilmorebell.com Participant s local bond counsel: Name: White Coleman Address: Dorothy White-Coleman 500 North Braodway, Suite 1300 St. Louis, MO Phone #: (314) Fax #: (314) whitecoleman@whitecoleman.net 9. Participant s financial advisor, if any: Name: ButcherMark with PFM as sub Address: Roy Torkleson 1120 Avenue of the Americas 4 th Floor New York, NY Phone #: (212) rtorkleson@butchmark.com II. Debt and Authorizing Information 1. What is the source of repayment of the Participant s bonds securing the direct loan: Combined Waterworks and Sewerage System Revenues Waterworks System Revenues Sewerage System Revenues Unlimited Property Tax Revenues (General Obligation) Capital Improvement Sales Tax Revenues (Bonds) Capital Improvement Sales Tax Revenues (annual appropriation) [note must also check another box] Other (describe): 2. Is there a limitation on the final maturity date for the Participant's bonds imposed by election or ordinance? If yes, please describe: 6/16/

4 2. Please attach a list of the Participant s outstanding bonds that are secured by the same source of revenues that will secure repayment of the direct loan indicated in II-1 above, showing outstanding balance, source of payment, and principal and interest payable by fiscal year. See the following excerpt from our financial statements Original Balance Balance Issuance June 30, June 30, Current Amounts 2009 Additions Retirements 2010 Portion Bonds and notes payable: Senior revenue bonds: Series 2004A $175,000,000 $168,965,000 $ -- $ 1,595,000 $167,370,000 $ 1,780,000 Series 2006C 60,000,000 60,000, ,000, Series 2008A 30,000,000 30,000, ,000, Series 2010B 85,000, ,000, ,000, Subordinate revenue bonds: Series 2004B 161,280, ,795, ,685, ,110,000 6,465,000 Series 2005A 6,800,000 5,955, ,000 5,665, ,417 Series 2006A 42,715,000 40,480, ,060,000 38,420,000 1,911,250 Series 2006B 14,205,000 13,575, ,000 12,935, ,833 Series 2008A/B 40,000,000 39,127, ,752,500 37,375,000 1,760,000 Direct Loans Series 2009A 23,000, ,000, ,000, ,700 Series 2010A 7,980, ,980, ,980, Totals: $645,980,700 $494,897,500 $115,980,700 $13,022,500 $597,855,700 $13,253, Describe the amount and type of any authorized but unissued bond debt for the type of bonds secured by the same source of revenues that will secure repayment of the direct loan, including the bonds to be issued in connection with this financing. The District currently has $129,019,300 0f unused authorization remaining from the election of August, 2008 where a total of $275,000,000 was authorized by the voters for waste water system revenue bonds. The District anticipates issuing $52,000,000 in stand alone debt by April 15, 2011, taking a $37,000,000 direct loan from the Missouri SRF program in either December, 2010 or January, 2011 and a $40,019,300 direct loan from the Missouri SRF program in the spring of 2011 (April or May). 5. If sales tax is an anticipated source of repayment for the direct loan, list and describe all sales taxes imposed by the Participant (including the sales tax described above as a source of repayment for this financing): Not Applicable Please provide a copy of the ballot authorizing such sales tax(es) and ordinance(s) establishing the sales tax(es). 6. Does the Participant anticipate issuing any bonds simultaneously with or within one year after the bonds to be issued by the Participant in connection with this direct loan? If yes, please describe and provide an official statement, if available: Proposed $52 million Build America Bonds or Revenue Bonds to be issued by April 15, /16/

5 III. Project and Finance Structure Information 1. Expected Project Sources and Uses: Description Direct Loan Other Total Sources Land and easement acquisition $1,825,899 $1,825,899 Planning and design $5,280,512 $5,280,512 Refinancing outstanding debt Construction [1] $77,019,300 $50,878,224 $127,897,524 Contingency $6,025,430 $6,025,430 Capitalized interest [2] Subtotal Construction Costs $77,019,300 $64,010,065 $141,029,365 Local bond counsel $47,900 $47,900 Local financial advisor $60,000 $60,000 Paying/Escrow Agent $1,000 $1,000 Master Trust Bond Expense [3] $222,000 $222,000 Program bond counsel [4] $6,000 $6,000 Subtotal Financing Costs $336,900 $336,900 TOTAL $77,356,200 $64,010,065 $141,366,265 [1] [2] [3] [4] Participant funds or other financing source (e.g. DNR rural sewer grant) Includes construction engineering Non-standard requires justification in 2. below 0.6% of Direct Loan Total Available from DNR Project Coordinator 2. Structure for Participant bonds: Amortization Method: Standard - Level debt. n-standard: Provide proposed amortization and justification. Are revenues available to pay interest on the Participant s bonds from date of issuance? If no, please describe special circumstances: Will this financing utilize all remaining voter authorization? 6/16/

