HomeMy WebLinkAbout12-13-2016 Item 16 Water Resource Recovery Facility Project - Funding Resolutions Meeting Date: 12/13/2016
FROM: Carrie Mattingly, Utilities Director
PREPARED BY: David Hix, Deputy Director – Wastewater
SUBJECT: WATER RESOURCE RECOVERY FACILITY PROJECT – FUNDING
RESOLUTIONS
RECOMMENDATION
1. Adopt a resolution (Attachment A) authorizing reimbursement to the State Water Resources
Control Board for the financing of the Water Resource Recovery Facility project and
authorize the Utilities Director to sign and file the financial assistance application for the
Water Resource Recovery Facility project; and
2. Adopt a resolution (Attachment B) pledging sewer fund revenues to State Water Resources
Control Board for the financing of the Water Resource Recovery Facility project; and
3. Adopt a resolution (Attachment C) requesting reimbursement of advanced monies related to
the construction of the Water Resource Recovery Facility project.
DISCUSSION
Background
The City operates a Water Resource Recovery Facility (WRRF) under a NPDES (National
Pollutant Discharge Elimination System) permit issued by the Central Coast Water Board
(CCWB). The most recent NPDES permit was adopted by the CCWB in 2014. In order to
comply with the 2014 NPDES permit, maximize water production, and address other pressing
issues including replacing equipment long past its useful life at the facility, much work is
required at the WRRF including process upgrades with strict regulatory deadlines.
Work on the WRRF Project commenced in 2014 when the City hired WSC as the WRRF Project
program manager. The project’s Facilities Plan was adopted by City Council in July 2015.
CH2M was hired as the project design firm in November 2015 and is currently working toward
60% design documents. The project Environmental Impact Report (EIR) was certified by the
City Council in August 2016.
Funding for the WRRF Project will come from the Clean Water State Revolving Fund loan
program.
Clean Water State Revolving Fund
The State of California established the Clean Water State Revolving Fund in 1989 under the
authority of the Federal Clean Water Act to help achieve the goal of clean water. The State
Revolving Fund (SRF) is capitalized with state and federal funds. The SRF loan program offers
low interest rates and favorable repayment terms, especially when compared with traditional
bond financing.
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The SRF financing application includes four main components (general, environmental,
financial, and technical) called packages. The general and environmental packages have already
been submitted to the State Water Resources Control Board who administers the SRF program.
The adoption of the three resolutions listed in the Recommendations will allow the City to
complete its financing application.
The funding amount being requested is $140 million with a funding term of 30 years. This is the
maximum projected cost estimate; the final cost is ultimately expected to be less. There are
several factors that have led to the this estimated cost to have increased from past reports
including the following primary issues; 1) a more sophisticated secondary process that will get
the City closer to potable reuse and better meet regulatory requirements, 2) additional flood
protection and 3) odor control. Due to complexities surrounding projects of this type,
underestimating the amount needed would require an entirely new financing application
submission and delay the project. Ultimately, the City is only required to pay back funding
actually used. More history and detail will be presented about the project, the latest cost estimate
and design progress at the January 3. 2017 Council meeting.
Submission of the financing application does not obligate the City to accept a State Revolving
Fund loan. It is expected the final agreement for Council’s consideration will be received late
summer or early fall 2017. This final agreement is the document that would bind the City to
repay the loan.
Next Steps
Many decisions on the WRRF Project will be coming before City Council in 2017.
1. A comprehensive WRRF Project update and design contract amendment request is
scheduled for January 3.
2. The release of a request for proposals for equipment pre-selection will be presented in
February.
3. In addition to the SRF funding agreement, other key items to come include a request for
proposals for construction management services and final design approval.
FISCAL IMPACT
There is no fiscal impact associated with the recommended actions. Submission of the financial
assistance application does not obligate or commit the City to accept a State Revolving Fund
loan, but allows this phase of the time consuming process to begin.
Further analysis and discussion of project costs will be provided during the January 3, 2017
WRRF Project update.
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ALTERNATIVE
Do Not Adopt the Resolutions. The Resolutions are required to submit a complete financing
application to the State Revolving Fund program. Should Council choose to not adopt the
Resolutions the City would not be able to apply for the SRF program. Alternative funding will be
on less favorable terms than the SRF program.
