HomeMy WebLinkAboutItem 08 - Public Disclosure of Good Faith Estimates and Pay Off for the Water Energy Efficiency Project Upgrade Financing
Department Name: Utilities
Cost Center: 6003
For Agenda of: January 21, 2020
Placement: Consent
Estimated Time: N/A
FROM: Aaron Floyd, Utilities Director
Prepared By: Jennifer Thompson, Utilities Business Manager
SUBJECT: PUBLIC DISCLOSURE OF GOOD FAITH ESTIMATES AND PAY OFF OF
STATE REVOLVING FUND LOAN AS CONDITIONS OF THE WATER
ENERGY EFFICIENCY PROJECT UPGRADE FINANCING
RECOMMENDATION
1. Review the California Infrastructure and Economic Development Bank (I Bank) good faith
estimate in compliance with Government Code Section 5851.2 disclosure requirements; and
2. Adopt a resolution accepting the good faith estimate (Attachment A).
3. Adopt a resolution authorizing the use of Water Fund Unreserved Working Capital to pay off
the State Revolving Fund (SRF) Water Reuse Project loan and authorizing payment of the I
Bank loan origination fee (Attachment B).
DISCUSSION
Background
On November 19, 2019, the City Council voted 4-0-1 (Mayor Harmon absent) to enter into an
agreement with PG&E for implementation of the Water Energy Efficiency Project. This project
will replace critical aging infrastructure with energy saving equipment at the Water Treatment
Plant. With this action, Council also approved the debt financing of up to $14,300,000 for the
construction of the project.
After analyzing two sources of funding, (1) a municipal lease from a commercial bank and; (2) a
traditional loan from the Infrastructure Bank, City staff found I Bank to be the preferred option.
Staff considered the interest rate, other fees, t erm, and debt covenant requirements in other
existing Water Fund debt. I Bank offered the lowest interest rate of 2.5 percent and satisfies the
debt covenants in existing Water Fund debt. The commercial bank interest rate was 2.75 percent
and a municipal lease type loan would violate existing debt covenants.
Good Faith Estimate
Pursuant to Government Code Section 5852.1, which became effective January 1, 2018, the
following good faith estimates obtained from an underwriter, financial advisor, or private lender,
must be disclosed at a public meeting before the governing body of a local government entity for
the issuance of debt with a term greater than 13 months:
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1. The true interest cost of the loan;
2. Any finance charges;
3. The amount of proceeds received; and
4. The total payment amounts.
The City has applied for financing for the Water Energy Efficiency project from I Bank with a
term of 20 years. Pursuant to that application, the I Bank underwriter has provided the attached
amortization schedule (Attachment C) which serves as a good faith estimate of these items.
1. The true interest cost of the loan is $3,807,745.48;
2. There is a 0.3 percent annual fee totaling $485,529.46 over the term of the loan;
3. The loan proceeds are $14,300,000; and
4. The total debt payment amounts to $18,593,274.94.
State Revolving Fund Loan Pay Off
As a condition of applying for and entering into the financing agreement, I Bank is requiring the
City to pay off an existing loan from the State Revolving Fund (SRF). The SRF loan proceeds
were received in 2004 to pay for the Water Reuse Project which generally consisted of
constructing water recycling facilities to provide approximately 1,000 acre-feet per year of
recycled water for landscape and agricultural irrigation in the southern part of the City. Both I
Bank and the SRF have a restrictive parity debt condition which means that each agency requires
that their loan be secured first by Water Fund revenues. To resolve this conflict, I Bank is
requiring the City to either enter into a formal agreement with the SRF deleting their parity
requirement or that the City pay off the SRF loan prior to receiving financing from I Bank. It is
unlikely that the SRF will agree to delete its parity requirement. However, since the SRF loan
was previously scheduled to be paid off in August 2024 staff recommends paying it off early to
avoid the conflict. By paying the loan off early, the City will save approximately $186,000 in
interest and service charges.
I Bank Loan Origination Fee
I Bank charges an origination fee of one percent of the loan amount, or $143,000. The
origination fee can either be financed with the loan or paid in advance with cash. The
recommendation is to pay the loan origination fee in advance from Water Fund Unreserved
Working Capital to avoid paying interest on the $143,000 over the course of the loan.
