Item 8IAGENDA ITEM # 8I
DECEMBER 14, 2009
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Drinking Water State Revolving Fund Construction Loan Agreement for Well
2R and Ocean Blvd. Water Main
SUBMITTED BY: Donna Kaluzniak, Utility Director`~/
Nelson Van Liere, Finance Director~_
DATE: December 4, 2009
BACKGROUND: Bids were advertised to construct new Public Supply Well 2R on November
11, 2009. Construction of the new well was recommended in the City's Water Master Plan to replace
an older well that is in poor condition.
Bids for replacement of the very old water main on Ocean Blvd. from 10~' St. to 14~' St. will be
received in January, 2010. The water main is severely deteriorated and is causing water quality
problems in the area.
Staff had prepared a Request for Inclusion and Facilities Plan for the Department of Environmental
Protection (DEP) in order to obtain Stimulus funds through the State Revolving Fund (SRF) loan
program for We112R. This program offers financing at considerably lower interest rates than
available through bank loans or bonds.
DEP informed staff that funding was available and a loan application and Resolution passed by the
City Commission on November 9, 2009 were forwarded to DEP.
DEP later advised City staff that additional Stimulus SRF monies were available and authorized an
additional $251,000 in funding should the City desire to include the Ocean B1vd.Water Main Project.
The City does not expect to be able to get full SRF funding for the TMDL project, so borrowing this
amount now under the Stimulus SRF will allow us to put in some cash later when we need to finance
the TMDL work, saving some interest expense.
The terms of the loan include a 2.71 % interest rate per annum, repaid in 40 semiannual loan
payments of $34,626 until the payment amount is adjusted by amendment. Other important
provisions include
• A requirement that the City maintain rates and charges sufficient to provide a 1.15 coverage
ratio
• The ability of the State to keep revenue sharing and sales taxes if the City defaults on the loan
• An interest rate increase of 1.667% if the City defaults on the loan
Staff has requested a Legal Opinion from John L. McWilliams, III of Livermore, Freeman and
McWilliams, P.A. addressing the availability of pledged revenues, the right to increase rates and
AGENDA ITEM # 8I
DECEMBER 14, 2009
subordination of the pledge. The legal opinion will be obtained prior to funds being released by DEP.
DEP has prepared a Loan Agreement that must be executed in order to proceed with the funding
process.
BUDGET: The original budget for the We112R was $800,000. The original budget for Ocean Blvd.
was $84,000 and the revised budget is $251,000. The total amount of the Loan Agreement is not to
exceed $1,063,800 ($800,000 for We112R, $251,000 for Ocean Blvd Water Main and $12,800 of
Capitalized Interest). An Amendment to the Agreement may be forthcoming based on the actual bid
amounts and construction timeline.
RECOMMENDATION: To approve a form of the Drinking Water State Revolving Fund
Construction Loan Agreement, authorizing the City Manager to execute and deliver the final form of
the Agreement as amended to reflect actual project costs and schedules.
ATTACHMENTS: 1. Drinking Water State Revolving Fund Construction Loan Agreement
REVIEWED BY CITY MANAGER:
AGENDA ITEM # 8I
DECEMBER 14, 2009
STATE OF FLORIDA
DEPARTMENT OF ENVIRONMENTAL PROTECTION
AND
CITY OF ATLANTIC BEACH, FLORIDA
DRINKING WATER STATE REVOLVING FUND
CONSTRUCTION LOAN AGREEMENT
DW160710
Florida Department of Environmental Protection
Bureau of Water Facilities Funding
Bob Martinez Center
2600 Blair Stone Road, MS 3505
Tallahassee, Florida 32399-2400
AGENDA ITEM # 8I
DECEMBER 14, 2009
DRINKING WATER STATE REVOLVING FUND CONSTRUCTION LOAN AGREEMENT
CONTENTS PAGE
ARTICLE I -DEFINITIONS 1
1.01. WORDS AND TERMS. 1
1.02. CORRELATIVE WORDS. 3
ARTICLE II -WARRANTIES, REPRESENTATIONS AND COVENANTS 3
2.01. WARRANTIES, REPRESENTATIONS AND COVENANTS. 3
2.02. LEGAL AUTHORIZATION. 5
2.03. AUDIT AND MONITORING REQUIREMENTS. 5
ARTICLE III -LOAN REPAYMENT ACCOUNT g
3.01. LOAN DEBT SERVICE ACCOUNT. g
3.02. INVESTMENT OF LOAN DEBT SERVICE ACCOUNT MONEYS. 9
3.03. LOAN DEBT SERVICE ACCOUNT WITHDRAWALS. 9
3.04. ASSETS HELD IN TRUST. g
ARTICLE IV -PROJECT INFORMATION g
4.01. PROJECT CHANGES. q
4.02. TITLE TO PROJECT SITE. g
4.03. PERMITS AND APPROVALS. 10
4.04. ENGINEERING SERVICES. 10
4.05. PROHIBITION AGAINST ENCUMBRANCES. 10
4.06. COMPLETION MONEYS. 10
4.07. CLOSE-OUT. 10
4.08. DISBURSEMENTS. 10
ARTICLE V -RATES AND USE OF THE WATER AND SEWER SYSTEMS 11
5.01. RATE COVERAGE. 11
5.02. NO FREE SERVICE. 11
5.03. MANDATORY CONNECTIONS. 11
5.04. NO COMPETING SERVICE. 12
5.05. MAINTENANCE OF THE WATER AND SEWER SYSTEMS. 12
5.06. ADDITIONS AND MODIFICATIONS. 12
5.07. COLLECTION OF REVENUES. 12
ARTICLE VI -DEFAULTS AND REMEDIES 12
6.01. EVENTS OF DEFAULT. 12
6.02. REMEDIES. 13
6.03. DELAY AND WAIVER. I4
ARTICLE VII -THE PLEDGED REVENUES 14
7.01. SUPERIORITY OF THE PLEDGE TO THE DEPARTMENT. 14
7.02. ADDITIONAL DEBT OBLIGATIONS. 14
ARTICLE VIII -GENERAL PROVISIONS 15
AGENDA ITEM # SI
DECEMBER 14, 2009
DRINKING WATER STATE REVOLVING FUND CONSTRUCTION LOAN AGREEMENT
CONTENTS PAGE
8.01. DISCHARGE OF OBLIGATIONS.
8.02. PROJECT RECORDS AND STATEMENTS.
8.03. ACCESS TO PROJECT SITE.
8.04. ASSIGNMENT OF RIGHTS UNDER AGREEMENT.
8.05. AMENDMENT OF AGREEMENT.
8.06. ANNULMENT OF AGREEMENT.
8.07. SEVERABILITY CLAUSE.
8.08. FALSE CLAIMS.
8.09. ARRA LOGO DISPLAY.
8.10. COMPLIANCE VERIFICATION.
ARTICLE IX -CONSTRUCTION CONTRACTS AND INSURANCE
9.01. AUTHORIZATION TO AWARD CONSTRUCTION CONTRACTS.
9.02. SUBMITTAL OF CONSTRUCTION CONTRACT DOCUMENTS.
9.03. INSURANCE REQUIRED.
ARTICLE X - DETAILS OF FINANCING
10.01. PRINCIPAL AMOUNT OF LOAN.
10.02. RESERVED.
10.03. FINANCING RATE.
10.04. LOAN TERM.
10.05. REPAYMENT SCHEDULE.
10.06. PROJECT COSTS.
10.07. SCHEDULE.
10.08. SPECIAL CONDITIONS.
ARTICLE XI -EXECUTION OF AGREEMENT
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