Attachments:
a - Resolution-SRF Financing Authorization
b - Resolution-Fund and Revenue Pledge
c - Resolution - Reimbursement From SWRCB
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R _____
RESOLUTION NO. (2016 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING THE REIMBURSEMENT TO
THE STATE WATER RESOURCES CONTROL BOARD FOR THE
FINANCING OF THE WATER RESOURCE RECOVERY FACILITY
UPGRADE
WHEREAS, the City of San Luis Obispo desires to finance the cost of the construction of
the Water Resource Recovery Facility Upgrade (the “Project”); and
WHEREAS, the City of San Luis Obispo intends to finance the construction of the Project
with moneys (“Project Funds”) provided by the State of California, acting by and through the State
Water Resources Control Board (State Water Board); and.
WHEREAS, the State Water Board may fund the Project Funds with proceeds from the
sale of obligations the interest upon which is excluded from gross income for federal income tax
purposes (the “Obligations”); and
WHEREAS, prior to either the issuance of the Obligations or the approval by the State
Water Board of the Project Funds the City of San Luis Obispo desires to incur certain capital
expenditures (the “Expenditures”) with respect to the Project from available moneys of the City of
San Luis Obispo; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The Director of Utilities or her designee is hereby authorized and directed to
sign and file, for and on behalf of the City of San Luis Obispo, a Financial Assistance Application
for a financing agreement from the State Water Resources Control Board for the construction of
the Water Resources Recovery Facility (the “Project”).
SECTION 2. This Authorized Representative, or her designee, is designated to provide
the assurance, certifications, and commitments required for the financial assistance application,
including executing a financial assistance agreement from the State Water Resources Control
Board and any amendments or changes thereto.
SECTION 3. The Authorized Representative or her designee, is designated to represent
the City of San Luis Obispo in carrying out the City’s responsibilities under the financing
agreement, including certifying disbursement requests on behalf of the City of San Luis Obispo
and compliance with applicable state and federal laws.
16.a
Packet Pg. 245 Attachment: a - Resolution-SRF Financing Authorization [Revision 2] (1528 : WRRF Funding Resolutions)
Resolution No. ______ (2016) Page 2
R _____
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2016.
____________________________________
Mayor Heidi Harmon
ATTEST:
_________________________________
Carrie Gallagher
City Clerk
APPROVED AS TO FORM:
_________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
_________________________________
Carrie Gallagher
City Clerk
16.a
Packet Pg. 246 Attachment: a - Resolution-SRF Financing Authorization [Revision 2] (1528 : WRRF Funding Resolutions)
R _____
RESOLUTION NO. (2016 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, PLEDGING SEWER FUND REVENUES TO THE
STATE WATER RESOURCES CONTROL BOARD FOR THE
FINANCING OF THE WATER RESOURCE RECOVERY FACILITY
UPGRADE
WHEREAS, the City of San Luis Obispo’s Water Resource Recovery Facility is in need
of upgrades to fulfill its regulatory mandates and capacity requirements for full build-out of the
City.
WHEREAS, the City Council desires to finance the construction phase of the Water
Resource Recovery Facility upgrade through the State Water Resources Control Board.
WHEREAS, the City Council directed staff to submit an application to the State Water
Resources Control Board for the applicable financing.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The City of San Luis Obispo will dedicate and pledge sewer rate revenue
from its Sewer Fund to payment of any and all Clean Water State Revolving Fund financing for
the Water Resource Recovery Facility Upgrade project (the “Project”).
SECTION 2. The City of San Luis Obispo commits to collecting such revenues and
maintaining the Sewer Fund throughout the term of such financing and until the City of San Luis
Obispo has satisfied its repayment obligation thereunder unless modifications or change is
approved in writing by the State Water Resources Control Board.
SECTION 3. So long as the financing agreement is outstanding, the City of San Luis
Obispo’s pledge hereunder shall constitute a lien in favor of the state Water Resources Control
Board on the foregoing fund and revenue without any further action necessary. So long as the
financing agreement is outstanding, the City of San Luis Obispo commits to maintain the Sewer
Fund and its revenue at levels sufficient to meet its obligations under the financing agreement.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2016.