Previous Council Action
On May 21, 2019 the City Council adopted “A Resolution of the City Council of the City of San
Luis Obispo, California, authorizing the submission of the application to the I Bank for financing
the Water Energy Efficiency project, authorizing the incurring of an obligation payable to I Bank
for the financing of the Water Energy Efficiency project if I Bank approves said application,
declaration of official intent to reimburse certain expenditures from proceeds of obligation, and
approving certain other matters in connection therewith” (Attachment D). This resolution
allowed the City to apply for I Bank financing but did not satisfy the requirements of
Government Code Section 5852.1.
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On November 19, 2019 the City Council adopted “A Resolution of the City Council of the City
of San Luis Obispo, California, authorizing use of water fund unreserved working capital for the
water energy efficiency project” (Attachment E). This resolution authorized the use of
unreserved working capital for cash flow purposes but did not go so far as to authorize the use of
unreserved working capital to pay off the SRF loan.
Policy Context
The good faith estimate public disclosure is required by State law: Government Code Section
5852.1.
Public Engagement
This is an administrative item, so no outside public engagement was completed. Public comment
can be provided to the City Council through written correspondence prior to the meeting and
through public testimony at the meeting.
CONCURRENCE
The Finance Department concurs with the recommendation.
ENVIRONMENTAL REVIEW
The City determined the activity funded by the I Bank loan, the Water Energy Efficiency Project,
is categorically exempt from the California Environmental Quality Act pursuant to CEQA
Guidelines section 15301, Class 1 – Existing Facilities and 15328, Class 28 - Small
Hydroelectric Projects at Existing Facilities. The exemption was filed with the State
Clearinghouse on January 24, 2019.
FISCAL IMPACT
Budgeted: No Budget Year: 2019-20
Funding Identified: Yes - Water Fund & Debt Financing
Fiscal Analysis:
I Bank Amortization Schedule Summary
Loan Proceeds $14,300,000
Total Interest $3,807,745.48
Total Annual Fee* $485,529.46
Total Payments $18,593,274.94
*over the term of the loan.
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The good faith estimate does not have a fiscal impact but simply serves as public disclosure
required to obtain financing for the Water Energy Efficiency Project.
Funding Sources Current FY Cost Annualized
On-going Cost Total Project Cost
General Fund
State
Federal
Other: Water Fund $2,643,000 $(525,456.94) $2,643,000
Other: Sewer Fund
By paying the SRF loan off early, the City will save approximately $186,000 in interest and
service charges and will not be obligated to pay the $525,456.94 annual payment for the next
five years.
Unreserved Working Capital Balance
After the SRF loan is paid off the Water Fund will still have approximately $14,000,000 in
Unreserved Working Capital at the end of fiscal year 2019-20 (unaudited financials). The Water
Fund has historically maintained an Unreserved Working Capital balance of between $10 million
and $15 million. This is considered the minimum level necessary to adequately provide for
economic uncertainties, local disasters, other financial hardships; unseen operating or capital
needs; and cash flow requirements.
Water Rates
The current adopted water rates are sufficient to cover the one-time SRF payment and origination
fee and the resulting decrease in Unreserved Working Capital. No increase to rates will be
required to pay for this transaction.
ALTERNATIVES
1. Do not adopt the good faith estimate resolution. This is not recommended because public
disclosure of the good faith estimate is required by California State law.
2. Do not approve the use of Unreserved Working Capital. This is not recommended because
I Bank is requiring the City to either enter into a formal agreement with the SRF deleting
their parity requirement or that the City pay off the SRF loan prior to receiving financing
from I Bank. It is unlikely that the SRF will agree to delete its parity requirement so paying
off the SRF loan is the most feasible alternative. It is also preferable to pay the I Bank
origination fee from Unreserved Working Capital rather than financing to avoid paying
interest on the fee.
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Attachments:
a - Draft Resolution - Accepting the Good Faith Estimate
b - Draft Resolution - Authorizing the Use of Unreserved Working Capital
c - I Bank Amortization Schedule
d - Resolution No. 11011 (2019 Series)
e - Resolution No. 11063 (2019 Series)
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R ______
RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ACCEPTING THE CALIFORNIA
INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK GOOD
FAITH ESTIMATE
WHEREAS, on January 1, 2018 Government Code Section 5852.1 became effective; and
WHEREAS, Government Code Section 5852.1 requires the following good faith estimates
obtained from an underwriter, financial advisor, or private lender, be disclosed at a public meeting
before the governing body of a local government entity for the issuance of debt with a term greater
than 13 months: (1) the true interest cost of the loan; (2) any finance charges; (3) the amount of
proceeds received; and (4) the total payment amount; and
WHEREAS, the City has applied for a loan from the California Infrastructure and
Economic Development Bank (I Bank) to fund the Water Energy Efficiency Project at the Water
Treatment Plant; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows that:
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Resolution No. _____ (2020 Series) Page 2
R ______
SECTION 1. The City Council hereby receives the following good faith estimate, as of
December 2019, from I Bank.
