REPORT TO COUNCIL
SUBJECT
Title
Adopt a Resolution Authorizing the City to Enter into a Loan Agreement with the United States Environmental Protection Agency up to the amount of $221,000,000 and Authorize the City Manager to Execute the Loan Agreement and Related Documents and Pay All Closing Costs
Report
BACKGROUND
The Donald M. Somers Water Pollution Control Plant (WPCP) is one of the oldest wastewater treatment facilities on the West Coast. In 2016, City Council adopted a Master Plan, which serves as a guide for reconstruction of the WPCP. This Master Plan is now being implemented as the Sunnyvale Clean Water Program, with a total cost of approximately $880 million in the FY 2020/21 Budget.
In 2016, the City successfully secured a $127 million Clean Water State Revolving Fund (CWSRF) loan for the Headworks and Primary Treatment project portion of this Program (Phase 1). Over the life of that loan, the savings in debt service is likely to exceed $40 million relative to traditional municipal bonds. The City is now in the mid stages of design on a group of other projects, budgeted at $450 million over the next six years which comprise the second phase (Phase II) of the Sunnyvale Clean Water Program.
In support of this second phase of the program, the City successfully obtained a Water Infrastructure Finance and Innovation Act (WIFIA) loan for the Clean Water Program from the United States Environmental Protection Agency (EPA). Staff has been negotiating with the EPA, supported by the City's Municipal Advisor, Ross Financial, its Underwriting and Special Structuring consultant, J.P. Morgan, and Jones Hall, Bond Counsel. Negotiations have gone well over the past several months resulting in the Loan Agreement and Term Sheet provided as Attachments 2 and 3.
EXISTING POLICY
Council Fiscal Policy 7.11 Enterprise Fund Policies, 1.1b.1 Capital improvements associated with the existing infrastructure of a utility should be primarily funded from two sources: rate r...
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