20050331Application.pdf

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Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street
O. Box 2564-83701
Boise, ill 83702
Tel: [phone]
Fax: [phone]
ioe~mc~-miller.com
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Attorneys for Applicant
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF UNITED WATER IDAHO INC. FOR
AUTHORITY TO (1) EXECUTE AND
DELIVER TO THE IDAHO WATER
RESOURCE BOARD (BOARD) A LOAN
AGREEMENT WITH RESPECT TO THE
PROCEEDS OF A SALE OF UP TO
$19 975 000 OF WATER RESOURCE
DEVELOPMENT REVENUE BONDS
SERIES 2005, UNDER AN INDENTURE OF
TRUST BE WEEN THE BOARD AND
WELLS FARGO BANK NORTHWEST
, AS TRUSTEE; (2) ENTER INTO AN
AGREEMENT WITH THE BOARD AND
ONE OR MORE UNDER-WRITERS FOR
THE PURCHASE ON A NEGOTIATED
BASIS OF THE SERIES 2005 BONDS; (3)
ENTER INTO AN AGREEMENT FOR
BOND INSURANCE; AND (4) ENTER IN
TO ANY AND ALL OTHER AGREEMENTS
THAT WOULD BE NEGOTIATED AND
REQ UIRED AT A LA TER DATE WITH
RESPECTTO THE FOREGOING.
Case No. UWI- W -05-
APPLICATION
AND
REQUEST FOR EXPEDITIOUS
ACTION
COMES NOW United Water Idaho Inc.
, ("
Applicant " or "the Company ) and
respectfully requests that the Commission issue its order granting the authorities specified
in the caption hereof and in support thereof shows as follows, to wit:
Application
Page
Applicant is a public utility water corporation within the meaning of the Idaho
Public Utility Law, is duly organized and existing under the laws of the State of Idaho
and engaged in conducting a general water business in and about Boise City, Ada
County, Idaho having its principal office and place of business at 8248 West Victory
Road, Boise, Idaho 83707.
II.
Communications in reference to this application should be addressed to:
Michael Algranati
Treasurer
United Waterworks
200 Old Hook Road
Harrington Park, NJ 07640
Phone: [phone]
Fax: [phone]
Dean J. Miller
McDevitt & Miller LLP
420 W. Bannock St
Boise, Idaho 83702
[phone]
[phone]
III.
A certified copy of Applicant's Articles of Incorporation , together with all
amendments to date, is on file with the Commission.
IV.
F or over 100 years, Applicant, together with its predecessors in interest, has
owned and operated and now owns and operates an extensive and integrated water
system in Boise City, Idaho, and in certain territory within Ada and Canyon Counties in
the vicinity of, but outside the present corporate limits of said Boise City, and renders
general water service within such territory and to the inhabitants thereof.
Applicant's current Certificate is Amended Certificate No. 143.
Application
Page 2
VI.
As required by IPUCRP 141 , following is the relevant information with respect to
the proposed issuance: The securities are Idaho Water Resource Development Revenue
Refunding Bonds, Series 2005 in the principal amount of $19 975 000, to be issued on or
about April 26, 2005 and which are due on April 1 , 2035. The estimated coupon rate is
70%, which rate will be finally fixed at the time of issuance. There are provisions for
optional redemption in full or in part after March 1 2012. The principal under-writer is
Edward D. Jones Company who expects to market the securities to individual investors
with an under-writing commission of3% of par.
The costs of issuance are estimated to be as follows:
Principal Amount Issued
Underwriter s Fee
Idaho Water Resource
Board
Bond Insurance
Financial Advisor
Bond Counsel
Underwritees Counsel
Trustee
Company Counsel
Rating Agencies
Ernst & Young
Printing, etc.
Total Costs
Net Proceeds
Application
Page 3
$19 975 000.
$ 599 250.
$ 159 278.41
$ 234 416.
$ 30 000.
$ 40 000.
$ 30 000.
$ 2 000.
$ 2 000.
$ 16 000.
$ 10 000.
$ 25 000.
$ 1 145 945.
$18 827 054.
VII.
The purposes for which the proceeds from the securities will be used
include: to refund and prepay, in advance of their stated maturity, the outstanding
principal amount of Water Resource Development Revenue Bonds, Series 1994 (Boise
Water Corporation Project) (the "Prior Bonds ) issued by the Board on behalf of the
Applicant's predecessor, Boise Water Corporation, which Prior Bonds were used to
finance the costs of certain facilities owned by the Applicant and used for the public
distribution of water.