6 3. Anticipated Project Schedule: Please provide a separate project schedule for each project that will be completed pursuant to a separate construction contract. Event Projected Date (month/year) Contract 1 Advertising for Bids 10/26/10 Bid Opening 12/07/10 Construction Contract Award 02/24/11 (approx) Initiation of Operations* 12/24/14 (approx) Construction Completion 10/01/14 (approx) Project Completion 06/01/15 (approx) Projected Date (month/year) Contract 2 * Initiation of operations is not Project completion. It is the date upon which operations commence or beneficial occupancy is achieved under a construction contract awarded in connection with this financing. Please add an additional page if the above table does not contain sufficient columns for the separate projects to be financed by this direct loan. 4. Estimated Construction Draw Schedule. Note: Construction draws should equal the financial assistance requested as shown in the Expected Sources and Uses (Construction Subtotal) (III.1. above). Please provide a separate draw schedule for each of the contracts identified above. Construction w/5% Contingency (Estimated) FY 2011* FY 2012* FY 2013* FY 2014* $134 Million $9,600,000 $56,400,000 $48,000,000 $20,000,000 *Assuming construction begins March Excludes DNR grants 5. Are sales tax revenues an anticipated source of repayment? If yes, please furnish the following information: Is there a tax increment financing district within the district/city that would capture a portion of the sales tax revenues that are anticipated to be a source of repayment for the participant s bonds? 6/16/

7 Collection data for the past five (5) fiscal years (and collections for current fiscal-year-to-date) for those sales tax revenues available to pay debt service on the Participant s bonds: 20 $ N/A (fiscal-year-to-date) 20 $ N/A 20 $ N/A 20 $ N/A 20 $ N/A 20 $ N/A Rate of sales tax available: N/A Permissible uses for the sales tax: Restrictions on the use of sales tax: N/A Sunset date for sales tax, if any: N/A 6. Note: Question 6 is applicable only if the Participant is refinancing outstanding notes/bonds with the direct loan. NOT Refinancing Does the project include a refinancing of outstanding notes or bonds? If yes, please describe the bonds or notes to be refinanced, the amount of the proceeds that have been spent, the amount of bonds or notes outstanding and the call date: Are there any unexpended proceeds from the bonds or notes being refinanced? If yes, please provide an expected disbursement schedule. (Include the last date on which any remaining proceeds from the bonds or notes to be refinanced may be disbursed.) Has DNR reviewed expenditures of the proceeds of the bonds or notes to be refinanced to determine if such expenditures qualify as eligible costs? Were these projects covered under a FNSI or a categorical exclusion? If financing is being requested for the purpose of refunding outstanding notes or bonds, please provide a copy of the resolution or ordinance authorizing the issuance of the bonds or notes to be refunded. 7. Are there any proposed leases or management contracts with or occupancy by nongovernmental entities (other than contracts for janitorial, office equipment repair, billing or other services that are solely incidental to the primary governmental function(s)) of the project financed with the proceeds of the direct loan? If yes, briefly describe: 6/16/

8 8. Will a nongovernmental entity use more than 5% of the project financed with the proceeds of the direct loan? If so, will such user receive treatment different than that afforded to a member of the general public, or is the project designed in any way to accommodate the needs of such user? For this purpose, the term use may include, among other things, ownership or the actual or beneficial use of property pursuant to any number of other arrangements, such as a lease, a management, service or incentive payment contract, a research agreement or certain other arrangements, such as a take or pay or other output-type contract. If yes, briefly describe the arrangements concerning such user. Include any special fee(s) to be charged to such user that are outside the approved user charge ordinance: IV. System Information and Revenues 1. Other than the project being financed with this direct loan, describe generally any plans to expand, improve or equip the system within the next two years: MSD plans to spend approximately $150 million in FY 2011 and $100 million in FY 2012 to improve its system. The program consists of the improvement and renewal of the collection system and treatment facilities, and the elimination of local storm water flooding and erosion. The cost for expansion of the system is borne by local developers with the system turned over to MSD for O & M, thus MSD has no expansion costs. 2. Provide actual operating expenses of the system for the previous two (2) years and projected operating expenses of the system for the current year and the next (4) fiscal years. Please do not include current or anticipated debt service payments. Denote the year in which new project is to come on line. Year Operating Expenses FY08 (previous) $142,725,186 FY09 (previous) $138,971,881 FY10 (current) $145,598,505 FY11 (next) $149,986,447 FY12 (next) $151,486,311 FY13 (next) $154,516,038 _ FY14_(next) $157,606,358 6/16/

