Title
Approval of a Resolution Regarding the Water Project Promissory Note
Recommended Action
Committee Recommendation:
Finance Committee directed staff to prepare a promissory note to be presented to the Council on the consent agenda.
City Manager Recommendation:
Move to approve the resolution regarding the Water Project promissory note.
Report
Issue:
Whether a Water Project promissory note should be used to fund Drinking Water projects impacted by the suspension of the Drinking Water State Revolving Fund (DWSRF) loans.
Staff Contact:
Dean Walz, Acting Director of Administrative Services, 360.753.8465
Stacie Tellers, Acting Accounting Supervisor, 360.753.8599
Presenter(s):
None - Consent Calendar Item.
Background and Analysis:
The Waterworks Utility of the City of Olympia provides drinking water, wastewater, and reclaimed water services for the citizens of Olympia. The utility, for debt purposes, is reported as a combined utility; however the City operates the services separately.
Recently the City was notified that the State did not pass a capital budget and suspended DWSRF loan payments. The City currently has State loans to finance three projects totaling more than $13 million in amounts not yet received. Those projects are:
* Log Cabin Road Reservoir
* McAllister Wellfield Corrosion Control Facility
* Fones Road Booster Pump Station
The loans are drawn down as the City expends funds on the projects. The City expects to again receive loan payments once a capital budget is adopted by the State.
The Drinking Water Capital Fund has less than $5,500,000 of resources. For June and July this fund had expenses of $1.1 and $1.5 million.
Staff recommends the Council adopt a resolution authorizing a promissory note by the Waterworks Utility for the Drinking Water Capital Fund. The note would be purchased by the City internal investment pool.
The promissory note is for $10 million, maximum maturity of three years and an interest rate of 1.5 percent which is the same rate as the State loans.
Neighborhood/Community Interests (if known):
None, this is an administrative amendment.
Options:
1. Approve the resolution authorizing an interfund loan(s) for the Water Project Promissory Note to be purchased by the City internal investment pool.
2. Do not approve the resolution. Funding of the Drinking Water Capital Fund projects will be suspended.
3. Direct staff to obtain funding from external sources.
Financial Impact:
Authorization of the resolution will result in minimal financial impact related to the issuance of the note. The note annual interest rate is equal to the rate of the State loan. If the resolution is not authorized there will be significant financial impact related to the Drinking Water Capital Fund due to the cost to stop work on the projects and delay of project completion.
Attachments:
Resolution
2017 Water Note