ITEM TITLE:
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Consideration and action upon a Resolution of the Lawton Water Authority (the “Authority”), approving an authorizing the modification of terms regarding the Letter of Credit Note, Series 2024C (the “Note”) to be issued by the Authority; and all matters related thereto.
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INITIATOR: Timothy Wilson, Deputy City Attorney
STAFF INFORMATION SOURCE: Timothy Wilson, Deputy City Attorney
BACKGROUND: On or around August 6, 2024, ODEQ approved a consent order with the City of Lawton requiring the City to “establish and submit to DEQ an alternative financial assurance mechanism(s) in the amount of the currently approved cost estimates no later than October 31, 2024.” On September 24, 2024, the Lawton Water Authority and City Council approved the Letter of Credit Note, Series 2024C, as the alternative financial assurance mechanism to be used to comply with ODEQ’s consent order. At the time of approval by the Lawton Water Authority and City Council the interest rate listed was a fixed rate of 6.75% as provided by BancFirst’s Letter of Interest. On Monday, October 28th, City staff learned the final terms changed from a fixed interest rate of 6.75% to a rate that will be fixed at the time of an advance under the Letter of Credit Note, Series 2024C to be the then existing 5 year Constant Maturity Treasury (CMT) + 2.50 percentage points, with the rate adjusting on each 5 year anniversary of the first draw based on the then existing 5 year CMT + 2.50 percentage points. Interest would only accrue if there were a draw on the line of credit. The proposed resolution authorizes this modification.
EXHIBIT: Resolution 24-
KEY ISSUES: N/A
FUNDING SOURCE: N/A
STAFF RECOMMENDED COUNCIL ACTION: Approve the Resolution authorizing the modification of terms related to the Letter of Credit Note, Series 2024C.