a) The true interest cost of the loan is $3,807,745.48;
b) There is a 0.3 percent annual fee totaling $485,529.46 over the term of the loan;
c) The loan proceeds are $14,300,000; and
d) The total payment amounts are $18,593,274.94.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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 ______________, 2020.
____________________________________
Teresa Purrington
City Clerk
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R ______
RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING THE USE OF WATER FUND
UNRESERVED WORKING CAPITAL TO PAY OFF THE STATE
REVOLVING FUND WATER REUSE PROJECT LOAN
WHEREAS, on April 4, 2018, the City Council adopted Resolution 10878 and voted to
proceed with the Water Energy Efficiency Project (Project); and
WHEREAS, on May 21, 2019, the City Council approved Resolution 11011 (2019 Series)
authorizing the Utilities Director to enter into a financing agreement with the California
Infrastructure and Economic Development Bank (I Bank) to debt finance the project; and
WHEREAS, I Bank is requiring the City, as a condition of applying for and entering into
a financing agreement, to pay off an existing loan for the Water Reuse Project from the State
Revolving Fund (SRF) which has an estimated balance of $2,465,255.60; and
WHEREAS, I Bank charges a one percent loan origination fee ($143,000); and
WHEREAS, a balance prior to the SRF loan payoff of approximately $16.7 million
(unaudited financials) is available from the Water Fund, Unreserved Working Capital.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The Water Fund is authorized to use up to $2,643,000 Water Fund
Unreserved Working Capital to pay off the Water Reuse Project SRF loan and to pay the I Bank
loan origination fee.
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Resolution No. _____ (2020 Series) Page 2
R ______
SECTION 2. Environmental Determination. In compliance with the California
Environmental Quality Act (CEQA), the City Council of the City of San Luis Obispo finds that
the activity funded by the I Bank loan is a project that is exempt under Class 1 (CEQA Guidelines,
§15301), Existing Facilities.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
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 _____________________________, 2020.
____________________________________
Teresa Purrington
City Clerk
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$14,300,000
2.50%Loan or Lease Loan
0.30%
4/1/2020 Fiscal Year Ends June 30
First Interest Only Pmt Date
First Principal Pmt Date 8/1/2020
20
Amortization Period 20
- -
Payment
Date
Ending Principal
Balance
Principal
Payment
Interest
Payment
Total Principal &
Interest Annual Fee Total Payment Total Payment Fiscal
Year Ending June 30
1-Apr-2020 $14,300,000.00
1-Aug-2020 $13,740,196.06 $559,803.94 $119,166.67 $678,970.61 $42,900.00 $721,870.61
1-Feb-2021 $171,752.45 $171,752.45 $171,752.45 $893,623.06
1-Aug-2021 $13,166,397.02 $573,799.04 $171,752.45 $745,551.49 $41,220.59 $786,772.08
1-Feb-2022 $164,579.96 $164,579.96 $164,579.96 $951,352.04
1-Aug-2022 $12,578,253.00 $588,144.02 $164,579.96 $752,723.98 $39,499.19 $792,223.17
1-Feb-2023 $157,228.16 $157,228.16 $157,228.16 $949,451.33
1-Aug-2023 $11,975,405.39 $602,847.62 $157,228.16 $760,075.78 $37,734.76 $797,810.54
1-Feb-2024 $149,692.57 $149,692.57 $149,692.57 $947,503.10
1-Aug-2024 $11,357,486.58 $617,918.81 $149,692.57 $767,611.37 $35,926.22 $803,537.59
1-Feb-2025 $141,968.58 $141,968.58 $141,968.58 $945,506.17
1-Aug-2025 $10,724,119.81 $633,366.78 $141,968.58 $775,335.36 $34,072.46 $809,407.82
1-Feb-2026 $134,051.50 $134,051.50 $134,051.50 $943,459.32
1-Aug-2026 $10,074,918.86 $649,200.95 $134,051.50 $783,252.44 $32,172.36 $815,424.80
1-Feb-2027 $125,936.49 $125,936.49 $125,936.49 $941,361.29
1-Aug-2027 $9,409,487.89 $665,430.97 $125,936.49 $791,367.46 $30,224.76 $821,592.21
1-Feb-2028 $117,618.60 $117,618.60 $117,618.60 $939,210.81
1-Aug-2028 $8,727,421.15 $682,066.74 $117,618.60 $799,685.34 $28,228.46 $827,913.81
