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RESOLUTION NO. 2007-08 A RESOLUTION OF THE CITY OF MOSCOW, LATAH COUNTY, IDAHO AUTHORIZING THE FILING OF A PETITION TO SEEK JUDICIAL CONFIRMATION OF THE CITY'S AUTHORITY TO ISSUE AND SELL CERTAIN REVENUE BONDS TO FINANCE PHASE IV OF IMPROVEMENTS TO THE WASTEWATER TREATMENT PLANT At"lD SEWER SYSTEM AND OTHER MATTERS PROPERLY RELATED THERETO CITY OF MOSCOW LATAH COUNTY, IDAHO BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MOSCOW, LATAH COUNTY, IDAHO, as follows: WHEREAS. the City of Moscow, Latah County, Idaho ("City"), is a political subdivision of the State of Idaho, created and existing under the Constitution and laws of the State of Idaho; and WHEREAS. on November I2, 1997, the City entered into a Voluntary Consent Order with the State of Idaho Department of Health and Welfare, Division of Environmental Quality ("DEQ") as a result of DEQ's determination that the City's wastewater treatment plant and sewer system ("Sewer System Facilities") no longer complied with federal and State regulations for operation and further required the City to make certain improvements to its sewer facilities in order to bring the Sewer System Facilities into full compliance with federal and State regulations; and WHEREAS, the City previously authorized the filing of a petition for judicial confirmation of the City's authority to issue and sell certain revenue bonds to finance the cost of improvements, repairs and replacements necessary to bring the Sewer System Facilities into partial compliance under the Voluntary Consent Order and make other necessary improvements to the City's sewer system in Resolution No. 99-26, dated October 4, 1999 (the "1999 Petition"); and WHEREAS, the City passed Ordinance No. 99-28, dated November 15, 1999, which provided for the reconstruction, improvement, betterment and replacement of the City's Sewer System Facilities in a phased matter referred to as the "Project" and contingent upon the ability of the City to finance Phases III, IV and V of the Project; and WHEREAS, during the same time period, the City appealed certain regulatory conditions imposed on it by the state and federal environmental agencies and said appeal was still pending at the time of the hearing on the 1999 Petition; and WHEREAS, in its Findings of Fact and Conclusions of Law on the 1999 Petition. dated January 5, 2000, the District Court of the Second Judicial District of the State of Idaho, County of Latah, confirmed the authority of the City to issue and sell revenue bonds and held that "[t]he improvements proposed in Phase III of the City of Moscow's Project meet the criteria articulated ---PAGE BREAK--- by the Idaho Supreme Court, and qualify under the "ordinary and necessary expense" exception to Article VIII, Section 3 of the Idaho Constitution, and WHEREAS, the Court also made the following finding and conclusion regarding Phases IV and V of the City's Project: ; and The City of Moscow is currently appealing the costs and requirements set forth in Phases IV and V of the wastewater treatment upgrade. A hearing on the merits of the appeal is pending. If the appeal is successful, the design and costs associated with Phases IV and V may change, therefore it is premature to find that the costs associated with Phases IV and V are ordinary and necessary. WHEREAS, the City's appeal of the DEQ requirements for Phases IV and V of the was unsuccessful and the City must proceed with the implementation of Phases IV and V of the Sewer System Facilities upgrade or face further regulatory action from DEQ; and WHEREAS, the City was notified by the United States Environmental Protection Agency, Region 10 (EPA), in a letter dated February 27, 2007 that the efflnent discharges from the City's Wastewater Treatment Facilities violate federal and state environmental regnlations, including the federal Clean Water Act, and the fine that will be imposed on the City for the violations will range from a mitigated fine of S 134,000 to an unmitigated fine of S2,500,000; and WHEREAS, the City anticipates entering into a Consent Agreement and Final Order (CAFO) with EPA to address the violations referenced in the February 27, 2007 EPA letter and expects the EPA to require the City to take immediate steps to prevent future violations or face additional fines; and WHEREAS, the City cannot maintain compliance with the federal Clean Water Act and the related regulation and avoid additional substantial fines from the EPA without the immediate implementation of the upgrades to the Sewer System Facilities identified as Phase IV in Ordinance No. 99-28; and WHEREAS, it is necessary for the City to incur debt by selling revenue bonds in order to immediately finance the capital costs of Phase IV, including the costs of improving, repairing and replacing existing City sewer facilities and meet the requirements established by the Clean Water Act, the EPA, DEQ and the anticipated CAFO; and WHEREAS, pursuant to Idaho Code §7-1302 et seq., the City may seek judicial confirmation of the City's authority to issue and sell certain revenue bonds to finance the required improvements to the City's Sewer System Facilities as an ordinary and necessary expense of the City of Moscow; WHEREAS, the City Council of the City of Moscow (the "Council"), as required by Idaho Code §7-1304(3), conducted a public hearing on April 16, 2007, at 7:00P.M., on the matter of whether this Resolution should be adopted by the Council and notice of said public hearing was provided by notice