9 If system revenues are an anticipated source of repayment of the bonds securing the direct loan, please provide the following information in connection with the Participant's system (or the portion of the system from which the Participant anticipates drawing revenues to repay the direct loan): Last five (5) fiscal years * 2006 * System Revenue $200,471, ,947, ,674, ,556, ,470,786 Investment Income 5,358,354 10,279,899 13,277,548 13,501,751 6,135,347 Other Income 4,226,840 5,025,394 5,306,631 7,391,655 5,988,302 Total Revenue 210,056, ,252, ,258, ,449, ,594,435 Operating Expenses (excl. depreciation) 145,598, ,971, ,725, ,089, ,909,717 Net Revenues available for DS 64,457,778 81,280,680 79,533,739 76,360,308 79,684,718 Annual Debt Service (existing) 29,946,469 33,971,107 26,334,791 24,329,929 19,242,832 Debt Service Coverage ** 34,511,309 47,309,573 53,198,948 52,030,379 60,441,886 Existing debt coverage required, if any: 1.25 for senior bonds For all bonds. * includes storm water expenses ** excludes non recurring project costs 3. Ten (10) largest users and % of system use. User User Charge % of Total User Charges Anheuser-Busch Incorporated 5,518, % Washington University 1,309, % City of St. Louis 1,266, % Mallinckrodt, Inc. 1,250, % Boeing Co. 667, % Zoological Gardens 597, % Sigma-Aldrich 512, % BJC Health System 512, % Sensient Colors Inc. 462, % Cott Beverages, Inc. 438, % Has there been a 5% or greater change in the number of system users during the past two-year period? If so, please explain. 6/16/

10 4. Identify system use (gallons per day) for billing purposes, actual billings, and collections for each of last five (5) years. If the system is a combined waterworks and sewerage system, please provide the following information separately for the waterworks and sewerage components of the combined system. Year Collections as % of Billed WW Chgs Billed WW Chgs Collected % $203,649,824 $198,413, % $206,957,535 $201,470,769* % $201,156,814 $195,617,863* % $163,506,126 $190,622,352* % $197,608,100 $189,854,048* *Restated from prior years reporting 5. Current and Proposed Rate Structure. Please provide the Participant s current rate structure and its effective date and any proposed new rate structure and date of adoption for the same. If the Participant has a combined waterworks and sewer system, the rate structure for both water and sewer users should be included. Residential users Commercial users Industrial users Current Rate Proposed Rate Schedule Effective Date Structure Date of Adoption Please provide a copy of the ordinance imposing the most recent rate increase in connection with the current SRF financing. See attachment IV6A. 6. Please provide information on previous rate increases and effective dates within the last five (5) years. See attachment IV6A. 7. Does the Participant's investment policy relative to funds of the system or otherwise securing the direct loan comply with the State Treasurer s model investment policy and any other state law requirements (see model policy)? 8. Please provide a certificate or other evidence of insurance coverage against the risks of property and casualty loss, public liability, and any other insurance maintained by the Participant, including type of coverage, amount of coverage, annual premiums, name of insurer, and term. 9. Accompanying this document is: a matrix of insurance coverage for fiscal year 2011, certificate of property insurance coverage for fiscal 2011 and certificate of other insurance coverage for fiscal V. Litigation and Other Proceedings 1. Provide a description of all contracts and commitments of the Participant under which any default has occurred or is claimed to have occurred. We have no contracts or commitments where defaults have occurred. From time to time there may be situations of mechanics liens where the District may also be named but these liens are a matter between the contractor for the District and their subcontractors. 6/16/