1-Feb-2029 $109,092.76 $109,092.76 $109,092.76 $937,006.57
1-Aug-2029 $8,028,302.73 $699,118.41 $109,092.76 $808,211.18 $26,182.26 $834,393.44
1-Feb-2030 $100,353.78 $100,353.78 $100,353.78 $934,747.22
1-Aug-2030 $7,311,706.36 $716,596.37 $100,353.78 $816,950.16 $24,084.91 $841,035.06
1-Feb-2031 $91,396.33 $91,396.33 $91,396.33 $932,431.39
1-Aug-2031 $6,577,195.08 $734,511.28 $91,396.33 $825,907.61 $21,935.12 $847,842.73
1-Feb-2032 $82,214.94 $82,214.94 $82,214.94 $930,057.67
1-Aug-2032 $5,824,321.02 $752,874.06 $82,214.94 $835,089.00 $19,731.59 $854,820.59
1-Feb-2033 $72,804.01 $72,804.01 $72,804.01 $927,624.60
1-Aug-2033 $5,052,625.10 $771,695.92 $72,804.01 $844,499.93 $17,472.96 $861,972.89
1-Feb-2034 $63,157.81 $63,157.81 $63,157.81 $925,130.71
1-Aug-2034 $4,261,636.79 $790,988.31 $63,157.81 $854,146.13 $15,157.88 $869,304.00
1-Feb-2035 $53,270.46 $53,270.46 $53,270.46 $922,574.46
1-Aug-2035 $3,450,873.77 $810,763.02 $53,270.46 $864,033.48 $12,784.91 $876,818.39
1-Feb-2036 $43,135.92 $43,135.92 $43,135.92 $919,954.31
1-Aug-2036 $2,619,841.67 $831,032.10 $43,135.92 $874,168.02 $10,352.62 $884,520.64
1-Feb-2037 $32,748.02 $32,748.02 $32,748.02 $917,268.66
1-Aug-2037 $1,768,033.77 $851,807.90 $32,748.02 $884,555.92 $7,859.53 $892,415.45
1-Feb-2038 $22,100.42 $22,100.42 $22,100.42 $914,515.87
1-Aug-2038 $894,930.67 $873,103.10 $22,100.42 $895,203.52 $5,304.10 $900,507.62
1-Feb-2039 $11,186.63 $11,186.63 $11,186.63 $911,694.25
1-Aug-2039 $894,930.67 $11,186.63 $906,117.31 $2,684.79 $908,802.10
$908,802.10
$14,300,000.00 $3,807,745.48 $18,107,745.48 $485,529.46 $18,593,274.94 $18,593,274.94
City of San Luis Obispo
Total Payments:
Applicant/Project Name
Loan Amount
Interest Rate
Annual Fee
Funding Date
Loan Years
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RESOLUTION NO. 11011 (2019 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING THE SUBMISSION OF THE
APPLICATION TO THE CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK (IBANK) FOR FINANCING THE
WATER ENERGY EFFICIENCY PROJECT, AUTHORIZING THE
INCURRING OF AN OBLIGATION PAYABLE TO TRANK FOR THE
FINANCING OF THE WATER ENERGY EFFICIENCY PROJECT IF
IBANK APPROVES SAID APPLICATION, DECLARATION OF
OFFICIAL INTENT TO REIMBURSE CERTAIN EXPENDITURES FROM
PROCEEDS OF OBLIGATION, AND APPROVING CERTAIN OTHER
MATTERS IN CONNECTION THEREWITH
WHEREAS, the California Infrastructure and Economic Development Bank ("IBank")
administers a financing program to assist local governments with the financing of Public
Development Facilities as described in Section 63000 et seq. of the California Government Code
(the "Act"); and
WHEREAS, IBank created the Infrastructure State Revolving Fund Program ("ISRF
Program") pursuant to the provision of the Act; and
WHEREAS, IBank has instituted an application process for financing under its ISRF
Program; and
WHEREAS, !Bank's Criteria, Priorities and Guidelines for the Selection of Projects for
Financing under the ISRF Program, dated February 23, 2016, and as may thereafter be amended
from time to time (the "Criteria"), establishes requirements for the financing of projects under the
ISRF Program; and
WHEREAS, the City of San Luis Obispo ("Applicant") desires to submit an application
("Financing Application") to the IBank from the ISRF Program for the financing of the Water
Energy Efficiency Project ("Project") in an amount not to exceed $14,300,000; and
WHEREAS, the Act and the Criteria require the Applicant to make, by resolution of its
governing body, certain findings prior to a project being selected for financing by IBank; and
WHEREAS, the Applicant expects to incur or pay certain expenditures in connection with
the Project from its Water Fund that are reimbursable with the proceeds of tax exempt bonds or
other tax exempt securities under Federal Tax Law ( defined below) prior to incurring indebtedness
for the purpose of financing costs associated with the Project on a long-term basis (the
"Reimbursement Expenditures"); and
R 11011