duly published in the official newspaper of the City; and WHEREAS, the Council provided an opportnnity for all interested persons to comment on the issue and, having duly considered all public comments on the issue, Resolution 2(X)7 O08 Judicia! Confirmation for Wastewater Treatment Plant Page 2 of 5 ---PAGE BREAK--- NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MOSCOW, LATAH COUNTY, IDAHO as follows: Section 1: NEED FOR IMPROVEMENTS The City is subject to strict conditions imposed on it by the federal Clean Water Act and related federal and state environmental regulations and permits and must immediately implement the required upgrades to bring the City into full compliance with said regulatory requirements. Failure to immediately proceed with the required upgrades to the Sewer System Facilities will subject the City, ratepayers and taxpayers to the continuing imposition of regulatory fines and penalties for violations of the federal and State regulations. The construction of Phase IV of the Project, as originally defined in Ordinance 99-28 and as updated by subsequent legislative action. is imminently necessary to bring the City into compliance and avoid further regulatory action and penalties. Section 2: NEED FOR JUDICIAL VALIDATION The Council hereby determines that the City must immediately proceed with the construction of capital improvements to the City's Sewer System Facilities. The City does not have adequate funds currently available in its budget to pay for the improvements that are necessary to bring the City's Sewer System Facilities into compliance with federal and State regulations. The Council hereby determines that the City must issue, sell and deliver certain revenue bonds in order to pay the costs of constructing the required capital improvements, repairs and replacements to the City's Sewer System Facilities. Judicial examination and confirmation would serve an important public purpose by providing an early determination of the validity of the authority of the City to issue said revenue bonds without voter approval as an ordinary and necessary expense as permitted by Article Vlll, Section 3 of the Idaho Constitution, all as provided by the Judicial Confirmation Act and in particular, §7-1302. Idaho Code. The City has been advised by its financial advisor that revenue bonds, without judicial validation, will not be marketable. The Council hereby decides to seek a determination of the validity of the City's authority to issue, sell and deliver revenue bonds to finance the costs of constructing required capital improvements, repairs and replacements to the City's Sewer System Facilities. Section 3: AUTHORIZATION TO RETAIN COUNSEL AND FILE PETITION The City has previously retained the law firm of Kirkpatrick & Lockhart, Preston, Gates, Ellis LLP of Coeur d'Alene, Idaho ("Firm") and now hereby authorizes the Firm to file a petition in Latah County. Idaho Second Judicial District Court ("Court") on behalf of the City to seek judicial confirmation of the City's authority to issue, sell and deliver revenue bonds to finance the costs of constructing required capital improvements, repairs and replacements to the City's Sewer System Facilities. The appropriate officials of the City are hereby authorized and empowered to take the steps necessary to assist in this process. The Firm is also authorized to R¢so!ution 2007-08 Judicial Confinnation for Wastev.'ater Treatment Plant Page 3 of 5 ---PAGE BREAK--- file any pleadings and other documents that it deems necessary or appropriate for the Court to consider. Section 4: RATIFICATION All actions (not inconsistent with the provisions of this Resolution) heretofore taken by the City, and its employees, with respect to making the improvements and filing the Petition for Judicial Confirmation are hereby in all respects ratified, approved, and confirmed, Section 5: REPEALER All resolutions, ordinances, or parts thereof in conflict herewith, to the extent of such conflict, are hereby repealed, Section 6: EFFECTIVE DATE This Resolution shall be effective from and after its adoption. PASSED AND ADOPTED this 71h day of May, 2007. ATTEST: ( S E A L) Resolution 2007 -CS CITY OF MOSCOW Latah County, Idaho v l {if j / I / J, Nancy Chany. Mayory . ' I Judicial for Wastewater Treatment Plant Page 4 of 5 ---PAGE BREAK--- CERTIFICATION I, the undersigned City Clerk of the City of Moscow, Latah County, Idaho, HEREBY CERTIFY that the foregoing Resolution is a full, true and correct copy of a Resolution duly adopted at a regular/special meeting of the City Council, duly and regularly held at the regular meeting place thereof on May 2007 of which meeting all members of said City Council had due notice and at which a majority thereof were present; and that at said meeting said Resolution was adopted by the following vote: A YES, and in favor thereof, Councilmembers: John Weber, Aaron Ament, Bill Lambert, Bob Stout, Linda Pall NOES, Councilmembers: None. ABSENT. Councilmembers: John Dickinson ABSTAIN, Councilmembers: None. I FURTHER CERTIFY that I have carefully compared the same with the original Resolution on file and of record in my office; that said Resolution is a full, true and correct copy of the original Resolution adopted at said meeting; and that said Resolution has not been amended, modified or rescinded since the date of its adoption, and is now in full force and effect. IN WITNESS WHEREOF, I have set my hand and affixed the official seal of said City on May 7'h, 2007. ( S E CITY OF MOSCOW Latah cunty, Inho l ;