4.7. SR 06-18-2012REQUEST FOR ACTION
TO ITEM NUMBER
Ma or and Ci Council 4.7
AGENDA SECTION MEETING DATE PREPARED BY
Consent June 18, 2012 Troy Adams, P.E. - ERMU General
Mana er
ITEM DESCRIPTION REVIEWED By
Central Minnesota Municipal Power Agency CAPX2020 Project Cal Portner, Ci Administrator
Revenue Bonds Disclosure Acknowledgement Letter and REVIEWED BY
Exhibit E to Bond Purchase Agreement
ACTION REQUESTED
Elk River Municipal Utilities (ERMU) requests City Council receive the executed Central Minnesota
Municipal Power Agency CAPX2020 Project Revenue Bonds Disclosure Acknowledgement Letter and
the executed Exhibit E to Bond Purchase Agreement.
BACKGROUND/DISCUSSION
In May 2006, the Utilities Commission authorized joining Midwest Municipal Transmission Group to
explore the potential to obtain ownership in the transmission system. In February 2007, ERMU entered
into an agreement to participate through Central Minnesota Municipal Power Agency (CMMPA) in the
CAPX2020 Brooking-Twin Cities Transmission Project. This represents ERMU's direction to own
instead of rent. This investment provides revenue to mitigate transmission costs and help to lower
ERMU electric rates.
In March 2011, the Utilities Commission and the City Council executed resolutions approving ERMU to
increase their investment in the project with a maximum direct cost of $6,265,278 and a resulting
$7,140,953 in maximum total debt supported.
The initial bonding is being issued for this project. With the bonding there is a requirement to provide
information on an ongoing basis. A Disclosure Acknowledgement Letter has been executed by
authorized ERMU staff. The Official Statement for the CMMPA Brookings -Southeast Twin Cities
Transmission Project Revenue Bonds, Series 2012 is referenced in the attached letter. This document is
available for review upon request. Also, an Exhibit E to Bond Purchase Agreement has been executed
by authorized ERMU and city staff. These are supporting documents not requiring Commission and
Council motion for approval.
These executed documents were received by the Utilities Commission at the June 12, 2012, regular
Utilities Commission meeting.
FINANCIAL IMPACT
There is no additional financial impact beyond what was approved in March 2011 when the Commission
and Council both adopted resolutions authorizing ERMU to participate in the Brookings Project through
CMMPA for an amount not to exceed $7,140,953 without further action.
~9~fJE~EiI ~~1`°
,f"'~+Vif..
ATTACHMENTS
• Central Minnesota Municipal Power Agency CAPX2020 Project Revenue Bonds Disclosure
Acknowledgement Letter -Dated May 21, 2012
• Central Minnesota Municipal Power Agency CAPX2020 Project Revenue Bonds Exhibit E
to Bond Purchase Agreement -Dated June 7, 2012
Action Motion by Second by Vote
Follow Up
-~~-
May 21, 2012
Troy Adams
ELK RIMER 1VIUNICIPAL UTILITIES
P.O. Box 430
13069 ~}rono Parkway
Elk River, MIq 55330-0430
Re: Disclosure Acknowledgement Letter
Dear Mr. Adams:
As discussed, Central Minnesota Municipal Power Agency ("CMMPA"), is issuing
$34.535.000x00 of Brookings -Southeast Twin Cities Transmission Project Revenue Bonds,
Series 2012 (the "Bonds") to finance the construction of CMMPA's 3.6 Percentage Interest in
the CapX Brookings -Southeast Twin Cities Transmission Project. In order to meet its
obligations and to enable CMMPA to satisfy the mandatory disclosure requirements of Rule
15c2-12 of the federal Securities and Exchange Commission ("SEC") (the "Rule") CMMPA
requests your utility's cooperation.
CMMPA is required by the Rule to enter into a "Continuing Disclosure Agreement" ~~
CMMPA's trustee ("Trustee"), which will obligate CMMPA to provide the same type of
financial information about your utility which was included in the ®fficial Statement (the
"Cfficial Statement") for the Bonds, to anSEC-approved repository, until the Bonds have been
paid off. According to the language of the Rule, your municipality becomes an "obligated
person" subject to the continuing disclosure requirements by virtue of the use of this information
in CMMPA's ®fficial Statement.
The information requested includes your utility's audited financial statements and
updated information contained in Appendix A of the ®fficial Statement. CMMPA currently has
the right to request such information under Section 703 of the Brookings -Twin Cities
Transmission Project Agreement dated February 14, 2011 (the "Transmission Project
Agreement"). CMMPA will be requesting updates of this information and audited financial
statements each year hereafter.
It is the understanding of CMMPA that your municipality's current fiscal year is
January 1 to December 31. If it is incorrect, please notify CMMPA immediately. Promptly
notify CMMPA of any change in this fiscal year, together with details about how the change will
be implemented for financial reporting purposes.
