2024-24 Ordinance Authorizing the City of Decatur of Macon County, Illinois to Borrow Funds from the Public Water Supply Loan Program

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2/29/24, 10:18 AM Item Coversheet in Public Works DATE: 2/23/2024 MEMO: 2024-30 TO: Honorable Mayor Moore Wolfe and City Council Members FROM: Scot Wrighton,City Manager Matt Newell,P.E.,Public Works Director Paul Caswell,P.E.,City Engineer Robert Weil,P.E.,Assistant City Engineer,Water Utility SUBJECT: Ordinance Authorizing the Water Utility of the City of Decatur,Macon County,Illinois to Borrow Funds from the Public Water Supply Loan Program for the South Water Treatment Plant Electrical Improvements,City Project 2022- 18. SUMMARY RECOMMENDATION: It is recommended that the City Council adopt the attached Ordinance authorizing a loan agreement to borrow up to$21,000,000 from the Public Water Supply Loan Program,which is administered by the Illinois Environmental Protection Agency(IEPA).The proposed loan will cover engineering and construction costs associated with needed electrical improvements to the South Water Treatment Plant. BACKGROUND: Illinois Environmental Protection Agency(IEPA)State Revolving Loan Program The IEPA Wastewater and Drinking Water loan programs provide low-interest loans through the State Revolving Fund(SRF).The SRF includes two loan programs:the Water Pollution Control Loan Program(WPCLP)which funds both wastewater and storm water projects,and the Public Water Supply Loan Program(PWSLP)for drinking water projects. The current year loan interest rate is 1.81%. Several years ago the city issued a$25 million water/sewer bond issue at very favorable terms in anticipation of future water and sewer infrastructure projects-- one of which was electrical improvements at the South Water Treatment Plant.These revenues can be used for any water and sewer project in the city's long- range plans.Use of the IEPA loan funds is more narrowly circumscribed.By using the IEPA's low-interest loan program for the SWTP upgrades,we provide more financial flexibility for the City Council to use proceeds from the previous bond issue on other projects. Project Funding through the Public Water Supply Loan Program The passage of an ordinance authorizing a loan agreement to borrow funds from the Illinois Public Water Supply Loan Program is one of the final steps in securing an IEPA low interest loan.The ordinance addresses the funding for the project and assures that the City is able to repay the loan over a 20-year time period beginning at the substantial completion of the project.The funds included in the loan request are summarized in the following table: Work Item Project Estimate Design Engineering $1,450,000 Construction $18,000,000 Construction Contingency(10%) $1,800,000 Construction Engineering $650,000 Total Estimated Project Cost $20,250,000 Construction Period Interest(1.5%) $304,200 Sub-Total $20,584,200 Total Loan Requested $21,000,000 As is common with the Public Water Supply Loan Program,the actual loan document will not be fully written until a construction contract has been awarded by the City Council and approved by the IEPA.At that point,the agreement authorized by the attached https:Hdecatur.novusagenda.com/agendaweb/CoverSheet.aspx?ItemID=4875 1/3