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HomeMy WebLinkAboutRes 1998-02 Four Dam Pool Line Of CreditI ,. t--,, ~T ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY .. !------------------------------ 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 I 269-3000 FAX 907 I 269-3044 MEMORANDUM TO: FROM: DATE: June 16, 1998 SUBJECT: AEA Lines of Credit Resolutions 1998-01 and 1998-02 authorize the Executive Director to enter into new line of credit agreements for the Alaska lntertie and Four Dam Pool projects. AEA has had lines of credit in place for these projects since 1990. The $1 million line of credit for the Alaska lntertie provides a source of credit to pay uninsured liability losses. The $10 million line of credit provides a source of credit to pay a portion of losses and loss related expenses for the Four Dam Pool. Under the Power Sales Agreement and Insurance Agreement for the Four Dam Pool, the state is responsible for uninsured facility losses. The lines of credit are backed by the moral obligation of the state. To date there have been no draws on either line of credit. The current lines of credit for these projects expire June 30, 1998. The Authority issued a request for proposals ("RFP") for new lines to local banks. The RFP also requested proposals for management of the existing trust fund and capital reserve fund that secures the $10 million dollar line. The Authority received four proposals. As the lines have never been drawn upon, staff reviewed the proposals favoring those with the lowest costs assuming no draws. Based upon this review, staff has entered into negotiations with First National Bank of Anchorage. If negotiations with First National Bank of Anchorage were to fail for some reason, staff intends to enter into discussions with the next highest ranked bidder. Resolution 1998-01 authorizes the Executive Director to enter into a line of credit and other appropriate agreements for a $1 million dollar line of credit for the Alaska lntertie project, on terms approved by the Executive Director. Resolution 1998-02 authorizes the Executive Director to enter into a line of credit and other appropriate agreements for a $10 million line of credit for the Four Dam Pool project, on terms approved by the Executive Director. The resolution also authorizes the Executive Director to enter into custodial, trust, or other agreements with respect to the funds securing the line. Staff recommends approval of Resolution 1998-01 and 1998-02. ORS:bjf h:all\keith\board\aea ijne of credit ALASKA ENERGY AUTHORITY RESOLUTION NO. 1998-02 A RESOLUTION OF THE ALASKA ENERGY AUTHORITY AUTHORIZING THE EXECUTION OF A LINE OF CREDIT AGREEMENT FOR THE FOUR DAM POOL AND PROVIDING FOR RELATED MATTERS WHEREAS, the Alaska Energy Authority (the "Authority") has entered into a Long Term Power Sales Agreement dated October 28, 1985 (the "Power Sales Agreement") with certain Purchasing Utilities defined therein for the purpose of making \ sales of power from the Initial Project (as defined in the Power Sales Agreement) to the ) Purchasing Utilities; / WHEREAS, pursuant to the Power Sales Agreement, the Authority and the Project Management Committee for the Initial Project have entered into an Amended Agreement for Satisfaction of Insurance Cost Payment Obligation and Concerning Risk Allocation dated June 23,1994, (the "Insurance Agreement") to provide for payment of the cost of insuring the Initial Project; WHEREAS, it is in the best interest of the Authority and the Purchasing Utilities to provide a source of credit to pay a portion of Losses and Loss Related Expenses, as those terms are defined in the Insurance Agreement; WHEREAS, the Authority has entered into a line of credit agreement (the "Prior Credit Agreement") for these purposes; WHEREAS, the Prior Credit Agreement is secured by certain Authority Four Dam Pool insurance funds (the "Insurance Fund"); WHEREAS, the Prior Credit Agreement will expire June 30, 1998, and it is in the best interest of the Authority to enter into another line of credit agreement for the purposes served by the Prior Credit Agreement; WHEREAS, the Authority is authorized to issue obligations payable from its income, receipts or other assets (AS 44.83.100(a)(3}), to carry out its corporate purposes; WHEREAS, the Authority has requested and received proposals for a new L line of credit agreement; WHEREAS, the Authority has determined that the establishment of a capital reserve fund pursuant to AS 44.83.11 0( c) would enhance the marketability of the obligations issued by the Authority with respect to the line of credit; and WHEREAS, it is in the best interests of the Authority that the Executive Director be authorized to enter into a new line of credit agreement and such other agreements as may be necessary to establish a $10,000,000 line of credit to provide a source of funds to pay a portion of Losses and Loss Related Expenses, as those terms are defined in the Insurance Agreement. NOW, THEREFORE, BE IT RESOLVED BY THE ALASKA ENERGY AUTHORITY AS FOLLOWS: Section 1. The Executive Director is hereby authorized to enter into a line of credit agreement and other appropriate agreements to reflect a line of credit in favor of the Authority in an aggregate principal amount not to exceed $10,000,000 upon terms and conditions approved by the Executive Director. The line of credit may be utilized to pay for Losses and Loss Related Expenses, as those terms are defined in the Insurance Agreement. Section 2. The line of credit may be secured by the Insurance Fund. The Executive Director is authorized to enter into such trust, custodial and other arrangements as may be necessary with respect to the Insurance Fund and the pledge of such fund in connection with the line of credit. Section 3. The form of the obligations and the provisions for signatures, authentication and payment shall be as set forth in the agreements approved and executed by the Executive Director. Section 4. The Executive Director is authorized to execute and deliver for and on behalf of the Authority any and all certificates, documents, opinions or other papers and perform all other acts as the Executive Director may deem necessary or appropriate in order to implement and carry out the intent and purposes of this Resolution. Four Dam Pool Line of Credil Resolution #1998-02 Page2 Section 5. This Resolution shall become effective upon passage and approval. DATED at Anchorage, Alaska this 161h day of June, 1998. (SEAL) ATTEST Four Dam Pool Line of Credit Resolution #1998-02 Chairman Page 3