VIII.
The transaction is consistent with the public interest and is consistent with
Applicant's proper performance of service as a public utility because, as illustrated by the
following chart, re- financing the Prior Bonds will result in significant savings, allowing
Applicant to provide service to its customers at a lower cost of capital:
Application
Page 4
Current Issue
Principal
Rate
Unamortized Cost of Issuance
Final Maturity
$19,975 000
6.40%
$925,966
0 ct-
Annual Interest Expense
Annual Amortization
Total
Annual Effective Interest Rate
278,400
$48 735
327 135
64%
ProDosed Refundina Issue
Principal
Estimated Coupon Rate
Unamortized Cost of Issuance
Call prem ium
New Issue Costs
Final Maturity
$19,975 000
70%
$925,966
232 860
0 ct-
Annual Interest Expense
Annual Amortization
Total
Annual Effective Interest Rate
$938,825
$107 941
046,766
24%
Estim ated Annual Pretax Savings $280,369
IX.
Attached hereto as Exhibit A is a financial statement showing the authorized and
outstanding classes of securities.
Attached hereto as Exhibit B are certified copies of resolutions authorizing the
transacti on.
XI.
Attached hereto as Exhibit C is a proposed order granting this Application.
XII.
Expeditious action is appropriate because the effect of this transaction is to reduce
borrowing costs, to the benefit of Applicant's customers, and because in the absence of
expeditious action the costs of this transaction may increase.
Application
Page 5
XIII.
A notice of this Application will be published within seven (7) days of the date
hereof in the Idaho Statesman.
XIV.
All fees required to be paid by Idaho Code 61-905 have been tendered to the
Commission.
XV.
As required by IPUCRP 143, when such information becomes available
Applicant will file with the Commission a verified report showing the amount realized
including the itemized costs and expenses incurred in connection with the transaction.
WHEREFORE, Applicant respectfully requests that the Commission act
expeditiously upon this Application and that the Commission enter its order authorizing
Applicant to:
1. Execute and deliver to the Idaho Water Resource Board a Loan Agreement with
Respect to the Proceeds of sale of up to $19 975 000 of Water Resource
Development Revenue Bonds Series 2005;
2. Enter into an Agreement with the Board and one or more under-writers for the
purchase on a negotiated basis of the series 2005 bonds;
3. Enter into an Agreement for Bond Insurance;
4. Enter into any and all other agreements that would be negotiated and required at a
date with respect to the foregoing.
Application
Page 6
DATED this day of March, 2005.
ITED WATER IDAHO INC.
Application
Page 7
EXHIBIT A
United Waterworks Inc
Pro Forma Consolidated Capital Structure
31-Dec-
Item Amou nt Percenta Cost Wei hted
Long-term Debt $ 224,435,000 99.75%90%88%
Minority Interest (Preferred Stock)554 200 250/0 00%01 %
Common Equity 00%11.20%00%
Total $ 224 989 200 100.00%89%
eXHIBIT
100~
UNITED WATERWORKS INC.
Extract from the Minutes of the
Meeting of the Board of Directors
Held March 30, 2005
The undersigned, Carla E. Hjelm, Assistant Secretary of United Waterworks Inc.
hereby certifies that the following is a true and correct extract from the minutes of a
special meeting of the Board of Directors held March 30, 2005, at which time a quorum
was present and voting throughout:
RESOLVED:
RESOLVED:
RESOLVED:
RESOLVED:
RESOLVED:
that the Board of Directors hereby approves a refunding program by the
Company calling for the issue and delivery of up to $19,975 000 principal
amount of Conlpany indebtedness to support Idaho Water Resources Board
indebtedness, such latter indebtedness to be issued and sold, through
negotiated sale or otherwise for the refunding of all or part of (a) the
$19,975,000 aggregate principal amount of Water Facilities Revenue Bonds
of 1994 Series bearing an interest rate of 4.65% to 5.0% and maturing in
2024; and be it further
that the officers of the Company are hereby authorized to cause the Company
to secure said Authority indebtedness, by promissory notes of the Company
and/or by bonds and/or insurance; and be it further
that, the order to consummate the refunding progr3.1n herein approved, the
officers of the Conlpany are hereby authorized on behalf of the Company to
do all aets and things, including obtaining necessary orders, approval and
authorizations from public regulatory agencies having jurisdiction, and in
eoIUlection therewith to retain such counsel and fmancial and other advisors
may be deemed necessary Or desirable; and be it further
that the officers of the Company are hereby authorized on behalf of the
Company to furnish such infonnation and execute and file in the name of the
Company such documents, as in the judgment of the officer or officers so
acting are necessary or desirable in order to qualify or exempt the $19 975,000
of indebtedness of the Company or said Authority for sale under the securities
1aws of such state as the representative of the underwriters, the placement
agents for said indebtedness or the Company s fmancjal advisors may
designate; and be it further
that in order to consummate the refunding program herein approved~ theofficers of the Conlpany are hereby authorized on behalf of the Company to
