Date: March 31, Infrastructure Finance Authority (IFA) Board

Transcription

1 Date: March 31, 2016 To: From: Subject: Infrastructure Finance Authority (IFA) Board Chris Cummings, Assistant Director Robert Ault, Program and Services Division Manager Janna Graham, Finance Officer Mary Baker, Regional Coordinator Request for Board approval of a $13,781,865 Safe Drinking Water Revolving Loan Fund (SDWRLF) loan and $1,030,000 SDWRLF Forgivable Loan, for the City of Ashland s $14,811,865, 2.5 MG Water Treatment Plant Project, Portfol Client # Requested Action: Information Only For Board Input Discussion For Board Action (Please see Recommended Motion) Issue: Under the SDWRLF program, if the loan exceeds $3 million, or the Forgivable Loan exceeds $750,000 it requires IFA Board approval and if the loan exceeds $6 million it also requires Drinking Water Advisory Committee (DWAC) approval on April 20, On March 16, 2016 the City of Ashland submitted an application to the Infrastructure Finance Authority (IFA) asking for SDWRLF funding in the full amount of $14,811,865 for a 2.5 million gallons (MG) water treatment plant project and acknowledges that this request exceeds typical IFA allowances and is seeking favorable consideration. Background: The City of Ashland owns and operates a municipal drinking water treatment, storage and distribution system under Public Water System Identification Number On April 17, 2012 the City adopted a new Water System Master Plan (WMP), prepared by Carollo Engineers. The City used a citizen-selected committee, Ashland Water Advisory Committee (AWAC) to work with City staff and Carollo Engineers in the development of the WMP. The City adopted WMP was approved by the Oregon Health Authority Drinking Water Section (OHA-DWS) on August 8, 2013.

2 One of the many recommended improvements in the approved WMP, is the construction of a new 2.5 million gallon (MG) treatment plant in an alternate location that is not subject to flooding. The new plant is needed since the existing 7.5 MG plant will be at full capacity by 2018 and is nearing the end of its useful life. The new treatment plant will have the ability to be expanded to 10 MG to meet 2060 needs. The existing treatment plant will eventually be taken offline. The nearly 70 year old, existing treatment plant (7.5 MG) is located near Ashland Creek in a canyon below Reeder Reservoir and Hosler Dam. In 1948 a rapid sand filtration plant was built to treat the Ashland Creek water, and then in the mid-1960 s the plant was converted to a high rate filtration plant. The location of the plant is problematic as it is subject to natural disasters (floods, slides and wildfire etc.). In fact, flood events in 1964, 1974 and 1997 disabled the current plant operations forcing the City to distribute bottled water to the citizens. The 1997 flood caused much damage to the aging plant. Refer to the attached pictures. The concern is that eventually a natural disaster will completely destroy the plant, leaving the community without drinking water for a long period of time. In addition, the current plant will be at full capacity by The new water treatment plant must be built simultaneously with a new 3.0 MG reservoir, Crowson II Reservoir, which is designed to serve as the clear well providing chlorine contact time for the treated water before it enters the distribution system. The OHA-DWS determined that the Crowson II Reservoir project was not an eligible priority under the Safe Drinking Water Revolving Loan Fund (SDWRLF), and the City determined that it could finance the project at a better interest rate and term than utilizing the Infrastructure Finance Authority s (IFA s) Special Public Works Fund (SPWF). Therefore, City intends to utilize local funding for the $8,136,600 Crowson II Reservoir project in conjunction with securing the 14,811,865 of SDWRLF for the new 2.5 MG water treatment plant. Once funding is secured for the treatment plant, the City will issue a Request for Proposal (RFP) for final design, construction engineering and geotechnical services. The engineering will include an alternatives analysis for the type of water treatment plant that will work best with the raw water source, involving bench scale testing of the raw water along with treatment alternatives and comparing to the finished water of the existing treatment plant to verify all OHA-DWS requirements for potable water are met. Once a final treatment process alternative is selected, final engineering will commence, along with appropriate permitting. The construction project will be publicly advertised for bid, and a construction contract will be awarded to the lowest responsive bidder. It is anticipated that construction will be completed in May The project will also include related legal, project management, permits and plan review fees.

