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Home My WebLink AboutCC AG PKT 2010-08-09 #VAGENDA STAFF REPORT DATE: August 9, 2010 TO: Honorable Mayor and City Council THRU: David N. Carmany, City Manager FROM: Sean P. Crumby, P.E., Director of Public Works SUBJECT: STATE REVOLVING FUND LOAN PROGRAM (SEWER CAPITAL FUND) SUMMARY OF REQUEST: To dedicate a source of revenue for repayment and establishing a reserve fund in participation with Clean Water State Revolving Fund Loan Program in accordance with the State Water Resources Control Board's requirement. BACKGROUND: On August 8, 2005, the City Council adopted the 2005 Sewer System Master plan Update which identified over $15 million in required Capital Improvement Projects. At the February 11, 2008 City Council Meeting, the City Council directed staff to pursue the low /no interest loan with the State Revolving Fund Loan Program administered through the State Water Resources Control Board. At the July 14, 2008 City Council Meeting, Council adopted Ordinance No. 1574 authorizing the City to borrow money from the State Water Resources Control Board. Since that time city staff has been working with the state regarding approval of the loan application. On June 3, 2010 the State Water Resources Control Board requested that included with the loan application, the City to adopt two resolutions; 1. Dedicate a revenue source to repay the loan and 2. Establishing a reserve fund for any debt on parity with the City's existing Certificate of Participation Bond. Agenda Item V Page 2 The State Water Resources Control Board has stated that this is the last remaining unresolved item on the application. FINANCIAL IMPACT: Participating in the State Revolving Fund Loan Program will not impact on the General Fund. The loans will be paid off by the Sewer Capital Fund. This loan application will be for $10,000,000. The funds will be drawn down over a period of years and as needed to support the various sewer projects. RECOMMENDATION: It is recommended City Council adopt: 1. Resolution No. 6045 dedicating a source of revenue for repayment of the Clean Water State Revolving Fund Loan in accordance with the State Water Resources Control Board's requirements. 2. Resolution No. 6046 establishing a reserve fund in connection with its participation in the State Water Resources Control Board's Clean Water State Revolving Fund loan program. NOTED AND APPROVED: Sean P. Crumby, P.E. Director of Public Works Prepared by: Michael Ho, City Engineer Attachments: David N. Carm ny City Manager A. Resolution Dedicating Revenue Source B. Resolution Establishing Reserve Fund SUBMITTED BY: RESOLUTION NUMBER 6045 A RESOLUTION OF THE SEAL BEACH CITY COUNCIL DEDICATING A SOURCE OF REVENUE FOR REPAYMENT OF THE CLEAN WATER STATE REVOLVING FUND LOAN IN ACCORDANCE WITH THE STATE WATER RESOURCES CONTROL BOARD'S REQUIREMENTS WHEREAS, the State Water Resources Control Board, created under the California Water Code, Section 174 et seq. (the "Board "), offers several Clean Water State Revolving Fund programs (the "Programs ") pursuant to which entities can apply for a low interest rate loan in order to finance improvements to water and wastewater facilities; and WHEREAS, the City of Seal Beach (the "City") applied for a loan (the "Loan ") from the Board pursuant to one of the Board's eligible Programs in order to obtain financing for improvements to its sewer system; and WHEREAS, the Loan will be paid back from net revenues of the sewer system ( "Net Revenues "); and WHEREAS, the Board requires the City to dedicate a source of revenue for repayment of the Loan. NOW, THEREFORE, THE SEAL BEACH CITY COUNCIL DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The City Council of the City of Seal Beach hereby dedicates Net Revenues to pay any and all Clean Water State Revolving Fund financial agreements on Project No. C -06- 5310 -110 (the "Loan Payments "). This dedicated source of revenue shall remain in effect until such financing agreements are fully discharged, unless a modification is approved in writing by the Board. The Loan Payments will be secured by a lien upon Net Revenues on a parity with installment payments due and payable on the City's $4,230,000 Certificates of Participation (2000 Sewer System Financing Project) which are currently outstanding in the amount of $3,460,000. Section 2. Authorize the City Manager to execute all necessary documents. PASSED, APPROVED and ADOPTED by the Seal Beach City Council at a regular meeting held on the 9th day of August 2010 by the following vote: AYES: Council Members NOES: Council Members ABSENT: Council Members ABSTAIN: Council Members Mayor ATTEST: City Clerk 57296- 0001 \1059193v2.doc Resolution Number 6045 STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Linda Devine, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution Number 6045 on file in the office of the City Clerk, passed, approved, and adopted by the City Council at a regular meeting held on the 9th day of August —1 2010. City Clerk 57296- 0001 \1059193v2.doc RESOLUTION NUMBER 6046 A RESOLUTION OF THE SEAL BEACH CITY COUNCIL ESTABLISHING A RESERVE FUND IN CONNECTION WITH ITS PARTICIPATION IN THE STATE WATER RESOURCES CONTROL BOARD'S CLEAN WATER STATE REVOLVING FUND LOAN PROGRAM WHEREAS, the State Water Resources Control Board, created under the California Water Code, Section 174 et seq. (the "Board "), offers several Clean Water State Revolving Fund programs (the "Programs ") pursuant to which entities can apply for a low interest rate loan in order to finance improvements to water and wastewater facilities; and WHEREAS, the City of Seal Beach (the "City") applied for a loan (the "Loan ") from the Board pursuant to one of the Board's eligible Programs in order to obtain financing for improvements to its sewer system; and WHEREAS, the Loan will be paid back from net revenues of the sewer system (the "Net Revenues ") on a parity basis with the installment payments due under the Installment Sale Agreement, dated June 1, 2000 by and between the City and the Seal Beach Public Financing Authority (2000 Sewer System Financing Project) (the "Installment Sale Agreement ") relating to the City's outstanding Certificates of Participation (2000 Sewer System Improvement Project); and WHEREAS, the Installment Sale Agreement requires the City to establish and fund a reserve fund for any debt issued on parity with the City's installment payments due under the Installment Sale Agreement. NOW, THEREFORE, THE SEAL BEACH CITY COUNCIL DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The City Council hereby establishes a "State Water Resources Control Board Loan - Reserve Fund" (the "Reserve Fund ") to be administered by the City in connection with the Loan. Section 2. Upon the start date of the Loan, the City Council hereby directs the City Manager to transfer to the Reserve Fund an amount equal to the lesser of: (i) the maximum annual payments to be made with respect to the Loan, (ii) 125 percent of the average annual payments to be made with respect to the Loan; or (iii) 10% of the principal amount of the Loan. PASSED, APPROVED and ADOPTED by the Seal Beach City Council at a regular meeting held on the 9th day of August , 2010 by the following vote: AYES: Council Members NOES: Council Members ABSENT: Council Members ABSTAIN: Council Members Mayor S7296 -0001 \ 1059196v3.doc Resolution Number 6046 ATTEST: City Clerk STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Linda Devine, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution Number 6046 on file in the office of the City Clerk, passed, approved, and adopted by the City Council at a regular meeting held on the 9th day of August , 2010. City Clerk S7296 -0001 \1059196x3. doc