CENTRAL I~BIVIVES®~'A N9UN~CIPAL P®INER AGENCY
459 South Grove Street Blue Earth, Rinnesota 56013 507-52b-2193
Finally, the Continuing Disclosure Agreement and the Rule also require C1V11VIPA to
express its understanding that your municipality currently prepares its financial statements in
accordance with generally accept accounting principles for governmental units as prescribed by
the Governmental Accounting Standards Board. If your municipality modifies the accounting
principles to be followed in preparing its financial statements, as required by federal or state
legal requirements, please provide notice of such modification promptly to CIVIIYIPA, including a
reference to the specific federal or state law or regulation describing such accounting principles,
or other description thereof, together with a comparison between the financial statements or
information prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles. Such comparison should include a qualitative and, to
the extent reasonably feasible, quantitative discussion of the differences in the accounting
principles and the impact of the change in accounting principles on the presentation of financial
information.
CPA requests your utility to confirm, by acknowledgment of this letter, that your
utility will supply the information described above to C1~IIVIPA annually through the term of the
Transmission Project Agreement. By acknowledgment of this letter, your municipality also
confirms that since July 3, 1995, it has not failed to comply with a similar continuing diselasure
obligation that your municipality might have entered into in connection with a separate
financing.
Please acknowledge receipt of this letter by executing the acknowledgment in the
signature box indicated below and retanrn go C A as soon as possible. Thank you for your
cooperation.
Sincerely:/, ~!~
~/ v.
Steven NI. Thompson
Chief Executive ®fficer
Central 1vlinnesota 1Vlunicipal Power Agency
Receipt of the foregoing is acknowledged:
ELK RIVER 1b1LTNICIPAL UTILITIES
~,._ .
By: j ~` -~ ~ ~ ~. . .
Title: ~ ~ c ~ ~ ... ~ I t ~. ~ .
Dated: ~,~~ ~ ~ ~ , Zolz
590097,DOCJC
EXHIBIT E TO BOND
PURCHASE AGREEMENT
Certificate of Utility System Employee
and Other City Employee of City of Elk River
We, the undersigned, Calvin Portner and Troy Adams, do hereby certify as follows;
(a} We are on the date hereof duly qualified employees of the City of Elk River,
Minnesota (the "City") and the electric utility system of the City, as indicated
under our signatures appearing below.
(b) We have reviewed certain portions of the Official Statement dated May 23, 2012
(the "Official Statement"), relating to the Brookings -Southeast Twin Cities
Transmission Project Revenue Bonds, Series 2012 of Central Minnesota
Municipal Power Agency (the "Agency"}, as follows. The information contained
in the Official Statement relating to the City and the City's electric utility system
under the captions "INTRODUCTION," "CENTRAL MINNESOTA
MUNICIPAL POWER AGENCY," "CMMPA BROOKINGS PARTICIPANTS"
and in Appendix A to the Official Statement, did not as of the date thereof, and
does not as of the date hereof, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements contained therein
relating to the City and the City's, electric utility system, in the light of the
circumstances under which they were made, not misleading.
(c) Except as described in or contemplated by those portions of the Official Statement
which we have reviewed as described above, since the date of the Official
Statement, the City has not incurred any material financial liabilities, direct or
contingent, and there has not been any change in the condition, financial or
otherwise, or operations of the City or its electric utility system or any material
development, nar has the City entered into any transaction, in each case that
would, or is likely to, materially and adversely affect the ability of the City to
meet its obligations under the Transmission Project Agreement dated
February 14, 2411, and the Transmission Owner Services and Asset Assignment
Agreement, dated Apri120, 2411, each between the Agency and the City
(collectively, the "CMMPA Brookings Participant Agreements").
(d) Except as described in these portions of the Official Statement which we have
reviewed as described above, there is no action, suit, proceeding or investigation,
at law or in equity, or before or by any court, public agency, board or ~ body,
pending or, to the best of our knowledge, threatened against or affecting the City
or its electric utility system wherein an unfavorable decision, ruling or finding
would in any way affect the validity or enforceability of the CMMPA Brookings
E-1
Participant Agreements or that would materially and adversely affect the ability of
the City to perform its obligations under the CMMPA Brookings Participant
Agreements.
(e} As of the date hereof there are no bonds, notes or other evidences of indebtedness
of the City or any agency, board, commission, or department thereof, or any
agreement by any of the foregoing to take or pay for power or energy, payable
from the revenues of the electric utility system of the City, superior to payments
under the CMMPA Brookings Participant Agreements. Inasmuch as the
obligations of the City under the CMMPA Brookings Participant Agreements
constitute operating expenses of the City's electric utility system, such obligations
will have a right to payment prior to the right to payment on any bonds, notes, or
other evidences of indebtedness of the City now outstanding that are payable out
of the revenues derived from the City's electric utility system.
(f) To the best of our knowledge, the Agency Agreement (as defined in the Official
Statement} and the CMMPA Brookings Participant Agreements each constitutes a
valid and binding obligation of the City, enforceable in accordance with its terms.
Troy dams
Title: General Manager
As to matters relating to the [electric] [integrated) utility
system
..~-
~,.
Calvin Portner
Title: City Administrator
As to matters relating to the City
Dated: June 7, 2012
GP:3183859 vl
E-2