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Home My WebLink AboutRES2023-092 Loan Agreement AK DEC1 Sponsored by: Regis CITY OF SEWARD, ALASKA RESOLUTION 2023-092 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A LOAN AGREEMENT WITH THE ALASKA DEPARTMENT OF ENVIRONMENTAL CONSERVATION WHEREAS, city staff identified several issues necessitating the addition of a Hypochlorite Generator for the SMIC water pumphouse, and WHEREAS, staff completed and submitted the required questionnaire to for loan monies being offered by the Alaska Drinking Water fund, and WHEREAS accepting the total loan amount of $476,000 with loan forgiveness of $238,000 from the Department of Environmental Conservation Clean Water Fund is in the best interest of the city by allowing the city to utilize the fund to invest in infrastructure, follow regulations set forth by the Alaska Department of Environmental Conservation and remain in compliance with the current permit, WHEREAS, the City of Seward seeks to obtain the necessary financial assistance to complete the SMIC Hypochlorite Pumphouse Addition Project by obtaining a loan from the State of Alaska Department of Environmental Conservation's Alaska Drinking Water Fund. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The City of Seward hereby confirms its commitment to the State of Alaska (ADEC) and its intent to fund $476,00 for the SMIC Hypochlorite Generator Pumphouse Project, with an estimated principal forgiveness of $238,000 for a total repayment of $238,000 subject to receiving a loan from ADEC. Section 2. The City Manager is authorized to apply for a loan in the amount of $238,000 from the State of Alaska Department of Environmental Conservation, Drinking Water Fund for the water system improvement known as SMIC Hypochlorite Generator Pumphouse Addition Project. Section 3. The City Manager is hereby authorized to execute any and all documents that may be necessary to affect a $238,000 loan from ADEC, the terms 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. Annual loan payments shall not exceed $15,470. Section 4. This resolution shall take effect immediately upon adoption. CITY OF SEWARD, ALASKA RESOLUTION 2023-092 PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14t1' day of August 2023. THE CITY OF SEWARD, ALASKA bYtamCknK Sue McClure, Mayor AYES: DeMoss, Finch, Barnwell, Calhoon, Osenga, McClure NOES: None ABSENT: Wells ABSTAIN: None ATTEST: Kris Peck City Clerk (City Seal) 1 1 City Council Agenda Statement Meeting Date: August 14th, 2023 To: City Council Through: Norm Regis, Acting City Manager From: Doug Schoessler, Public Works Director Subject: Resolution 2023-092: Authorizing The City Manager To Enter Into A Loan Agreement With The Alaska Departruent Of Environmental Conservation Background and justification: The current SMIC water system uses chlorine gas cylinders in the SMIC water pumphouse. The declining availability and hazards of chlorine gas cylinders necessitates a change to the same system that was already installed at the North Seward Water Plant facility. CRW Engineering investigated sizing and other requirements for infrastructure in the SMIC water pumphouse. City staff utilized the CRW report as part of a master project list to identify potential funding sources. The SMIC Hypochlorite Generator Project was placed on the master project list because of issues outlined in both reports and staff observations. If the City is successful in procuring funding, it will construct the SMIC Hypochlorite Generator to the SMIC Water Pumphouse, which will serve the clean water needs of the Seward Marine Industrial Complex on the East side of Resurrection Bay well into the future. The City of Seward loan requires the City to commit to the State of Alaska (ADEC) and its intent to fund $476,000 for the Hypochlorite Generator Pumphouse Project, with an estimated principal forgiveness of $238,000 for a total repayment of $238,000 from the State of Alaska Department of Environmental Conservation Drinking Water Fund. The repayment terms are over 20 years at a rate of interest equal to 1.5%, resulting in annual payments of approximately $15,470. This debt payment was not previously budgeted in the Water Fund and will be subject to annual appropriations. Unfortunately, the Water Fund does not have adequate cash reserves to fund the project without assistance. However, the most recent Financial Capacity Assessment found the fund healthy enough to cover existing and potential loan obligations. The Water fund generates sufficient revenue to fully pay anticipated expenses attributed to the operation of the water system and also pay all debt service for existing loans and the proposed SRF loan during the next 5 years. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with (citation listed): Comprehensive Plan: Strategic Plan: Other: Total amount of funds listed in this legislation: $ This legislation (✓): Creates revenue in the amount of: Creates expenditure in amount of: Creates a savings in the amount of: $ Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted Not applicable x x $ $ 238,000/ $15,470 Annually Affected Fund (✓): General Boat Harbor Motor Pool SMIC Parking Other Available Fund Balance/ Net Position X Electric Water Wastewater Healthcare Note: amounts are unaudited $ 9,269,962 Finance Director Signature: 5'a, x Attorney Review Yes Attorney Signature: Not applicable Comments: Administration Recommendation x Adopt Resolution Other: