Res 1954 - Amend Loan Agreement R98414COUNCIL BILL NO. 2808
RESOLUTION NO. 1954
A RESOLUTION TO AMEND THE CLEAN WATER STATE REVOLVING FUND LOAN
AGREEMENT NO. R98414 WITH THE STATE OF OREGON AND AUTHORIZING THE
CITY ADMINISTRATOR TO SIGN SUCH AGREEMENT
WHEREAS, the City of Woodburn has determined that the City needs to accomplish
wastewater facilities improvements in order to comply with the City's National Pollution
Discharge Elimination System permit; and
WHEREAS, the State of Oregon acting by and through its Department of
Environmental Quality is authorized to enter into Clean Water State Revolving Fund loan
agreements and disburse funds pursuant to OAR 340-054-0065(2); and
WHEREAS, the City of Woodburn through Resolution 1860 authorized entering into
Clean Water State Revolving Fund Loan Agreement No. R98414 and for the City
Administrator to sign said agreement; and
WHEREAS, the City and DEQ entered into a Mutual Agreement and Order
(MAO) Case No. WQ/M-WR-07-082 in December of 2007. The MAO addresses limits
and a compliance schedule for meeting effluent limits for wastewater; and
WHEREAS, the State of Oregon acting by and through its Department of
Environmental Quality, has authorized an increase to the existing loan amount from
$5,356,261 to $9,093,175, an increase of $3,736,914, to partially finance MAO No.
WQ/M-WR-07-082; and
WHEREAS, the City finds that the increased loan amount is necessary to meet the
City's obligations and compliance schedule under MAO No. WQ/M-WR-07-082; NOW
THEREFORE,
THE CITY OF WOODBURN RESOLVES AS FOLLOWS:
Section 1. The City of Woodburn agrees to amend Clean Water State Revolving
Fund Loan Agreement No. R98414 with the State of Oregon acting by and through its
Department of Environmental Quality, to increase the amount of the loan from $5,356,261
to $9,093,175, an increase of $3,736,914.
Section 2. That the City Administrator of the City of Woodburn is authorized to sign
an amendment to Clean Water State Revolving Fund Loan Agreement No. R98414 on
behalf of the City in a form acceptable to the City Attorney.
Page 1 - COUNCIL BILL NO. 2808
RESOLUTION NO. 1954
Approved as to form
City Attorney
Approved:
Passed by Council
Submitted to the Mayor
Approved by the Mayor
Filed in the Offi a Recor
ATTEST:
S
ina Shear r, C' Recorder
City of Woodburn, Oregon
Page 2 - COUNCIL BILL NO. 2808
RESOLUTION NO. 1954
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Date
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January 11, 2010
January 11, 2010
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January 1'l, 2010
TO: Honorable Mayor and City Council through City Administrator
FROM: Dan Brown, Public Works Director
SUBJECT: ADOPT RESOLUTION TO INCREASE EXISTING CLEAN WATER STATE
REVOLVING FUND LOAN AGREEMENT NO. R98414
RECOMMENDATION:
That Council adopt a resolution authorizing the City Administrator to enter into
an agreement to amend the existing Department of Environmental Quality
(DEQ) Clean Water State Revolving Fund Loan Agreement No. R98414. The
amendment is to increase the City's current loan by an amount of $3,736,914.
BACKGROUND:
The City has a "Revenue Secured Loan" with DEQ in the amount of $4,093,175 to
finance upgrades to the wastewater collection, treatment, disposal systems,
and watershed enhancement projects. The loan was approved by the City on
July 11, 2007.
The City and DEQ entered into a Mutual Agreement and Order (MAO) Case No.
WQ/M-WR-07-082 in December of 2007. The MAO addresses limits and a
compliance schedule for meeting effluent limits. The recent adoption of the
Total Maximum Daily Load (TMDL) for the Molalla-Pudding Sub -basin by DEQ
places the compliance schedule within the MAO in motion. To meet the
compliance limits and schedule, the City must make certain improvements to
the wastewater facility in order to comply with the National Pollution Discharge
Elimination System (NPDES) permit limits and conditions.
