STAFF REPORT
Operations Committee, November 5, 2009
 
Resolutions for Application for State Revolving Loans for Western Wake Regional Wastewater Management Facility (WWRWMF) (FN10-02)
Consideration of approval of two resolutions to authorize staff to apply for State Revolving Loan Funds
Speaker:  Ms. Karen Mills

From: Karen Mills, Finance Director
Prepared by: Mary Beth Johnson, Deputy Treasurer
Approved by:  Benjamin T. Shivar, Town Manager
Approved by:  Michael J. Bajorek, Assistant Town Manager

Executive Summary:  A potential funding source for the construction of the Western Wake Regional Wastewater Management Facility is a State Revolving Loan.  Loan applications must be submitted to the Construction Grants & Loans Section of the Division of Water Quality once the Record of Decision (ROD) is made.  Staff recommends approval of a resolution required as part of the State Revolving Loan application process which authorizes Staff to pursue the loan.  In addition, Staff recommends approval of a second resolution necessary to access remaining funding available from the first State Revolving Loan of $5 million approved in January 2005 for this same project.

Background:  The Town of Cary and its municipal partners (the towns of Apex, Morrisville and Holly Springs) are working together to design, construct and eventually operate the Western Wake Regional Wastewater Management Facility (WWRWMF).  Phase I construction will provide 18 million gallons per day (MGD) of treatment capacity.  Phase I is projected to bid in spring 2010 with construction to start in summer 2010. The Town of Cary serves as the lead agency for managing the financial, design and construction aspects of this initiative.

Discussion:  There are several component projects to the WWRWMF with the primary project being the construction of the Water Reclamation Plant.  The current project budget for the plant is $152,983,000 with funding provided from General Obligation Bond Proceeds, Sewer Development Fees, Unrestricted Revenue, State Revolving Loan Funds and reimbursement from Apex.  The State Revolving Loan Funds are offered at a lower interest rate than traditional bond options, and the Town should pursue the maximum state revolving loan funding available, using these funds in lieu of more expensive funding sources.

As part of the application requirements for the state revolving loan, a Resolution by the Town Council must be approved to affirm required assurances and agreements and designate an authorized representative to file the application, to make necessary certifications, and execute such affidavits as are required by the rules and regulations.  The first proposed resolution addresses routine operations, financial management and prudent compliance and confirms the following:

• The Town will arrange for financing for the remainder of the project costs
• The Town will adopt utility rates necessary to cover the prudent operations cost of the project and the related debt service
• The Town authorizes the State to withhold debt service payments from other State distributions if the Town does not make the committed debt service repayments
• The Town will efficiently operate and maintain the project after construction
• Town staff is authorized to apply for the loan and provide necessary related documentation and execute necessary documentation
• The Town will comply with Federal and State laws and regulations pertaining to the project.

In addition to the state revolving loan for construction, the Town applied for and received approval of an initial State Revolving Loan of $5 million on behalf of all the partners to begin the design and permitting process for the Plant in January 2005.  The Town drew $3,958,770 of this initial loan and began paying debt service in May 2008.  The Town and partners intended to use all of the $5 million in proceeds, however the State stopped the partners’ draws on the loan until later in the permitting process.   Because of the delay, the State is requiring another application process to access the remaining funds on the initial planning loan.  Since a resolution to apply for the initial $5 million loan was approved by Council on July 15, 2004, staff recommends that Council reconfirm the original resolution which will authorize staff to reapply for the remaining loan funds of $1,041,230.

Fiscal Impact:  The fiscal impact of the debt service requirements for these loans and all other planned financing for the project has been factored into the Town’s utility rate forecasts.  Council has taken steps to plan for these loan repayments by adopting rates in accordance with a rate smoothing strategy. 

Staff Recommendation: Staff recommends the approval of both resolutions which authorize staff to pursue State Revolving Loan funds for the Western Wake Regional Waste Water Management Facility project construction phase and to pursue the remaining loan funds from the initial loan for the design and permitting of the Plant.
 