16.b
Packet Pg. 247 Attachment: b - Resolution-Fund and Revenue Pledge [Revision 1] (1528 : WRRF Funding Resolutions)
Resolution No. _______ (2016) Page 2
R _______
____________________________________
Mayor Heidi Harmon
ATTEST:
_________________________________
Carrie Gallagher
City Clerk
APPROVED AS TO FORM:
_________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
_________________________________
Carrie Gallagher
City Clerk
16.b
Packet Pg. 248 Attachment: b - Resolution-Fund and Revenue Pledge [Revision 1] (1528 : WRRF Funding Resolutions)
R ________
RESOLUTION NO. (2016 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, SEEKING REIMBURSEMENT FROM THE
STATE WATER RESOURCES CONTROL BOARD FOR CERTAIN
ADVANCED MONEYS RELATED TO THE CONSTRUCTION OF THE
WATER RESOURCE RECOVERY FACILITY UPGRADE
WHEREAS, the City of San Luis Obispo desires to finance the cost of Water Resource
Recovery Facility Upgrade (the “Project”), and;
WHEREAS, the City of San Luis Obispo intends to finance the construction with moneys
("Project Funds") provided by the State of California, acting by and through the State Water
Resources Control Board (“State Water Board”); and
WHEREAS, the State Water Board may fund the Project Funds with proceeds from the
sale of obligations the interest upon which is excluded from gross income for federal income tax
purposes (the "Obligations"), and
WHEREAS, prior to either the issuance of the Obligations or the approval by the State
Water Board of the Project Funds the City of San Luis Obispo desires to incur certain capital
expenditures (the "Expenditures") with respect to the Project from available moneys of the City of
San Luis Obispo Sewer Fund; and
WHEREAS, the City of San Luis Obispo has determined that those moneys to be
advanced on and after the date hereof to pay the Expenditures are available only for a temporary
period and it is necessary to reimburse the City of San Luis Obispo Sewer Fund for the expenditures
from the proceeds of the Obligations.
NOW, THEREFORE, the City Council of the City of San Luis Obispo, California, does
resolve, declare, and order as follows:
SECTION 1. The City of San Luis Obispo hereby states its intention and reasonably
expects to reimburse Expenditures paid prior to the issuance of the Obligations or the approval by
the State Water Board of the Project Funds.
SECTION 2. The reasonably expected maximum principal amount of the Project Funds is
One Hundred Forty Million Dollars ($140,000,000.00).
SECTION 3. This resolution is being adopted no later than 60 days after the date on which
the City of San Luis Obispo will expend moneys for the construction portion of the Project cost to
be reimbursed with Project Fun
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Packet Pg. 249 Attachment: c - Resolution - Reimbursement From SWRCB [Revision 2] (1528 : WRRF Funding Resolutions)
Resolution No. _____ (2016) Page 2
R _____
SECTION 4. Each project expenditure will be a type properly chargeable to a capital
account under general federal income tax principles.
SECTION 5. To the best of its knowledge, the City of San Luis Obispo is not aware of the
previous adoption of official intents by the City of San Luis Obispo that have been made as a
matter of course for the purpose of reimbursing expenditures and for which tax-exempt obligations
have not been issued.
SECTION 6. This resolution is adopted as official intent of the City of San Luis Obispo
in order to comply with Treasury Regulation §1.150-2 and nay other regulations of the Internal
Revenue Service relating to the qualification for reimbursement of Project Cost.
SECTION 7. All the recitals in this Resolution are true and correct and the City of San
Luis Obispo so finds, determines, and represents.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2016.
____________________________________
Mayor Heidi Harmon
ATTEST:
_________________________________
Carrie Gallagher
City Clerk
APPROVED AS TO FORM:
_________________________________
J. Christine Dietrick
16.c
Packet Pg. 250 Attachment: c - Resolution - Reimbursement From SWRCB [Revision 2] (1528 : WRRF Funding Resolutions)
Resolution No. _____ (2016) Page 3
R _____
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
_________________________________
Carrie Gallagher
City Clerk
16.c
Packet Pg. 251 Attachment: c - Resolution - Reimbursement From SWRCB [Revision 2] (1528 : WRRF Funding Resolutions)