HomeMy WebLinkAboutA025 - Council Action Form dated August 9, 2022 1
ITEM # 38
DATE: 08-09-22
COUNCIL ACTION FORM
SUBJECT: RESOLUTION APPROVING A STATE REVOLVING FUND LOAN
AGREEMENT IN THE AMOUNT OF $3,500,000 TO BE REPAID WITH
WATER UTILITY REVENUE
BACKGROUND:
During the design of the new water treatment plant, City staff made a commitment to
demolish the old treatment facility as soon as practical to prevent it from becoming an
abandoned eyesore for the neighborhood. The new water treatment plant started
operation in Fall 2017, and it is time to demolish the old water treatment plant.
This project will demolish the filter building, chemical feed building, external treatment
basins, administrative offices, and 3/4 million-gallon ground reservoir. Improvements to the
site distribution and raw water piping will be included in this project as well. The high
service pump station, two-million-gallon storage reservoir, and five-million-gallon storage
reservoir will remain. The authorized project funding is as follows.
Fiscal Year Amount
FY 2018/19 — FY 2020/21 Actual $ 141,916
FY 2021/22 CIP Adopted 1,288,560
FY 2022/23 CIP Adopted 1,233,000
Total $ 2,663,476
A State Revolving Fund (SRF) Drinking Water Loan in an amount not to exceed
$3,500,000 has been identified as the funding source for the demolition of the old water
plant. Repayment of the loan will be from water utility revenues. The not-to-exceed
amount was established to cover any potential cost increases and change orders; the
City will only borrow the amount actually needed to fund the project. A public hearing to
proceed with the SRF loan was held on June 14, 2022. At the July 12, 2022, meeting,
City Council approved the submission of an SRF loan application as shown below. The
final action needed by council to proceed is approval of the loan agreement.
Total Project Loan
Engineering Services (design/bidding/const.) $ 277,200
Loan Origination Fees (0.5%) 17,413
Construction 2,398,000
Contingency 807,387
Total Project Cost $ 3,500,000
1
ALTERNATIVES:
1. Adopt a resolution approving a State Revolving Fund Agreement in the amount of
$3,500,000 to be repaid with Water Utility Revenue.
2. Do not approve the loan and disbursement agreement and provide staff additional
direction on 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 demolition of the old water plant facilities. This is the most cost-effective
approach to completing this demolition work. The principal and interest payments related
to this loan have been accounted for in the Water Fund rate design.
Therefore, it is the recommendation of the City Manager that the City Council approve
Alternative No. 1, as described above.
2