HomeMy WebLinkAboutRES2024-004 Water Tank Replacement Sponsored
OF SEWARD,ALASKA by: Sorensen
RESOLUTION 2024-004
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO APPLY FOR A
LOAN WITH THE ALASKA DEPARTMENT OF ENVIRONMENTAL
CONSERVATION-DRINKING WATER FUND FOR $1,905,000.00 WITH A
FORGIVENESS OF $1,500,000.00 LEAVING A BALANCE OF $405,000.00
TO BE FUNDED BY THE CITY OF SEWARD FOR THE LOWELL
CANYON WATER TANK REPLACEMENT AND APPROPRIATING
FUNDS.
WHEREAS, the Lowell Canyon water storage tanks are essential to the water supply for
the City of Seward; and
WHEREAS,staff completed and submitted the required questionnaire to for loan funding
being offered by the Alaska Drinking Water fund, and
WHEREAS,a 2011 engineering survey by Wince-Corthell-Bryson Consulting Engineers
showed the 400,000-gallon tank was in disrepair and recommended the interior and exterior of the
tank be recoated.That tank refurbishment was completed in 2018; and
WHEREAS, the same survey recommended that the 200,000-gallon tank be taken out of
service for replacement; and
WHEREAS, the State of Alaska DEC Drinking Water Fund has loan/grant funds for
replacing the Lowell Canyon water tank including engineering, contracting/construction and
administration for up to $1,905,000 with forgiveness of$1,500,000; and
WHEREAS,utilizing these"Drinking Water"loan/grant funds is an excellent opportunity
to reduce the city taxpayer's capital cost liability for the Lowell Canyon Water Tank replacement.
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$1,905,000 for the Lowell Canyon Water Storage Tank Replacement,
with an estimated principal forgiveness of$1,500,000 for a total repayment of$405,000 subject to
receiving a loan from ADEC.
Section 2.The City Council hereby authorizes the City Manager to accept the loan grant
funding and enter into a loan agreement with ADEC for$405,000,with the remaining$1,500,000
forgiveness of the total of the loan grant agreement of$1,900,000.
Section 3. The City Manager is hereby authorized to execute any and all documents that
may be necessary to affect a$405,000 loan from ADEC, the terms of its repayment over 10 years
CITY OF SEWARD,ALASKA
RESOLUTION 2024-004
Page 2 of 2
at the lowest rate of interest available to ADEC Drinking Water Fund, subject to annual
appropriations, including but not limited to an agreement for the loan and a promissory note.
Annual loan payments shall not exceed$24,768.00.
Section 4.This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward,Alaska this 22nd
day of January 2024.
THE CITY OF SEWARD,ALASKA
SLA r► IcCQu„r
Sue McClure,Mayor
AYES: Osenga,Calhoon,Wells, Barnwell,Crites, McClure
NOES: None
ABSENT: Finch
ABSTAIN: None
ATTEST:
soss of SE tokr,,
•
Kris Peck = SE AL , •
City Clerk e
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(City Seal) cS'T:,,NE�.....•
OF A\- ..`.
Resolution 2024-004
City Council Agenda Statement
9
Meeting Date: January 22, 2024
To: City Council
Through: Kat Sorensen, City Manager
From: Doug Schoessler, Public Works Director
Subject: Resolution 2024-004: Authorizing The City Manager To Apply For A Loan
With The Alaska Department Of Environmental Conservation-Drinking
Water Fund For $1,905,000.00 With A Forgiveness of $1,500,000.00
Leaving A Balance Of$405,000.00 To Be Funded By The City Of Seward
For The Lowell Canyon Water Tank Replacement and Appropriating Funds
Background and justification:
Seward's water supply system is dependent on well water stored in Lowell Canyon. The Lowell Canyon
tank facility has two water storage tanks. The newer and larger tank is 400,000 gallons in size and is a
primary storage tank for drinking water for the city. The second tank is 200,000 gallons and is used as a
secondary source of water. A 2011 engineering survey of the water tanks conducted by Wince-Corthell-
Bryson Consulting Engineers. That study showed the 400,000-gallon tank was in disrepair and
recommended the interior and exterior of the tank be recoated. This refurbishment was successfully
completed in 2018. The same survey showed that the 200,000-gallon tank is in poor condition and
recommended it be taken out of service and replaced. Replacing the tank with a larger 500,000-gallon tank
would meet Seward's increasing water supply needs.
The estimated cost to replace the 200,000-gallon tank with a new 500,000-gallon tank is $1.905,000. The
DEC - Drinking Water Fund will provide forgiveness of$1,500,000 leaving a loan balance of$405,000.
We also have $222,914.29 in the Lowell Canyon Water Storage Tank Fund to put toward this project.
The State Revolving Fund(SRF)loan requires the City to commit to the State of Alaska(ADEC)intent to
fund$1,900,000 for The Lowell Canyon Water Tank Replacement,with an estimated principal forgiveness
of$1,500,000 for a total repayment of$405,000 from the State of Alaska Department of Environmental
Conservation Drinking Water Fund.The repayment terms are over 10 years at the lowest rate of interest
available to ADEC Drinking Water Fund, 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 pay all debt service for existing loans and the proposed SRF loan.
Seward's water supply needs continue to increase with new housing and business infrastructure being built
each year. This project award is an incredible funding opportunity and will meet the water storage needs
for clean drinking water in the City of Seward.
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Resolution 2024-004
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with (citation listed):
Comprehensive Plan: 2030 Volume I 3.7.1.4
Strategic Plan:
Other: 2023-2024 Budget book, Capital Improvement Plan
Certification of Funds
Total amount of funds listed in this legislation: $ 0
This legislation(✓):
Creates revenue in the amount of. $
Creates expenditure in amount of. $
Creates a savings in the amount of: $
X Has no fiscal impact
Funds are (✓):
Budgeted Line item(s):
Not budgeted
X Not applicable
Fund Balance Information
Affected Fund(✓):
General SMIC Electric Wastewater
Boat Harbor Parking FX Water F1 Healthcare
Motor Pool Other Lowell Canyon
x Water Tank fund
Note:amounts are unaudited
Available Fund Balance $ $222,914.29
Finance Director Signature: 04�etl
1,7
Attorney Review
Yes Attorney Signature:
Not applicable Comments:
Administration Recommendation
eAdopt Resolution
Other:
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