HomeMy WebLinkAboutA066 - Council Action Form dated August 8, 2023 ITEM #: 14
DATE: 08-08-23
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DEPT: FIN
COUNCIL ACTION FORM
SUBJECT: RESOLUTION AUTHORIZING AND APPROVING A LOAN
DISBURSEMENT AGREEMENT AND PROVIDING FOR ISSUANCE AND
SECURING PAYMENT OF $2,150,000 IN SEWER REVENUE BONDS,
SERIES 2023
BACKGROUND:
This resolution is the final step in authorizing a not-to-exceed amount of $2,150,000 in
Sewer Revenue Bonds through the Iowa Clean Water State Revolving Loan Fund (SRF)
in support of the annual program for rehabilitation/reconstruction of deficient sanitary
sewer and deteriorated manholes at various locations throughout the City. This specific
project includes the rehabilitation of sanitary sewers along US Hwy 69 (Basin 12: S Duff,
Lincon Way, and Grand Ave).
On June 13, 2023, bids for the project were accepted by City Council, and on July 11,
2023, the City Council held a public hearing and adopted a resolution instituting
proceedings to take additional action for the authorization of a loan disbursement
agreement in an amount not to exceed $2,150,000 and identified the Iowa Clean Water
State Revolving Loan Fund (SRF) as the funding source in anticipation of the identified
repairs. Additionally, Council awarded the contract for sewer rehabilitation to Jet Drain
Services LLC of Ames, Iowa, in the amount of$1,353,819.
Staff believes the SRF program offers the lowest cost option to borrow for capital projects,
with a 1.75% annual interest rate, a 0.25% annual servicing fee, and a 0.5% origination
fee. The funding source for the repayment of the loan will be sewer utility revenues which
have been included in the financial model used to project future rate increases.
ALTERNATIVES:
1. Adopt a resolution approving a State Revolving Fund Agreement an amount not-
to-exceed $2,150,000 to be repaid with Sewer Utility Revenue.
2. Do not approve the loan and disbursement agreement and provide staff additional
direction for the financing of the project.
CITY MANAGER'S RECOMMENDED ACTION:
Authorization of the construction loan will allow the City to access State Revolving Funds
to finance the necessary sewer improvements. The financing terms of the SRF program
are the most cost-effective method of financing the project. The principal and interest
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payments related to the loan have been accounted for in the Sewer Fund rate design.
Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative No. 1, as noted above.
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