City of Gonzales
PUBLIC WORKS / CITY ENGINEER DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: October 7, 2024
FROM: Patrick Dobbins, Public Works Director/City Engineer THROUGH: Carmen Gil, City Manager
SUBJECT: Resolution No. 2024-60 Agreements and Services from Various Consultants to Secure an Interim Loan for Construction of the Industrial Wastewater System
RECOMMENDATION
It is recommended that the City Council Adopt Resolution No. 2024-60, A Resolution of the City Council of the City of Gonzales, Authorizing the City Manager to Execute Agreements and/or Proceed with Services from Various Consultants to Secure an Interim Loan for Construction of the Industrial Wastewater System.
BACKGROUND
The City has secured funding through the State Water Resources Control Board (SWRCB) for construction of the Industrial Wastewater System. The Funding Agreement with SWRCB requires the City to submit for reimbursement of costs incurred. The City cannot request reimbursement for Project Costs until such cost has been incurred and is due and payable by the City. Due to the delay in reimbursement, the City expects it will need an Interim Loan to bridge the gap between paying for project costs and receiving reimbursement from SWRCB.
REVIEW AND ANALYSIS
As mentioned above the City expects it will need an Interim Loan to bridge the gap between paying for project costs and receiving reimbursement for such project costs from SWRCB. It is anticipated that reimbursement from SWRCB will take between three to five months. This timing difference will result in the City needing short-term cashflow of up to $10 million. Due to the short-term cashflow need, the City will secure an Interim Loan.
AGENDA
ITEM
11 Approval for such Interim Loan is expected to be on the City Council agenda later this year. However, to facilitate the process for securing such funding, the City requires the expertise and services of the following consultants:
1. Kutak Rock to perform Bond Counsel services in connection with the Financing
2. NHA Advisors LLC, to perform Municipal Advisor services in connection with the Financing; and
3. Hilltop Securities, to serve as Placement Agent in connection with the Financing.
Kutak Rock’s proposed fees to serve as Bond Counsel for the proposed interim loan are $25,000. Hilltop Securities’ proposed fees for services related to the Interim Loan are not-to-exceed a flat fee of $25,000 to provide Placement Agent services to the City. NHA Advisors proposed fees range from $37,500 to $47,500 depending on the financing structure, complexity, the extent of NHA’s tasking and, generally, how much time it will take to complete the financing.
The proposed fees for consultant services will be paid contingent upon the completion of securing the necessary Interim Loan.
This is the same group of consultants that successfully secured the construction loan for Phase 1 of the Community Center Complex project.
Therefore, staff recommends that the City Council Adopt Resolution No. 2024-60 authorizing the City Manager to execute agreements and/or proceed with services from various consultants to secure an Interim Loan for construction of the Industrial Wastewater System.
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: This project supports our vision by making improvements to the wastewater system to increase its capacity for residential and industrial developments 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. _ Yes ____ No____ N/A
Explain: Maintaining and improving the wastewater treatment plant enhances the community’s quality of life by providing for treatment and safe disposal of the City’s wastewater.
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. _ Yes ____No ____ N/A Explain: See Vision explanation above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety Yes No X N/A
• Housing X Yes No N/A
• Recreation Yes No X N/A
• Environment X Yes No N/A
• Education Yes No X N/A
ALTERNATIVES
The City Council could direct staff to seek additional proposals. Staff doesn’t recommend this as the proposed consultants have provided services to the City on several recent, important transactions.
Additionally, there is some urgency to engage them for the Interim Loan for timely execution.
BUDGET IMPACT
Consultants expected costs for the interim funding are:
Kutak Rock $25,000
Hilltop Securities $25,000
NHA Advisors $37,500 - $47,500
The services provided in conjunction with the Interim Loan will be contingent upon loan closing. It is anticipated that SWRCB reimbursements cannot be used towards interest costs or financing costs and therefore the source of repayment of such components will come from Impact Fees or net revenues of the Wastewater System.
CONCLUSION
It is recommended that the City Council Adopt Resolution No. 2024-60, A Resolution of the City Council of the City of Gonzales, Authorizing the City Manager to Execute Agreements and/or Proceed with Services from Various Consultants to Secure an Interim Loan for Construction of the Industrial Wastewater System.
Attachments:
1. Resolution No. 2024-60
2. Kutak Rock LLP Fee Letter
3. Hilltop Securities Non-Binding Engagement Letter
4. NHA Advisors Regulatory Disclosure Letter