11 2. Describe (1) any pending or possible litigation and contractual disputes and (2) any consent decrees, prospective judgments, writs, injunctions, court orders, settlement agreements or judgments, or correspondence regarding the same, to which the Participant either is or has been a party within the past three (3) years or that are threatened against the Participant. Supply copies of all letters concerning any litigation against the Participant that have been provided by all legal counsel to the Participant s independent public accountants in connection with audit opinions for the last three (3) fiscal years. See attachment V2A. 3. Has the Missouri Department of Natural Resources initiated or threatened any enforcement action against the Participant with regard to the system? If yes, please describe. US & State of Missouri v MSD Case # 4:07-cv-1120-JCH Allege Clean Water Violations 4. Is the Participant under an administrative or judicial compliance order? If yes, please describe: If yes, please describe. US and State of Missouri v. Metropolitan St. Louis Sewer District; In the US District Court for the Eastern District of Missouri; Case No A lawsuit was filed by the Department of Justice on behalf of the United States Environmental Protection Agency ( EPA ) for various alleged violations of the Clean Water Act. The District has been the subject of several investigatory actions by EPA over the past several years. Negotiations have been ongoing with EPA and the DNR regarding the sewer collection system, both the combined system and the sanitary system, for several years. The Missouri Coalition for the Environment ( MCE ) gave Notice of Intent to Sue the District under the citizen suit provisions of the Clean Water Act. EPA and the DNR then brought the suit in June 2007, and MCE moved to intervene. Intervention was granted in August In October 2007, the Court granted the District s motion to dismiss all of the plaintiffs claims for civil penalties attributable to any and all of the District s alleged violations of the Clean Water Act that occurred before June 11, 2002 from this litigation. The suit is based on violations of the Clean Water Act as a result of overflows in the combined and sanitary sewer systems causing pollutants to reach waters of the United States. There are other counts involving violations of permit conditions. Also, the suit alleges that the District does not have an approved Long-Term Control Program ( LTCP ) for the combined system. The District has been working on these issues for several decades and has asked voters to approve bonds and rate increases to rehabilitate and maintain the collection system. As required by its Charter, the District has increased rates which will continue to fund the improvements sought by EPA and the DNR. In September 2008, the Judge put in place a Stay while the parties mediate the issues. William Zweig et al. v. Metropolitan Sewer District. This case was filed on July 18, 2008 and, as amended, contends that Metropolitan Sewer District Ordinances No and No , which enacted increases in the District s stormwater user charge based on the amount of impervious area on the customer s property, are unconstitutional. The lawsuit claims the ordinances violate the so-called Hancock Amendment, Mo. Const. art. X, 22(a), because the stormwater user charge is in reality a tax that requires voter approval. The District s Board of Trustees passed the ordinances in December 2007 and December 2008, respectively, without submitting them to the voters. The District contends the stormwater user charge is not a tax and, thus, not subject to voter approval. The original plaintiff is a District stormwater customer who seeks to represent a class of all the District stormwater customers. In July 2009, two more plaintiff class representatives were added to the lawsuit. The lawsuit seeks (1) a declaration that the stormwater user charge is unconstitutional, (2) a refund of all stormwater user charges collected, and (3) payment of the plaintiffs costs, including attorneys fees. 6/16/

12 Trial was held April 13, 2010 through April 16, On July 9, 2010, the court handed down Findings of Fact, Conclusions of Law, Judgment and Decree in the first phase of the bifurcated trial. The Court declared the Stormwater User Charge is a tax under the Hancock Amendment. The second phase of the trial was heard on October 6, 2010, to determine the amount, if any, to be refunded. The judge has not yet issued a ruling on the second phase of the case. The District cannot predict with any certainty at this time whether, or in what amount, the District may be required to make a refund. The third phase, will determine the amount of plaintiffs counsel s attorneys fees, to be paid by MSD out of any refund awarded. Once the judge rules on phases 2 and 3, the case will be appealable. The District has collected approximately $90,872,000 since it imposed the impervious charge in March 2008 until it suspended collections in August The District has resumed the collection of real and personal property taxes as well as the previously voted on 24 per month per customer flat rate charge for stormwater purposes. This is consistent with what the District did prior to imposing the stormwater user charge. The District is a defendant in various other matters of litigation. Of these matters, management and District s legal counsel do no anticipate any material effect on the June 30, 2010 and 2009 financial statements. 5. Please provide any report or investigation made by any governmental agency or administrative regulatory body concerning the Participant within the last five (5) years. None in the last 5 years VI. Requested Documents Please provide a copy of the following: 1. All annual reports or audited financial statements and auditor s reports, including any management letters, for the Participant, and for the Participant s system, if available, for the last two (2) fiscal years (if available on a website, please indicate so and provide a web address) Any bond ordinances or resolutions adopted in connection with outstanding system revenue bonds or any other document that contains restrictions on the use of system revenues. See attached ordinances in file folder on the CD entitled Bond Indentures 3. All reports prepared by or for the Participant (including reports by inside or independent consultants) that describe or evaluate the Participant or its system. Include all reports that detail future operating costs of the system for the next five (5) years, such as any recent rate studies or operating budget or engineering reports. Attached in the CD is a Feasibility Study report dated Any agreements relating to any grants and/or loans to the Participant relating to its system, including any USDA Rural Development loans/grants and/or HUD Community Development Block Grants The most recent official statement, if any, regarding a bond issue or other financing. See attached file in the CD entitled Transcripts 2010B 6. One copy of this completed form, including supporting documentation, on a compact disk (CD) in Acrobat Adobe (pdf) format. 6/16/

13 Executed this 5th day of November, 2010 at 3:00 p.m. Metropolitan St. Louis Sewer District [Participant Name] By: Name: Karl J Tyminski Title: Secretary-Treasurer 6/16/