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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: Item 8 Packet Page 117 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. Item 8 Packet Page 118 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. Item 8 Packet Page 119 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. Item 8 Packet Page 120 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) Item 8 Packet Page 121 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: Item 8 Packet Page 122 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 Item 8 Packet Page 123 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. Item 8 Packet Page 124 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 Item 8 Packet Page 125 $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 Item 8 Packet Page 126 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 Item 8 Packet Page 127 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 Item 8 Packet Page 128 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 Item 8 Packet Page 129 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 Item 8 Packet Page 130 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 Item 8 Packet Page 131 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