City of Gonzales
PUBLIC WORKS / CITY ENGINEER DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: November 21, 2022
FROM: Patrick Dobbins, Acting City Manager
THROUGH: Carmen Gil, Interim City Manager
SUBJECT: Resolution No. 2022-81 & Resolution No. 2022-82
RECOMMENDATION
It is recommended that the City Council:
1. Adopt Resolution No. 2022-81, A Resolution of the City Council of the City of Gonzales authorizing the Interim City Manager or designee to execute and submit a Clean Water State Revolving Fund Financial Assistance Application to the State Water Resources Control Board (SWRCB) for the planning, design, and construction of the 1.0 million gallons a day (MGD) Industrial Wastewater System, and execute SRF financial assistance agreements and any amendments with the SWRCB; and
2. Adopt Resolution No. 2022-82, A Resolution of the City Council of the City of Gonzales designating the amount of the 1.0 million gallons a day (MGD) Industrial Wastewater System expenditures to be reimbursed by proceeds from the Clean Water State Revolving Fund.
BACKGROUND
As presented in staff’s progress report at the November 7, 2022 Council meeting, the Industrial Wastewater System (IW System) Project is a key component of the City’s approach to expanding the wastewater system beyond the current 1.3 million gallons/day permitted capacity. The various agprocessing facilities (Taylor Farms, Del Monte, Braga Fresh, etc.) within the city’s Business Industrial Park discharge approximately 800,000 gallons/day of agricultural wash water into the city sewer system.
This is approximately two-thirds of the flow to the City wastewater treatment plant.
Completion of the new IW System will restore capacity at the existing wastewater treatment plant (WWTP) and allow for the facility to be upgraded to meet new Regional Board permit requirements.
AGENDA
ITEM
14 REVIEW & ANALYSIS
The IW System is estimated to cost approximately $27 million (hard and soft costs). The cost estimate includes:
• Hard costs (Construction contracts)
• Soft costs which include consultants (Designer, Program and Construction Managers, Environmental, Surveying), temporary and permanent easements, legal support, and preparation of the project EIR
• Contingency for unforeseen costs
• Escalation to the mid-point of construction
The project will be constructed under two separate construction contracts:
1. Pipeline contract estimated to cost $6,000,000
2. Treatment facility estimated to cost $18,000,000
Staff considered funding the project from the State Infrastructure Bank and other sources and pursued grant funding for the project. Staff decided on funding the project through the State Revolving Loan Program with the State Water Resource Control Board due to the very low interest rate (currently 2.0%).
Staff is pursuing the potential for principal forgiveness of the SRF loan due to the city’s status as an Economically Disadvantaged Community which would greatly reduce the debt service for the project.
The City’s SRF application was submitted in fall of 2021 and favorably reviewed in the spring of 2022.
There are four parts of the review; Environmental, Technical, Financial and Legal. The technical review is completed, the Environmental review is nearly complete and financial review is in progress. The Legal review is the process of negotiating the final terms of the loan agreement and takes place last. The current schedule is to complete the Environmental and Financial reviews by the end of 2022 and execute a funding agreement in the first quarter of 2023.
The term of the SRF loan is usually 30 years with an interest rate that is fixed when the loan agreement is signed.
The Financial part of the SRF application requires adoption of the two attached resolutions.
1. Adoption of Authorizing Resolution - Authorizing the Interim City Manager or designee to apply for an SRF loan for planning, design, and construction of the 1.0 MGD Industrial Wastewater System. The resolution also authorizes the Interim City Manager or his designee, the Director of Public Works, to execute SRF financial assistance agreements and any amendments with the SWRCB. The SRF financial assistance agreements do not obligate the City to borrow the funding.
2. Adoption of Reimbursement Resolution - The SRF program requires the City to pay for project costs and then be reimbursed by the SRF loan. Through the Reimbursement Resolution, the Council will designate a maximum of $27 million in funding for expenditures for the 1.0 MGD Industrial Wastewater System.
Staff recommends adoption of the two attached resolutions.
How Recommendation Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.
Explain: Constructing an Industrial Wastewater System supports our vision to expand the city’s wastewater system capacity and support economic development that will provide more local employment opportunities for City residents.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ____ No____ N/A
Explain: Constructing an Industrial Wastewater Treatment Facility will enhance the community’s quality of life by providing for the continued treatment and safe disposal of the wastewater generated by the processing facilities in the Industrial Business Park.
City services will be delivered in a cost-effective, respectful and friendly manner to insure the safety and well-being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner. X Yes ____No ____ N/A Explain: See Vision explanation above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety Yes X No N/A
• Housing X Yes No N/A
• Recreation Yes X No N/A
• Environment X Yes No N/A
• Education Yes X No N/A
ALTERNATIVES
Staff presented alternatives on the different ways to expand and upgrade the City’s wastewater system at the August 14, 2020 Council meeting. The decision at that time was to pursue building an Industrial Wastewater System. Therefore, alternatives are no longer considered.
BUDGET IMPACT
There is no budget impact to this evening’s presentation. The loan from the State Water Resource Control Board will be repaid from Sewer Impact Fees and Wastewater Enterprise monies.
CONCLUSION
It is recommended that the City Council:
1. Adopt Resolution No. 2022-81, A Resolution of the City Council of the City of Gonzales authorizing the Interim City Manager or designee to execute and submit a Clean Water State Revolving Fund Financial Assistance Application to the State Water Resources Control Board (SWRCB) for the planning, design, and construction of the 1.0 million gallons a day (MGD) Industrial Wastewater System, and execute SRF financial assistance agreements and any amendments with the SWRCB; and
2. Adopt Resolution No. 2022-82, A Resolution of the City Council of the City of Gonzales designating the amount of the 1.0 million gallons a day (MGD) Industrial Wastewater System expenditures to be reimbursed by proceeds from the Clean Water State Revolving Fund.
Attachments:
1. Resolution No. 2022-81
2. Resolution No. 2022-82