The URL can be used to link to this page

Home My WebLink AboutResolution No. 2023-56KENAI CITY OF KENAI RESOLUTION NO. 2023-66 Sponsored by: Administration A RESOLUTION AUTHORIZING THE APPLICATION TO THE STATE OF ALASKA, DEPARTMENT OF ENVIRONMENTAL CONSERVATION FOR A STATE REVOLVING FUND LOAN FROM THE ALASKA DRINKING WATER FUND AND EXECUTION OF A LOAN AGREEMENT FOR THE WATER TREATMENT PLANT PUMPHOUSE PROJECT. WHEREAS, the Water Treatment Plant Pumphouse Project will construct a new pumphouse including new water distribution system pumps and appurtenances at the 420 Shotgun Dr. location to replace outdated equipment and improve overall system resiliency as detailed within the City's FY2024 Capital Improvement Plan; and, WHEREAS, the City of Kenai seeks to obtain the necessary financial assistance for the project; and, WHEREAS, the State of Alaska, Department of Environmental Conservation has offered funding through the Alaska Drinking Water Fund; and, WHEREAS, the project currently is included on an Alaska Drinking Water Fund project priority list for the current fiscal year; and, WHEREAS, a project loan of up to $1,200,000 has been offered and is eligible for 100% loan forgiveness according to the notification received on August 1, 2023 from the Alaska Department of Environmental Conservation; and, WHEREAS, the City's debt covenant established in Article 6 of Kenai Municipal Charter is not applicable to this agreement consistent with the City's plan to appropriate and fund the project through completion then seek reimbursement by loan proceeds that will simultaneously provide debt forgive thus the City will not be incurring debt; and, WHEREAS, as a result no debt is anticipated to be incurred with this work. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA. Section 1. That the City Manager is authorized to apply for and execute a loan agreement with the Alaska Department of Environmental Conservation in the amount of $1,200,000 in support of the Water Treatment Plant Pumphouse Project, and that the City Manager is authorized to represent the City of Kenai in carrying out the City of Kenai's responsibilities under the loan agreement, and that the City Manager is authorized to delegate responsibility to appropriate City of Kenai staff to carry out technical, financial, and administrative activities associated with the loan agreement. Section 2. That this Resolution takes effect immediately upon passage. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 20TH DAY OF SEPTEMBER, 2023. Brian Gabriel Sr., Mayor M Michelle ane , ,City Clerk New Text Underlined; [DELETED TEXT BRACKETED] KFNAI —I .. Ienai 1210 Fidalgo Ave, Kenai, AK 99611-77941907.283.7535 ( www.kenai.city 11IT1�� i ► it TO: Mayor Gabriel and Council Members THROUGH: Terry Eubank, City Manager FROM: Scott Curtin, Public Works Director DATE: September 13, 2023 SUBJECT: Resolution 2023-56 This Resolution will authorize application for and execution of the City's requirements of receiving funding through the State's Revolving Loan Fund in support of the Water Treatment Plant Pumphouse project. This project is identified as Project No. 1 in the City's FY2024-2028 Capital Improvement Plan for the Water Sewer Fund. The project will include construction of a new pumphouse building, distribution pumps, controls, piping and other appurtenances. The Public Works Department applied for this funding opportunity on February 28, 2023 and received word of the programs offer on August 1, 2023 per the letter included with this Resolution. The City's debt covenant established in Article 6 of Kenai Municipal Charter is not applicable to this agreement consistent with the City's plan to appropriate and fund the project through completion then seek reimbursement by loan proceeds that will simultaneously provide debt forgive thus the City will not be incurring debt. The administration received concurrence from Bond Counsel that this methodology would not trigger the requirements of the City's debt covenant. I will be available for questions. Council's support is respectfully requested. THE STATE °fALASKA GOVERNOR MIKE DUNLEAVY August 1, 2023 Scott Curtin, Director of Public Works City of Kenai 210 Fidalgo Ave Kenai, AK 99611 Department of Environmental Conservation DIVISION OF WATER Technical Assistance and Financing 555 Cordova Street Anchorage, Alaska 99501 