Specific projects identified to meet the requirements of MAO include:
TABLE 1 -
Pre -design 2010 - 2013 Recommended Improvements
Project Component Details
Mill Creek Pump Station Install low flow pump
Agenda Item Review: City Administrator City Attorney Finance
Honorable Mayor and City Council
January 11, 2010
Page 2
TABLE 1 -
Pre -design 2010 - 2013 Recommended Improvements
Improvements Phase 1
POTW Upgrades
Convert wet weather clarifiers to
primary clarifiers
Upgrade blower and aeration
system*
Rehabilitate wet weather clarifiers
Replace valves, instrumentation, and
blowers.
Contact stabilization modifications* Install piping to allow flow to be diverted
to the midpoint of the aerated zone
under high flow conditions
Expand existing UV system
Construct bypass around aerator
Condition improvements
Install additional emergency
generator
Reuse and Discharge Improvements
(Natural Treatment Systems)
Lagoon Wetlands*
Floodplain Wetlands*
Replace blanks in existing Trojan UV units
with UV lamp assemblies and make
minor channel improvements
Construct a piped bypass around the
aeration structure in Outfall 001 A
Provide improvements throughout the
POTW to improve operation and
maintenance.
Meet Class 1 reliability standards.
Develop constructed wetlands for
effluent cooling within the existing
effluent lagoon
Develop constructed wetlands for
effluent cooling within the floodplain area
of adjacent City -owned land
Honorable Mayor and City Council
January 11, 2010
Page 3
TABLE 1 -
Pre -design 2010 - 2013 Recommended Improvements
Poplar Tree Irrigation Expansion*
Pudding River Ouffall*
Expand polar tree plantation onto City -
owned land including extension of
effluent irrigation and biosolids
distribution facilities
Develop a new Pudding River ouffall with
supporting conveyance
The total estimated capital improvement cost for the identified facilities
improvements from the Wastewater Facilities Plan is $10.8 million. This
estimated project cost includes the estimated construction cost and an
additional 25 percent for engineering, administrative and legal fees.
DISCUSSION:
DEQ previously authorized in September 2009 an increase to the existing loan
amount from $4,093,175 to $5,356,261, or an increase of $1,263,086 to partially
finance MAO No. WQ/M-WR-07-082. The City requested an increase of
$5,000,000 to completely finance the MOA; however, DEQ was initially limited to
only being able to provide $1,263,086 of the requested loan increase at this time
due to restriction of funds available for the State Revolving Fund loan program.
Additional funds have become available and DEQ has authorized an additional
increase of $3,736,914. This additional allocation meets the City's request to
increase loan #R98414 from $4,093,175 to $9,093,175.
The proposed expenditures of this increased loan amount are consistent with
the intent of the original loan in that the funds will -be expended on watershed
enhancement projects.
The loan increase will have the same attractive interest rate of 1.53 percent per
year as the original loan. Other means of financing the wastewater capital
improvements needed to comply with the MAO will have a higher interest rate
and greater debt service. One of the City's goals in executing the needed
capital improvements for the wastewater system are to optimize the use of
State Revolving Fund Loans to minimize the rate increases needed to finance
the capital improvements identified for regulatory compliance.
Honorable Mayor and City Council
January 11, 2010
Page 4
The action requested of Council is consistent with the Wastewater Facilities Plan
Update and Rate Study.
FINANCIAL IMPACT:
Acceptance of the increase in the State Revolving Fund loan #R98414 increases
the City's debt. Paying the debt service associated with this loan will require a
future sewer rate increase. Debt service payments do not start until the
barrowed funds are expended. Council is reminded that acceptance of this
increase in the State Revolving Fund loan will require an increase in sewer rates
for the fiscal year beginning of July 1, 2010 ranging from 9.5% for low volume
users to 16% for high volume users as identified in the Wastewater Facilities Plan.
Securing the loan increase provides the City the best opportunity to control the
cost of debt needed to address the wastewater capital improvements. Failure
to secure the loan increase at this time would deny Council the opportunity to
acquire the revenue needed at the lowest interest possible. Should Council
elect to not increase sewer rates to fund the debt service required, the
unobligated loan balance can be returned to DEQ for redistribution to other
needing municipalities.
Approval of the attached resolution and amendment to increase the State
Revolving Fund loan #R98414 must be accompanied with a full understanding
of Council that future sewer rate increases will be needed prior to obligation of
this low interest loan.