3 Discussion: The City acknowledges that that this request exceeds typical IFA allowances under the SDWRLF program and requests favorable consideration. = In considering this request the following is provided, demonstrating the community s capacity, local support and economic need: 1) The City of Ashland is proactive in improving its water system and has demonstrated good performance and administration capacity on the existing SDWRLF funded project #S14005 in the amount of $3,511,027, matched with $2,400,000 of City funds for a total project cost of $5,911,027. The funds are being utilized for the Talent Ashland Phoenix (TAP) intertie (construction is completed), the TAP Booster Pump Station (construction is underway), the Talent Irrigation District (TID) Pump Station (under final design) and the Loop Road Reservoir (under final design). The completion date for this project is July 18, At this time, the City is managing this project in conformance with the program requirements and it appears the project will be completed before the required project completion date. 2) The City has the capacity to undertake this project and will enter into an intergovernmental agreement with the Rogue Valley Council of Governments (RVCOG) to assist with project management. 3) The City has strong community support through the Ashland Water Advisory Committee for the proposed 2.5 MG water treatment plant project, and financial plan that established successive rate increases to support capital improvement projects. 4) Business Oregon has determined that Jackson County, including the City of Ashland is considered distressed in In addition the City has a 5.4% unemployment rate that exceeds the statewide of 4.8%; a tourism based economy that is home to 6,000 students from Southern Oregon University; a median household income of $43,500 which is 86.1% of the statewide average of $50,521; and, 42.58% of the residents are considered low to moderate income. Funding Summary: The application for the City of Ashland was considered under SDWRLF guidelines. The project was scored as a priority by the Oregon Health Authority. The financing consists of an Award in the amount of $14,811,865 which is to be distributed as follows: $13,781,865 SDWRLF Loan (30 year term loan at a 1.79% interest rate, as a Disadvantaged Community).! The Disadvantaged rate of 1% is limited to a grant equivalent of the subsidy of $2,500,000 over the life of the loan, thus producing a 1.79% interest rate for this project

4 $1,030,000 SDWRLF Forgivable Loan! All eligible projects up to 10% of Total Award not to exceed $250,000, additionally! For a Health and Compliance project Up to 20% of Total Award not to exceed $250,000, additionally! All Disadvantaged Communities are eligible for up to 50% of Total Award not to exceed $500,000, additionally! All eligible Project Management costs, not to exceed $15,000, additionally! All eligible Labor Standards Compliance costs, not to exceed $15,000! The forgivable portion not to exceed the lesser of $1,030,000 or 60% of Total Award The Community qualifies as Disadvantaged due to their projected rate at project completion of $ This exceeds the Affordability Rate (AR) of $ The 2014 AR based on American Community Survey data is calculated at 1.25% of Median Household Income (MHI). The City of Ashland s MHI is $43,500 X 1.25%, divided by 12, equals the AR of $ Recommendation: Based upon the reasons identified within this memo, IFA staff recommend, IFA Board approval of $14,811,865 in SDWLRF funding to the City of Ashland, comprised of a $13,781,865 loan at 1.79% for 30 years and a $1,030,000 Forgivable Loan to construct a 2.5 MG water treatment plant. Recommended Motion: Move to approve $14,811,865 in Safe Drinking Water Revolving Loan Fund (SDWRLF) funding to the City of Ashland, comprised of a $13,781,865 loan at 1.79% for 30 years and a $1,030,000 Forgivable Loan to construct a 2.5 MG water treatment plant. Attachments: 1) Staff Recommendation 2) Pictures of flood event 3) Map of current water treatment plant location and new water treatment plant location

5

6

7

8

9

10 Site Map Crowson 2 Proposed 2.5 MGD Water Treatment Plant (Existing) ² Legend Ashland City Limits Ashland Urban Growth Boundary Hosler Dam Reeder Reservoir Document Name: WaterSystemServiceArea-aerial_detail Source: Esri, DigitalGlobe, GeoEye, i-cubed, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AEX, Getmapping, Aerogrid, IGN, IGP, swisstopo, and the GIS User Community