Main: 907.269.7502 Fax 907.269.7509 dec.alaska.gov Dear Mr. Curtin: The Alaska State Revolving Fund Program's State Fiscal Year 2024 (SFY24) Project Priority List for the Alaska Drinking Water Fund (ADWF) has been updated and includes the project listed below based on the questionnaire submitted in February 2023. The complete Project Priority List and the Intended Use Plan can be found online at: htms: / / dec.alaska.c!ov/water/technical-assistance-and-financinty-1 state-revolving-fund/intended-use-clans Alaska Drinking Water Fund Score Project Name Requested Loan Loan Forgiveness Estimated Project Amount Start Date 120 Water Treatment Plant Pumphouse $1,200,000 $1,200,000 5/1/2024 This project has been allocated 100% loan forgiveness. If a loan application is not submitted by February 29, 2024, the offer of loan forgiveness may be rescinded and re -allocated to another project that is ready to move forward. As mentioned in the Intended Use Plan, projects may remain on the Project Priority List for a maximum of two years. These projects will retain the same score originally assigned unless a revised questionnaire is submitted and reviewed. If applications have not been submitted for these projects within two years from the date that the project questionnaires were submitted, the projects will be removed from the list and new questionnaires will be required to relist the project. The next step in the financing process is to submit a loan application. If you have questions about the next steps you need to take to complete the loan application process, please contact the SRF Program. Sincerely, Peggy Ulman SRF Program Coordinator 907-334-2681 peggy.ulman@alaska.gov DOLA 3000 A STREET, SUITE 300, ANCHORAGE, ALASI A 99503-4097 TELEPHJONE (907) 563-8844 - FAx (907) 563-7322 - WWW.JDOLAW.com 1ERMAIN DUNNAGAN & OWENS, P.C. MEMORANDUM TO: Members of the City Council City of Kenai, Alaska THRU: City Attorney Scott Bloom FROM: Jermain, Dunnagan & Owens, P.C. Bond Counsel DATE: August 10, 2023 RE: Loan Subsidy from the Department of Environmental Conservation, Division of Water The State of Alaska, Department of Environmental Conservation, through the Division of Water ("Department"), by letter dated August 1, 2023 ("Letter"), extended financing to the City of Kenai ("City"), through the Alaska State Revolving Fund Program, Alaska Drinking Water Fund, to finance costs associated with the City's Water Treatment Plant Pumphouse ("Project"). The Letter includes a requested loan amount of $1.2 million, with loan forgiveness in the amount of $1.2 million. In addition, the Department provided the City with a draft loan agreement to be entered into in connection with the financing which characterizes the 100% loan forgiveness as a "Subsidy." City officials contacted us to determine whether the proposed funding triggered City debt limitations thereby requiring voter authorization. We understand the City proposes to forward fund Project costs and request (one disbursement) the full "Subsidy' in the amount of $1.2 million within the required timeframe. The Department has represented that it does not expect or require repayment of the "Subsidy" and has, in fact, agreed to include language in the final loan agreement which states: "Nothingcontained in this [loan] Agreement shall be construed as an obligation or pledge of the Borrower to appropriate or expend general funds or revenues of the Borrower to repay the Subsidy, or operate or maintain the Project Facility." Further, the Department provided the City with a form letter to be attached to the proposed loan agreement which states, in part, "this project is 100% subsidized in the form of loan forgiveness.... When the project has been completed and the last disbursement request {01420655) Page 2 has been received, the closeout process will be initiated. ... Repayment will not be required under this agreement since thieproject is 100% subsidized." Based on the above, neither party anticipates the City will incur debt to fund the Project. Rather, both parties anticipate final costs of the Project will be paid with the "Subsidy" as described herein. There will be no loan or accrual of interest on the "Subsidy." Subject to the above, we do not believe voter authorization is necessary for the City to enter into the above described financing arrangement with the Department. (014206551