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Resolution No. 110011 (2019 Series) Page 2
WHEREAS, the Applicant reasonably expects that a financing arrangement
("Obligation") in an amount not expected to exceed $14,300,000 will be entered into under and
memorialized by one or more financing agreements and related documents ( collectively, the
"Financing Agreement") and that certain proceeds of such Obligation will be used to reimburse
the Applicant for Reimbursement Expenditures incurred or paid prior to incurring the Obligation;
and
WHEREAS, the Applicant acknowledges that IBank funds the ISRF Program, in part,
with the proceeds of tax exempt bonds and, as such, has certain compliance obligations that may
require it to have the Applicant enter into one or more new financing agreements to replace the
Financing Agreement ( collectively, the "Replacement Agreement") on terms and conditions
substantially identical to the original Financing Agreement.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The Council hereby approves confirms, ratifies, and affirms all actions of the
Applicant's representatives, employees and officers heretofore taken in connection with, or with
respect to, submitting the Financing Application, and the consideration and approval of the
Obligation and the Financing Agreement, if IBank approves the Financing Application and the
Obligation, and in connection therewith the Council finds and certifies:
a. The Project facilitates the effective and efficient use of existing and future public
resources so as to promote both economic development and conservation of natural
resources;
b. The Project develops and enhances public infrastructure in a manner that will attract,
create, and sustain long-term employment opportunities;
c. That the Project is consislent with the General Plan of the City of San Luis Obispo, and
the General Plan of the County of San Luis Obispo;
d. The proposed financing is appropriate for the Project;
e. The Project is consistent with the Criteria; and
f It has considered (i) the impact of the Project on California's land resources and the
need to preserve such resources; (ii) whether the Project is economically or socially
desirable; and (iii) whether the project is consistent with, and in furtherance of the State
Environmental Goals and Policy Report (as defined in the Criteria).
SECTION 2. Environmental Determination. In compliance with the California
Environmental Quality Act (CEQA), the City Council of the City of San Luis Obispo finds that
the activity funded by the loan is a project that is exempt under Class l (CEQA Guidelines,
§ 15301 ), Existing Facilities and Class 28 (CEQA Guidelines, § 15328), Small Hydroelectric
Projects at Existing Facilities.
R 11011
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Resolution No. 110011 (2019 Series) Page 3
SECTION 3. The Applicant hereby declares its official intent to use proceeds of the
Obligation to reimburse itself for the Reimbursement Expenditures with the proceeds of tax
exempt bonds or other tax exempt securities issued under the provisions of the Internal Revenue
Code of 1986, as amended, and those Treasury Regulations implementing such provisions
( collectively, "Federal Tax Law''). This declaration is made solely for purposes of establishing
compliance with applicable requirements of Federal Tax Law and its date is controlling for
purposes of reimbursement under Federal Tax Law. This declaration does not bind the Applicant
to make any expenditure, incur any indebtedness, or proceed with the Project.
SECTION 4. All of the Reimbursement Expenditures were made no earlier than 60 days
prior to the date of this Resolution. The Applicant will allocate proceeds of the Obligation to pay
Reimbursement Expenditures within eighteen ( 18) months of the later of the date the original
expenditure was paid or the date the Project was placed in service or abandoned, but in no event
more than three (3) years after the original expenditure was paid.