execute any and all documents which may be necessary or desirable to
consummate the refunding program herein approved, including, without
limitation: (1) a Loan AgreeIl1ent; (ij) a Contract for Purchase anlOng the
underwriter(s) and the Conlpany; and (iii) any and all documents required by
any bank or other institutions providing credit, liquidity or repmchase support
and any third party insurer of said Authority's indebtedness; and be it further
EXHIBIT
XID1SV3Rl ~31VM a3~INa Zt99L9L 106 XV
600 If!
RESOLVED:that if nlanagement of the Company concludes that it is not in the interest of
the Company to pursue the refunding authorized in the foregoing resolutions,
it is understood that management will so infoml the Board of Directors.
Witness Iny hand and seal oftbe Company this 30th day of March 2005.
XHnSVaRl ~alVM a3~INn 61S9L9L 106 XVd 01: 91 SO06/0C/CO
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF UNITED WATER IDAHO INC. FOR
AUTHORITY TO (1) EXECUTE AND
DELIVER TO THE IDAHO WATER
RESOURCE BOARD (BOARD) A LOAN
AGREEMENT WITH RESPECT TO THE
PROCEEDS OF A SALE OF UP TO
$19 975 000 OF WATER RESOURCE
DEVELOPMENT REVENUE BONDS
SERIES 2005, UNDER AN INDENTURE OF
TRUST BEWEEN THE BOARD AND
WELLS FARGO BANK NORTHWEST
, AS TRUSTEE; (2) ENTER INTO AN
AGREEMENT WITH THE BOARD AND
ONE OR MORE UNDER-WRITERS FOR
THE PURCHASE ON A NEGOTIA TED
BASIS OF THE SERIES 2005 BONDS; (3)
ENTER INTO AN AGREEMENT FOR
BOND INSURANCE; AND (4) ENTER IN
TO ANY AND ALL OTHER AGREEMENTS
THAT WOULD BE NEGOTIATED AND
REQUIRED AT A LATER DATE WITH
RESPECTTO THE FOREGOING.
Case No. UWI-05-
(PROPOSED)
ORDER APPROVING
APPLICATION
On March 31 , 2005, United Water Idaho Inc., (Company) filed an Application
pursuant to Chapter 9, Title 61 of the Idaho Code and Rule 141 of the Commission
Rules of Procedure, IDAPA 31.01.01141 for authority to participate in the issuance of up
to $19 975 000 of Water Resource Development Revenue Bonds, Series 2005.
The net proceeds of the Series 2005 bonds will be applied toward the re-financing
of similar Water Resource Development Bonds, issued in 1994.
EXHIBIT C
The Commission, having considered the Application, the information in its files
concerning the Company, the applicable law, and being fully advised in the premises
finds and concludes:
FINDINGS OF FACT
United Water Idaho Inc., is a water corporation within the definition of Idaho
Code ~ 61-125 and is a public utility within the definition of Idaho Code ~ 61-129.
United Waterworks Inc., is a corporation duly organized and existing pursuant to
the laws of the state of Delaware. United Waterworks holds all of United Water Idaho
issued and outstanding common stock.
II.
The Series 2005 bonds will be issued by the Board on a tax-exempt basis and will
be supported by United Waterworks' promissory notes and/or payment obligations
undertaken by United Waterworks pursuant to a loan agreement to be entered into with
the Board. The proposed issuance of the Series 2005 bonds will be offered in
conjunction with bond insurance.
III.
The net proceeds of the Series 2005 bonds will be used to refund and prepay,
in advance of their stated maturity, the outstanding principal amount of Water
Resource Development Revenue Bonds, Series 1994 (Boise Water Corporation
EXHIBIT C
Project) (the "Prior Bonds ) issued by the Board on behalf of the Applicant's
predecessor , Boise Water Corporation, which Prior Bonds were used to finance the
costs of certain facilities owned by the Applicant and used for the public distribution of
water.
IV.
