HomeMy WebLinkAboutRes2016-004 Sponsored by: Hunt
CITY OF SEWARD,ALASKA
RESOLUTION 2016-004
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA,AUTHORIZING THE CITY MANAGER TO INCREASE ALASKA
CLEAN WATER FUND LOAN#769091 FROM$490,000 TO$781,838.23 FOR
THE SMIC AND LOWELL POINT SLUDGE REMOVAL AND DISPOSAL
PROJECT
WHEREAS,in 2012 City Council authorized an Alaska Clean Water Fund(ACWF) loan
for$490,000 for the Seward Marine Industrial Center(SMIC)and Lowell Point Sludge Removal and
Disposal Project and a separate ACWF loan of$1,200,000 for only the Lowell Point portion of the
project; and
WHEREAS, upon completion of the project, the loan funds available for SMIC (ACWF
Loan#769091)were$291,838.23 short of covering total project costs, and $445,844.93 remained
unused for Lowell Point in ACWF Loan#769111; and
WHEREAS,the Alaska Department of Conservation(ADEC)will allow an increase in Loan
#769091 to a total of $781,838.23 at the original interest rate of 1.5%. In addition, the loan
agreement stipulates potential eligibility for loan forgiveness of up to 10% of the loan principal
related to disadvantaged community assistance; and
WHEREAS, the ACWF Loan #769111 for Lowell Point will be closed out at a total of
$754,155.07, which is lower than the authorized loan amount of$1,200,000, in addition to the
potential eligibility for forgiveness of up to 10% of the loan principal related to disadvantaged
community assistance; and
WHEREAS,the combined loan total of the two ACWF loans authorized by the Seward City
Council is$1,690,000,but given that the City underspent the total authorized loan amount,the two
loans will be executed at$1,535,993.30,with the potential eligibility for forgiveness of up to 10%of
this principal amount.
NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD,ALASKA that:
Section 1.The City Manager is hereby authorized to apply for,and accept,an increase in the
State of Alaska Department of Environmental Conservation Alaska Clean Water Fund Loan No.
769091 from $490,000 to $781,838.23.
Section 2. The City Manager is hereby authorized to execute any and all documents that may
be necessary to reflect the increased loan amount now totaling$781,838.23,from ADEC,the terms
CITY OF SEWARD,ALASKA
RESOLUTION 2016-004
of its repayment over 20 years at a rate of interest equal to 1.5% subject to annual appropriations,
including but not limited to,an agreement for the loan and a promissory note,with annual payments
not to exceed$90,000.
Section 3. This resolution shall take effect immediately upon its approval.
PASSED AND APPROVED by the City Council of the City of Seward,Alaska, this 25th
day of January, 2016.
THE CITY OF SEWARD,ALASKA
can Bardarson,Mayor
AYES: Butts, Squires, McClure, Altermatt, Casagranda, Keil, Bardarson
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
Jo anna Trey, CMC
C. y Clerk
(City Seal)
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Agenda Statement
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Meeting Date: January 25, 2016 *.g:;<`1,
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To: City Council
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Through: City Manager,Jim H ' •;
From: Public Works Director, W.C. Casey
Agenda Item: Authorize an increase of the Alaska Clean Water Fund Loan#769091 for the
SMIC&Lowell Point Sludge Removal and Disposal project from$490,000
to$781,838.23,by reducing loan funds authorized by ACWF Loan#769111
BACKGROUND&JUSTIFICATION:
In 2012, City Council passed Resolution 2012-056 authorizing the City Manager to accept a loan
offer from the Alaska Clean Water Fund (ACWF) for $490,000 for the SMIC and Lowell Point
Sludge Removal and Disposal project. An additional ACWF loan for$1,200,000 and a Designated
Legislative Grant for$1,300,000(both for Lowell Point only)were also approved for this project.
While total funding amounted to $2,990,000, the total of the two loans is $1,690,000.
Because the ACWF loan#769091 for$490,000 was the only loan designated for the SMIC Sludge
Removal and Disposal,this was the only loan that could accrue expenses for the SMIC portion of the
project. The final expenses for SMIC,including engineering,sludge removal and disposal came to
$781,838.23,making us$291,838.23 short on loan funds. The Alaska Department of Conservation
will allow the City of Seward to increase the loan amount of ACWF loan#769091 to cover these
expenses at the initial 1.5%interest rate.
We are in the process of closing out the Lowell Point ACWF Loan# 769111 for a total of
$754,155.07 which comes in at$445,844.93 under the approved loan amount of$1,200,000. Since
this loan will not be executed for the full amount, and if we increase the SMIC loan,the two loans
combined would be$1,535,993.30,coming in$154,006.70 under the original$1,690,000 approved
loan amount.
We ask that Council authorize the increase of ACWF loan# 769091 to a total of$781,838.23 to
cover the expenses accrued at SMIC.
Funding Source/Location: Loan/Grant Project Cost Loan Funds
Amounts: Per Location Remaining
Designated Leg. Grant$1.3M—LP only
ACWF 769111 $1.2M—LP only $2,500,000 $2,054,155.07 $445,844.93
ACWF 769091 SMIC/LP $490,000 $781,838.23 -$291,838.23
Total Funding Project Cost: Unused Loan Funds:
$2,990,000 $2,835,993.30 $154,006.70
to
INTENT:
To increase ACWF loan #769091 by$291,838.23, making the total loan amount $781,838.23.
CONSISTENCY CHECKLIST: Yes No N/A
1. Comprehensive Plan (document source here): X
2. Strategic Plan (document source here): X
3. Other (list): X
FISCAL NOTE:
The City received loans totaling$1,690,000 and expended funds related to these loans, in the total
amount of$1,535,993.30. The loan agreements stipulate a forgiveness of up to 10%, making the
City potentially eligible for reduced loan totals. Once the funds are shifted from Loan#769111 to
Loan#769091,updated loan agreements will stipulate the exact amount of forgiveness. However,
the City will borrow an amount not to exceed $1,416,477.80. The 2016 Budget estimates total
annual debt service of$72,518, including both principal and interest. The 2017 Budget estimates
total annual debt service of$69,460. The revised action to move funding between loans and account
for the principal to be forgiven,results in estimated annual debt service for principal and interest of
$82,241.16 in both 2016 and 2017.
Approved by Finance Department: Jiikcity► -/
ATTORNEY REVIEW: Yes No Not Applicable X
RECOMMENDATION:
City Council approve resolution 2016- Authorizing an increase in ACWF loan #769091 from
$490,000 to$781,838.23 for the Sludge Removal and Disposal project at SMIC,through a reduction
in loan #769111 from $1,200,000 to approximately $754,155.07, with further reduction of loan
principal owed of approximately 10% due to loan forgiveness.