City of Gonzales
PUBLIC WORKS / CITY ENGINEER DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: January 16, 2024
FROM: Patrick Dobbins, Public Works Director/City Engineer THROUGH: Carmen Gil, City Manager
SUBJECT: Agreement with Kutak Rock LLP for Industrial Wastewater Bond Counsel
RECOMMENDATION
It is recommended that the City Council Retroactively Approve an $8,500 Agreement with Kutak Rock, LLP for Bond Counsel Services related to the Revolving Fund Loan Agreement with the State Water Resources Control Board for Construction of the Industrial Wastewater System.
BACKGROUND
Constructing 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 ag-processing 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 provide additional capacity at the existing wastewater treatment plant and allow for the facility to be upgraded to meet new Regional Board permit requirements.
The IW System is estimated to cost approximately $29 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
AGENDA
ITEM
14 • Escalation to the mid-point of construction
REVIEW & ANALYSIS
Over the last two years, staff have pursued a State Revolving Fund Loan from the State Water Resources Control Board (SWRCB) due to the very low interest rate (currently less than 2.0%). A SRF Loan Application consists of the following four packages that are reviewed and accepted by SWRCB staff:
1. Environmental (CEQA clearance)
2. Technical (Plans, Technical Specifications and Cost Estimate)
3. Financial (City Sewer Rates support repayment of the SRF Loan and the Sewer Enterprise account doesn’t have any debt that’s superior to the SRF Loan), and
4. Legal (Installment Sale Agreement)
The Environmental and Technical packages are complete, and review of the Financial package is nearly complete. The Legal package is accepting the terms of the “Installment Sale Agreement” template and the SWRCB providing a project-specific loan agreement to the city.
The Legal package requires the city to provide a Bond Counsel Letter of Opinion that includes the following items:
1. Review of the financial documents for legal sufficiency, including the Construction Installment Sale Agreement between the City and the Board.
2. Legality of the proceedings for the authorization, execution and delivery of the Installment Sale Agreement and other agreements relating to the Transaction.
The City’s long-time financial advisor, NHA Advisors (NHA) recommended Kutak Rock, LLP to provide Bond Counsel services. This recommendation is based upon the firm’s reputation, the assigned Kutak attorney, Albert Reyes’ specific and significant experience serving as bond counsel on SWRCB financings, and Mr. Reyes’ previous professional service to the City.
In order to expedite the Bond Counsel services as it was time sensitive for the SRF loan application, the City Manager executed the attached agreement with Kutak Rock LLP on December 12, 2023 and staff recommends the City Council retroactively approve this agreement with Kutak Rock LLP for Bond Counsel Services.
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
The Council could decide to direct staff to seek additional proposals for this work.
BUDGET IMPACT
The $8,500 expense will be funded with Wastewater Enterprise monies.
CONCLUSION
It is recommended that the City Council Retroactively Approve an $8,500 Agreement with Kutak Rock, LLP for Bond Counsel Services related to the Revolving Fund Loan Agreement with the State Water Resources Control Board for Construction of the Industrial Wastewater System.
Attachments:
1. Agreement with Kutak Rock LLP