MATERIAL EVENT NOTICE COVER SHEET

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Transcription:

MATERIAL EVENT NOTICE COVER SHEET This cover sheet and material event notice should be sent to the Municipal Securities Rulemaking Board pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D). Issuer s and/or Other Obligated Person s Name: Union County Improvement Authority, Union County, New Jersey (the Authority ) and County of Union, New Jersey (the County ) Issue: $15,190,000 County of Union Guaranteed Renewable Energy Program Lease Revenue Bonds, Series 2011 (Federally Taxable) (the Bonds ) Issuer s Nine-Digit CUSIP Number(s) of the certificates to which this material event notice relates: 906351 AD3, AE1, AF8, AG6, AH4, AJ0, AK7, AL5, AM3, AN1 AP6, AQ4 Description of Material Event Notice/Other Material Information 1. Principal and interest payment delinquencies; 2. Non-payment related defaults, if material; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. X Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of holders of Bonds, if material; 8. Bond calls (excluding calls for mandatory sinking fund redemptions), if material, and tender offers; 9. Defeasances of Bonds; 10. Release, substitution or sale of property securing payment of the Bonds, if material; 11. _ Rating changes; 12. Failure to provide financial and operating data as required 13. Bankruptcy, insolvency, receivership or similar event of the Authority; 14. Appointment of a successor or additional trustee or the change of name of the trustee, if material; or

15. Other material event notice (specify). 2

MATERIAL EVENT FILING (Pursuant to SEC Rule 15c2-12) Relating to the: UNION COUNTY IMPROVEMENT AUTHORITY Union County, New Jersey NOTICE OF DRAW ON COUNTY GUARANTY On October 15, 2015, the County of Union, New Jersey (the County ) paid a portion of the principal and interest due on the Union County Improvement Authority s $15,190,000 County of Union Guaranteed Renewable Energy Program Lease Revenue Bonds, Series 2011 (Federally Taxable) (the Renewable Energy Bonds ) pursuant to the County Guaranty Agreement dated as of May 1, 2011, (the County Guaranty ) between the County and the Union County Improvement Authority (the Authority ). The County had appropriated sufficient monies in the 2015 budget to make such payment under the County Guaranty, and paid the amount necessary pursuant to the County Guaranty such that the bondholders of the Renewable Energy Bonds received full payment of the principal of, and interest due on, the Renewable Energy Bonds on October 15, 2015. Pursuant to the Continuing Disclosure Agreements executed in connection with the issuance of the Renewable Energy Bonds and applicable federal securities laws referenced therein including Rule 15c2-12, as amended ( Rule 15c2-12 ), promulgated by the Securities and Exchange Commission, the Authority has determined to file this Material Event Notice. On August 31, 2010, the Authority issued a Request for Proposals for a Developer of Photovoltaic Systems with respect to certain Local Government Facilities in the County of Union, New Jersey (the RFP ) to design, permit, acquire, construct, install, operate and maintain solar Renewable Energy Projects at multiple municipal and board of education facilities located throughout the County. The Authority selected and designated Tioga Solar Union County 1, LLC (the Company ) as the successful respondent to the RFP and thereafter entered into a Lease Purchase Agreement, dated as of May 1, 2011 (the Lease Agreement ), a Power Purchase Agreement and certain other agreements with the Company and others in furtherance thereof. On May 4, 2011, the Authority issued its Renewable Energy Bonds, of which $11,130,000 is presently outstanding, to finance up to 70% of the costs of the Renewable Energy Projects, with the Company financing the balance of such cost. The lease payments made by the Company pursuant to the Lease Agreement are equal to and secure the payment of the principal of, and interest due on, the Renewable Energy Bonds. The County, in accordance with the terms of the County Guaranty, has fully, unconditionally and irrevocably guaranteed the timely payment of the principal of, and interest due on, the Renewable Energy Bonds. In addition, Tioga Energy, Inc., the parent of the Company ( Tioga Energy ) provided a parent guaranty, capped at $4,000,000, of the Company s obligations under, among other things, the Lease Agreement. 3