SECTION 5. The Director of Utilities, or Deputy Director Utilities -Water, is hereby
authorized and directed to act on behalf of the Applicant in all matters pertaining to the Financing
Application, and if IBank approves the Financing Application and the Obligation, the execution
of related financial documents, including but not limited to, the authority to : (i) pledge the revenues
of the Water Fund and all legally available amounts in the Water Fund, on a parity basis with the
Applicant's obligations in connection with the existing debt, to the repayment of the Obligation,
(ii) provide covenants relating to, among other things, maintaining the debt service coverage ratio
required by !Bank, rates and charges to be pledged, and as to any other security or collateral
securing the Obligation, and (iii) take any other action necessary or desirable to enable the
Applicant to enter into the Financing Agreement and incur the Obligation.
SECTION 6. If the Financing Application and the Obligation is approved by !Bank, the
Director of Utilities, or Deputy Director Utilities -Water is authorized to negotiate, enter into and
sign financing documents and any amendments thereto, including, but not limited to the Financing
Agreement and the Replacement Agreement, with IBank for the purposes of financing the
ObHg~tion.
R ll011
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Resolution No. 110011 (2019 Series) Page4
SECTION 6. This resolution shall become effective immediately upon adoption.
Upon motion of Council Member Christianson, seconded by Council Member Gomez, and on the
following roll call vote:
AYES :
NOES:
ABSEN T:
Council Members Chris tianson, Gomez, and Stewart,
Vice Mayor Pease, and Mayor Harmon.
None
None
The foregoing resolution was adopted this 21 st day of May 2019.
ATTEST:
(_~'\J~.
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
IN WITNESS WHEREOF, I have heretmto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this 6 day of 3u.b:e , 2C) ,q
Q\WA~?~~ eresa Purrington
City C lerk
R 11011
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RESOLUTION NO. 11063 (2019 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING USE OF WATER FUND
UNRESERVED WORKING CAPITAL FOR THE WATER ENERGY
EFFICIENCY PROJECT
WHEREAS, on April 4, 2018, the City Council adopted Resolution 108 78, reviewed the
Preliminary Energy Assessment for the Water Energy Efficiency Project (Project) and voted in
favor of proceeding to the Project's Investment Grade Audit; and
WHEREAS, on May 21, 2019, the City Council approved Resolution 11011 authorizing
the Utilities Director to enter into a financing agreement with the Infrastructure Bank (!Bank) to
debt finance the Project; and
WHEREAS, in June 2019, the City Council approved 2019-21 Financial Plan, Capital
Improvement Program, identified a Project budget of $14,300,000; and
WHEREAS, On August 20, 2019, the City Council authorized the use ofup to $2 million
including design, equipment acquisition, construction costs and contingencies from Water Fund,
Unreserved Working Capital to fund Emergency Power Supply needs and $1,700,000 is available
to contribute for funding the Project; and
WHEREAS, on November 1, 2019, the City Manager approved an extension and an
amendment to the Work Order to include design for a permanent Water Treatment Plant generator
in response to potential Public Safety Power Shutoff events; and
WHEREAS, the total available budget for the Efficiency Phase of the Project is
$16,000,000; and
WHEREAS, private financing (US Bancorp , and others) is al so being considered for the
Project as it may offer the City more favorable financing terms; and
WHEREAS, a balance of approximately $18 million (unaudited financials) is available
from Water Fund, Unreserved Working Capital to fund the Efficiency Phase of the Project and
manage cashflow.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obi spo
as follows:
SECTION 1. The Director of Finance and/or the Utilities Director is authorized to execute
and deliver any and all certificates, contracts an d other documents necessary or appropriate to
finance the Project.
R 11063
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Resolution No. 11063 (2019 Series) Page 2
SECTION 2. Environmental Review. Construction of this project is exempt from the
California Environmental Quality Act (CEQA) 1530 I , Class 1 -Existing Facilities and 15328,
Class 28 -Small Hydroelectric Projects at Existing Faci lities. The Community Development
Department issued a Notice of Exemption on January 24, 2019.
Upon motion of Council Member Christianson, seconded by Council Memb er Stewart, and
on the following roll call vote:
AYES:
NOES:
ABSENT :
Council Member Christianson, Gomez, Stewart and Vice Mayor Pease
None
Mayor Harmon
The fo regoing resolution was adopted this 191h day ofNovember 2019.
ATTEST:
eresa Purrington
City C lerk
).·Christi ne Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto s e t my hand and affixed the offic ial seal of the Ci ty
of San Luis Obispo , California, this 3 ~ day ofVce;elb<l h '}V:: , ZO \ 9 .
Teresa Purrington
City Clerk
-
R 11063
Item 8
Packet Page 132