HomeMy WebLinkAboutA042 - Council Action Form dated January 10, 2023 ITEM#: 9
DATE: 01-10-23
DEPT: FIN
COUNCIL ACTION FORM
I
SUBJECT: RESOLUTION AUTHORIZING AND APPROVING A LOAN
DISBURSEMENT AGREEMENT AND PROVIDING FOR THE ISSUANCE
j AND SECURING THE PAYMENT OF $4,071,000 OF SEWER REVENUE
BONDS, SERIES 2023A
BACKGROUND:
The City's Capital Improvement Plan includes a program for rehabilitation/reconstruction of
deficient sanitary sewers and deteriorated manholes at various locations throughout the
City. A State Revolving Fund (SRF) Clean Water Loan in the amount of $4,071,000 was
identified as the funding source for the sanitary sewer system improvements which include
rehabilitation of approximately 7,700 linear feet of sanitary sewer near Ames High School
and Veenker Golf Course.
A public hearing was held on November 22, 2022, and a Council resolution is now
necessary to enter into the agreement to receive the requested funding for this FY
2022/23 project.
The SRF program provides competitive interest rates to support publicly financed water and
sewer projects. This resolution authorizes and approves the issuance of the bonds and
disbursement agreement with a 20-year term and an interest rate of 1.75%. The agreement
also includes a 0.25% annual servicing fee and a one-time initiation fee of 0.5%. The annual
debt service varies over the course of the bond repayment schedule, but once fully
amortized will result in annual debt service payments of approximately $260,000. Funding
for the annual debt service payments will be included in the Sanitary Sewer Utility's annual
budget.
ALTERNATIVES:
1. Approve the State Revolving Fund Clean Water Loan agreement in an amount not to
exceed $4,071 ,000.
2. Do not approve the loan agreement and direct City staff to identify other sources to
fund the project.
CITY MANAGER'S RECOMMENDED ACTION:
Approval of this loan agreement will ensure that funding is available to carry out the sanitary
sewer system improvements as previously approved by Council. Therefore, it is the
recommendation of the City Manager that the City Council approve Alternative No. 1 as
described above.