The Series 2005 bonds will be offered to the public through an underwriter or
underwriters, on a negotiated basis, at a price to be determined.
The results of the issuance are expected to be as follows:
Principal Amount Issued
Underwriter s Fee
Idaho Water Resource
Board
Bond Insurance
Financial Advisor
Bond Counsel
Underwriter s Counsel
Trustee
Company Counsel
Rating Agencies
Ernst & Young
Printing, etc.
Total Costs
Net Proceeds
$19 975 000.
$ 599 250.
$ 159 278.41
$ 234 416.
$ 30 000.
$ 40 000.
$ 30 000.
$ 2 000.
$ 2 000.
$ 16 000.
$ 10 000.
$ 25 000.
$ 1 145 945.
$18 827 054.
VI.
The Company has paid the fees required by Idaho Code ~ 61-905.
EXHIBIT C
CONCLUSIONS OF LAW
United Water Idaho Inc., is a water corporation within the definition of Idaho
Code ~ 61-125 and is a public utility within the definition of Idaho Code ~ 61-129.
II.
The Idaho Public Utilities Commission has jurisdiction over this Application
pursuant to the provisions of Idaho Code ~ ~ 61-901 et seq. and the Application
reasonably conforms to Rule 141 of the Commission s Rules of Procedure, IDAP A
31.01.01141.
III.
The method of issuance is proper.
IV.
The general purpose to which the proceeds will be put are lawful purposes under
the Public Utility Laws of the state of Idaho and are compatible with the public interest.
However, this general approval of the general purposes to which the proceeds will be put
is neither a finding of fact nor a conclusion of law that any particular construction
program of the Company which may be benefited by the approval of this Application has
been considered or approved by this Order, and this Order shall not be construed to that
effect.
EXHIBIT C
The issuance of an order authorizing the proposed financing does not constitute
agency determination/approval of the type of financing or the related costs for ratemaking
purposes, which determination the Commission expressly reserves until the appropriate
proceeding.
VI.
The Application should be approved.
IT IS THEREFORE ORDERED that the Application of United Water Idaho Inc.
for authority to (1) execute and deliver to the Idaho Water Resource Board a loan
agreement with respect to the proceeds of a sale of up to $19 975 000 of Water Resource
Development Revenue Bonds, Series 2005, under an indenture of trust between the Board
and Wells Fargo Bank Northwest N.; (2) enter into an agreement with the Board and
one or more underwriters for the purchase on a negotiated basis of the Series 2005 bonds;
(3) enter into an agreement for bond insurance; and (4) enter into any and all other
agreements that would be negotiated and required at a later date with respect to the
foregoing is hereby approved.
IT IS FURTHER ORDERED that this authorization is without prejudice to the
regulatory authority of this Commission with respect to rates, service, accounts
valuation, estimates or determination of cost, or any other matter which comes before this
Commission pursuant to its jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provisions of
Chapter 9, Title 61 Idaho Code or any act or deed done or performed in connection with
EXHIB IT C
this Order shall be construed to obligate the state of Idaho to payor guarantee in any
manner whatsoever any security authorized, issued, assumed or guaranteed under the
provisions of Chapter 9, Title 61 Idaho Code.
IT IS FURTHER ORDERED that United Water Idaho Inc., shall file the
following documents as they become available:
a. verified copies of any agreement entered into in connection with the borrowing
pursuant to this Order;
b. verified copies of any credit support arrangement entered into pursuant to this
Order;
c. a verified statement setting forth in reasonable detail the disposition of the
proceeds of the borrowing made pursuant to this Order; and
a verified statement setting forth in detail all fees and expenses to be paid in
connection with the proposed issuance.
IT IS FURTHER ORDERED that issuance of this Order does not constitute
acceptance of United Water Idaho Inc.s exhibits or other materials accompanying the
Application for any purpose other than the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues
finally decided by this Order) or in interlocutory Orders previously issued in this Case
No. UWI-95-03 may petition for reconsideration within twenty-one (21) days of the
service date of this Order with regard to any matter decided in this Order or in
interlocutory Orders previously issued in this Case No. UWI-95-3. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-
petition for reconsideration. See Idaho Code ~ 61-626.
EXHIBIT C
DONE BY Order of the Idaho Public Utilities Commission at Boise, Idaho
this day of April, 2005.
PAUL KJELLANDER, PRESIDENT
MARSHA A. SMITH, COMMISSIONER
DENNIS S. HANSEN, COMMISSIONER
ATTEST:
Jean Jewell
Commission Secretary
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EXHIBIT C