The Renewable Energy Projects procured under the Renewable Energy Program are, in all material respects, complete, lien free, in service and generating energy and revenues, with such revenues being principally derived from (i) the sale of electric energy to the local unit hosts under a Power Purchase Agreement, and (ii) the sale of Solar Renewable Energy Certificates ( SRECs ) to utilities. Tioga Energy, which was engaged in the solar energy business throughout the United States, advised the Authority that on April 30, 2013, it (not the Company) initiated an assignment for the benefit of creditor s under California Code of Civil Procedure Sec. 493.010-493.060 and 1800-1802 (similar in effect to a liquidation under Chapter 7 of the United States Bankruptcy Code) ( ABC process ) in order to liquidate and dissolve its business (after the initiation of such process, Tioga Energy is referred to as Tioga ABC ). Effective May 1, 2013, the Company discontinued making full lease payments under the Lease Agreement, and on May 4, 2013 the Authority declared the Company in default thereunder. On May 17, 2013, the Authority filed a Notice of Material Event pursuant to Rule 15c2-12 relating to the failure of the Company to pay the May, 2013, lease payment and the consequent declaration of default by the Authority. Shortly thereafter, most of Tioga ABC s assets were sold in an auction process. Tioga ABC still holds the membership interests in the Company. Available proceeds from liquidation of Tioga ABC s assets were used to pay Tioga ABC s creditors, including a $333,000 payment to the Authority under the parent guaranty. The revenues generated by the Renewable Energy Projects are principally proceeds from the sale of SRECs and proceeds from the sale of electric energy to various governmental entities in the County. Under the Lease Agreement, the revenues generated are credited against the Company s obligation to make the lease payments. Due principally to the drop in SREC prices since the time the Renewable Energy Bonds were issued, the Renewable Energy Projects are not currently generating revenues sufficient to satisfy the Company s lease payment obligations under the Lease Agreement in full and, therefore, are not sufficient to pay the full amount of debt service on the Renewable Energy Bonds. All debt service payments due from the time the Authority declared the Company in default under the Lease Agreement, through and including the April 15, 2015, interest payment, were paid by the Authority, in full when due, from a combination of accumulated revenues, other amounts held under the Renewable Energy Bonds bond resolution (the Bond Resolution ), and funds provided by the Authority. The County was not required to make a payment under the County Guaranty. The County had appropriated in the 2015 budget sufficient monies to pay the entire $1,267,810.00 principal and interest payment on the Renewable Energy Bonds that was due on October 15, 2015 (as well as the $252,810.00 interest payment due on April 15, 2015 which did not require any payment under the County Guaranty). Pursuant to the County Guaranty, the County was required to pay an amount of $960,321.57 that, together with $261,212.57 of available monies on deposit in the Debt Service Fund and $46,275.86 of available monies on deposit in the Revenue Fund of the Bond Resolution, was sufficient to pay the principal of, and interest due on, the Renewable Energy Bonds on October 15, 2015. The County intends to appropriate sufficient monies in the 2016 budget to pay for all debt service due on the Renewable Energy Bonds in 2016. The Authority is exploring the feasibility 4

of refinancing the Renewable Energy Bonds in an effort to structure debt service payments that more closely match revenues. THE RENEWABLE ENERGY BONDS ARE NOT IN DEFAULT, AND THE PRINCIPAL AMOUNT OF THE RENEWABLE ENERGY BONDS HAS NOT BEEN ACCELERATED. Accordingly, the debt service payment schedule for the Renewable Energy Bonds upon original issuance remains in effect. This Notice of Material Events has been filed within ten (10) days of the October 15, 2015, County Guaranty payment date, in accordance with Rule 15c2-12. If you have any questions or comments regarding this notification, or require any additional information, please contact Bibi Taylor, County Treasurer, County of Union, at btaylor@ucnj.org, phone number 908.527.4055 or Daniel P. Sullivan, Executive Director, Union County Improvement Authority, at dsullivan@ucua.org, or phone number732.382.9400. CUSIP: 906351 AD3, AE1, AF8, AG6, AH4, AJ0, AK7, AL5, AM3, AN1 AP6, AQ4 Dated: October 19, 2015 5