The URL can be used to link to this page

Home My WebLink AboutItem 25 - Water Well 32 Project Public Works Agency www.santa-ana.org/public-works Item # 25 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report December 19, 2023 TOPIC: Water Well 32 Project AGENDA TITLE Adopt a Reimbursement Resolution Approving an Updated Construction Installment Sale Agreement with the California State Water Resources Control Board for Financing of the Well 32 Nitrate Treatment Project (Non-General Fund) RECOMMENDED ACTION Adopt a Reimbursement Resolution with the California State Water Resources Control Board for financing of the Well 32 Nitrate Treatment Project, in an amount up to $13,761,712. RESOLUTION NO. 2023-XXX entitled A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AUTHORIZING THE REIMBURSEMENT OF FUNDING FOR THE WELL 32 NITRATE TREATMENT AND REHABILITATION PROJECT FROM THE STATE WATER RESOURCES CONTROL BOARD GOVERNMENT CODE §84308 APPLIES: No DISCUSSION The Public Works Agency’s Water Resources Division (Water Resources Division) oversees and maintains the daily operations of the City’s water and sanitary sewer systems. In an effort to find cost-effective solutions to maintain and improve the City’s water system infrastructure, the Water Resources Division has sought out funding mechanisms such as the California State Water Resources Control Board’s (SWRCB) Drinking Water State Revolving Fund (SRF). The SRF assists public water systems in financing the cost of drinking water infrastructure projects needed to achieve or maintain compliance with Safe Drinking Water Act (SDWA) requirements. The City was originally awarded a SRF loan in the amount of $5,290,000 to complete the Well 32 Nitrate Treatment Project (Project). The Well 32 Nitrate Treatment Project will rehabilitate Well 32, located in Morrison Park, which has been inactive for over 15 years due to low operating efficiencies and nitrate levels above the state threshold. The Project will construct approximately 3,600 feet of new pipeline to convey the well’s flow to the Garthe Reservoir where the water will be blended with other water sources to reduce the nitrate levels to well below the state Water Well 32 Project December 19, 2023 Page 2 3 9 1 3 threshold for drinking water. It is estimated that the project will provide the City with an additional 4,000 acre feet (1,303,600,000 gallons) of water per year. Placing Well 32 back in the City’s water system will improve system efficiency and reduce the burden on other water-producing facilities. After the conclusion of a competitive bidding process, the City Council awarded a construction contract to Pacific Hydrotech Corp. in the amount of $12,795,865 and a total estimated project delivery cost $16,634,625 to complete the Project. Due to the low-interest nature of the SRF loan, Staff has requested an increased loan amount of $13,761,712, from the previously-approved $5,290,000, to help fund the project. Approval of the Reimbursement Resolution (Exhibit 1) will allow Staff to satisfy SWRCB requirements for consideration of the requested loan increase. Staff will return to Council for approval of any amendment to the funding agreement, should the request be approved by SWRCB. FISCAL IMPACT Funds are available in the current fiscal year, FY 2023-24, to pay estimated administrative and grant fund fees in Water Debt Service, Contract Services- Professional expenditure account (No. 06017020-62300). Principal and interest payments are due annually beginning one year after construction completion date of June 30, 2025. Funds for debt servicing will be budgeted in Water Debt Service, Principal-Debt Services expenditure account (No. 06017020-67100) and Interest-Debt Services expenditure account (No. 06017020-67110) for FY 2025-26 through FY 2054- 55. Loan reimbursement disbursements will be recorded in Water Fund, Notes/Loan Payable account (No. 06001001-27000). The project costs are estimated at $16,634,625 and Staff continues to seek funding to fully fund the delivery of this project. EXHIBIT(S) 1. Reimbursement Resolution Submitted By: Nabil Saba, Executive Director Public Works Approved By: Tom Hatch, Interim City Manager Resolution No. 2023-XXX Page 1 of 3 RESOLUTION NO. 2023-XXX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AUTHORIZING THE REIMBURSEMENT OF FUNDING FOR THE WELL 32 NITRATE TREATMENT AND REHABILITATION PROJECT FROM THE STATE WATER RESOURCES CONTROL BOARD WHEREAS, the City of Santa Ana (“City”) desires to finance the costs of constructing and/or reconstructing certain public facilities and improvements relating to its water and wastewater system, specifically the Well 32 Nitrate Treatment and Rehabilitation Project (“Project”); and WHEREAS, the City intends to finance the construction and/or reconstruction of the Project or portions of the Project with moneys (“Project Funds”) provided by the State of California, acting by and through the State Water Resources Control Board (“State Water Board”); and WHEREAS, the State Water Board may fund the Project Funds with proceeds from the sale of obligations the interest upon which is excluded from gross income for federal income tax purposes (the “Obligations”); and WHEREAS, prior to the issuance of the Obligations or the approval by the State Water Board of the Project Funds, the City desires to incur certain capital expenditures (the “Expenditures”) with respect to the Project from available moneys of the City; and WHEREAS, the City has determined that those moneys to be advanced on and after the date hereof to pay the Expenditures are available only for a temporary period, and it is necessary to reimburse the City for the Expenditures from the proceeds of the Obligations. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Ana as follows: Section 1. The City hereby states its intention and reasonably expects to reimburse Expenditures paid prior to the issuance of the Obligations or the approval by the State Water Board of the Project Funds. Section 2. The reasonably expected maximum principal amount of the Project Funds is $13,761,712. Section 3. This Resolution is being adopted no later than 60 days after the date on which the City will expend moneys for the construction portion of the Project costs to be reimbursed with Project Funds. Resolution No. 2023-XXX Page 2 of 3 Section 4. Each City expenditure will be of a type properly chargeable to a capital account under general federal income tax principles. Section 5. To the best of its knowledge, the City is not aware of the previous adoption of official intents by the City that have been made as a matter of course for the purpose of reimbursing expenditures and for which tax-exempt obligations have not been issued. Section 6. This Resolution is adopted as official intent of the City in order to comply with Treasury Regulation Section 1.150-2 and any other regulations of the Internal Revenue Service relating to the qualification for reimbursement of Project costs. Section 7. All the recitals in this Resolution are true and correct, and the City so finds, determines, and represents. Section 8. This Resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall attest to and certify the vote adopting this Resolution. ADOPTED this _____ day of ____________, 2023. ________________________________ Valerie Amezcua Mayor APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney By: Brandon Salvatierra Deputy City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers _ Resolution No. 2023-XXX Page 3 of 3 CERTIFICATION OF ATTESTATION AND ORIGINALITY I, Jennifer L. Hall, City Clerk, do hereby attest to and certify the attached Resolution No. 2023-XXX to be the original resolution adopted by the C ity Council of the City of Santa Ana on _______________. Date: ______________________ ________________________________ City Clerk City of Santa Ana