RESOLUTION #1

RESOLUTION BY GOVERNING BODY OF TOWN OF CARY

WHEREAS, The Federal Clean Water Act Amendments of 1987 and the North Carolina Water Infrastructure Act of 2005 (NCGS 159G) have authorized the making of loans and grants to aid eligible units of government in financing the cost of the permitting, design and construction of wastewater collection and treatment projects, and

WHEREAS, The Town of Cary, in collaboration with other municipal governments in Wake County, has need for and intends to construct regional wastewater management facilities in western Wake County, including regional wastewater pumping and conveyance, water reclamation facility, biosolids management facility and effluent pumping and discharge facilities to the Cape Fear River, and

WHEREAS, The Town of Cary intends to request state loan assistance for the project,

NOW THEREFORE BE IT RESOLVED, BY THE TOWN COUNCIL OF THE TOWN OF CARY:

That the Town of Cary, the Applicant, will arrange financing for all remaining costs of the project, if approved for a State loan award.

That the Town of Cary will adopt and place into effect on or before completion of the project a schedule of fees and charges and other available funds which will provide adequate funds for proper operation, maintenance, and administration of the system and the repayment of all principal and interest on the debt.

That the governing body of the Town of Cary agrees to include in the loan agreement a provision authorizing the State Treasurer, upon failure of the Town of Cary to make scheduled repayment of the loan, to withhold from the Town of Cary any State funds that would otherwise be distributed to the local government unit in an amount sufficient to pay all sums then due and payable to the State as a repayment of the loan.

That the Town of Cary will provide for efficient operation and maintenance of the project on completion of construction thereof.

That Karen Mills, Finance Director, the Authorized Official, and successors so titled, is hereby authorized to execute and file an application on behalf of the Town of Cary with the State of North Carolina for a loan to aid in the construction of the project described above.

That the Authorized Official, and successors so titled, is hereby authorized and directed to furnish such information as the appropriate State agency may request in connection with such application or the project:  to make the assurances as contained above; and to execute such other documents as may be required in connection with the application.

That the Town of Cary has substantially complied or will substantially comply with all Federal, State, and local laws, rules, regulations, and ordinances applicable to the project and to Federal and State grants and loans pertaining thereto.

Adopted this the 12th day of November, 2009 at Cary, North Carolina.

Mayor
 




RESOLUTION #2

RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF CARY, NORTH CAROLINA PROVIDING REQUIRED ASSURANCES AND AGREEMENTS AND DESIGNATING AN AUTHORIZED REPRESENTATIVE TO FILE AN APPLICATION FOR A LOAN WITH THE STATE OF NORTH CAROLINA

WHEREAS, The Federal Clean Water Act Amendments of 1987 and the North Carolina Clean Water Revolving Loan and Grant Act of 1987 have authorized the making of loans and grants to aid eligible units of government in financing the costs for the permitting, design and construction of wastewater collection and treatment projects, and

WHEREAS, The Town of Cary, in collaboration with other municipal governments in Wake County, has need for and intends to construct regional wastewater management facilities in western Wake County, including regional wastewater pumping and conveyance, water reclamation facility, biosolids management facility and effluent pumping and discharge facilities to the Cape Fear River, and

WHEREAS, The Town of Cary intends to request state loan assistance for the project,

NOW THEREFORE BE IT RESOLVED, BY THE TOWN COUNCIL OF THE TOWN OF CARY:
That Town of Cary, in collaboration with other local governments in Wake County, will arrange financing for all remaining costs of the project, if approved for a State loan award.

That Town of Cary will adopt and place into effect on or before completion of the project a schedule of rates, fees and charges and other available funds, which will provide adequate funds for proper operation, maintenance, and administration of the system and the repayment of all principal and interest on the debt.

That the Town Council of the Town of Cary agrees to include in the loan agreement a provision authorizing the State Treasurer, upon failure of the Town of Cary to make scheduled repayment of the loan, to withhold from the Town of Cary any State funds that would otherwise be distributed to the Town of Cary in an amount sufficient to pay all sums then due and payable to the State as a repayment of the loan.

That Town of Cary will provide for efficient operation and maintenance of the project on completion of construction thereof.

That Karen A. Mills, Finance Director, and successors so titled, is hereby authorized to execute and file an application on behalf of the Town of Cary with the State of North Carolina for a loan to aid in the construction of the project described above.

That Karen A. Mills, Finance Director, and successors so titled, is hereby authorized and directed to furnish such information as the appropriate State agency may request in connection with such application or the project; to make the assurances as contained above; and to execute such other documents as may be required in connection with the application.

That the Town of Cary has substantially complied or will substantially comply with all Federal, State, and local laws, rules, regulations, and ordinances applicable to the project and to Federal and State grants and loans pertaining thereto.

Adopted on the 15th day of July 2004 for initial loan application.

Adopted this 12th day of November 2009 for second loan application for balance of funds.

Mayor