City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-02317 1/31/2023 Consent Item 3.
Environmental Protection Agency Brownfields Revolving Loan Fund Closeout Agreement File ID: 2022-02317
Location: Citywide
Recommendation: Pass a Motion authorizing the City Manager or the City Manager’s Designee to execute the Fiscal year 2022 Brownfield Revolving Loan Fund Closeout Agreement between the United States Environmental Protection Agency and the City of Sacramento.
Contact: Amanda Wallace, Development Project Manager, (916) 808-5453, [email protected], Office of Innovation and Economic Development; Denise Malvetti, Assistant Director, (916) 808-7064, [email protected], Office of Innovation and Economic Development
Presenter: None
Attachments:
1-Description/Analysis
2-2022 Brownfields RLF Closeout Agreement
3-2019 Brownfields RLF Closeout Agreement
Additional Description/Analysis
Issue Detail: In 1997, the City of Sacramento (City) established a Brownfields Revolving Loan Fund (RLF) Program funded by the United States Environmental Protection Agency (EPA). The EPA defines a brownfield as a property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant. The purpose of the RLF program is for the City to provide loans and subgrants to qualified projects to assist with the cleanup of contaminated sites within the city. The remediation of contaminated properties can be costly; therefore, the EPA grant funds are a critical tool to offset those costs. The following projects have received loans or subgrants for remediation from the city’s RLF: The WAL, Powerhouse Science Center, 800 K/L, Curtis Park Village, and Rio Linda Superblock.
File ID: 2022-02317 1/31/2023 Consent Item 3.
The EPA allows the City to keep the RLF loan repayments plus the interest earned on those funds as Program Income. In order to utilize the Program Income, the City entered into a Closeout Agreement (Contract #2019-1023) with the EPA in 2019 (2019 Closeout Agreement). The 2019 Closeout Agreement stipulates what activities Program Income can fund. In addition to using the funds for the original grant purpose of loans and subgrants for remediation, Program Income can also be used for environmental assessments, cleanup planning, and reuse planning of brownfield sites. Recent projects to utilize Program Income include: Paratransit’s The Kind Project South, the Capitol Area Development Authority (CADA) and Mutual Housing’s 8th and R Streets project, and the Sacramento Housing and Redevelopment Agency’s 39th and Broadway project. All of these are projects where the City utilized RLF Program Income to conduct environmental assessments to facilitate development of affordable housing.
In 2022, the EPA standardized their Closeout Agreement template and expanded how and where Program Income can be used (2022 Closeout Agreement). In addition to the previously allowed uses, the new 2022 Closeout Agreement permits Program Income to be used for direct cleanup by the City of Sacramento on behalf of a property owner, health monitoring, institutional control and engineering control monitoring, and cleanup of City-owned properties as long as the City is not the responsible party. The 2022 Closeout Agreement also expands the eligible work area to sites within 100 miles of the original RLF grant workplan scope.
The 2022 Closeout Agreement terminates the 2019 Closeout Agreement between the EPA and the City of Sacramento.
Policy Considerations: The Brownfields Revolving Loan Fund is consistent with General Plan Economic Development Policy 3.1.3 Key Infill Opportunity Areas as it facilitates and promotes economic development projects in key infill and opportunity areas.
Economic Impacts: None.
Environmental Considerations: The proposed action is exempt from the provisions of the California Environmental Quality Act (CEQA), consistent with section 15378(b)(4) of the CEQA Guidelines, which provides that the creation of government funding mechanisms or other government fiscal activities that do not involve commitment to any specific project are not subject to environmental review. Further, it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment. (CEQA Guidelines, §15061(b)(3).) The recommendation is also exempt from the National Environmental Policy Act under Title 24, section 58.34 (a)(1) of the Code of Federal Regulations.
Sustainability: Brownfields grants promote sustainability by eliminating property contamination and supporting infill development.
File ID: 2022-02317 1/31/2023 Consent Item 3.
Commission/Committee Action: None.
Rationale for Recommendation: The EPA provided grant funding to the City to establish a Revolving Loan Fund to loan or subgrant funds for the remediation of contaminated properties. The EPA allows the City to keep the Program Income generated by repayment and interest on those loans. In 2019 the City and the EPA entered into a Closeout Agreement to stipulate the activities that Program Income may fund (Agreement #2019-1023). In 2022 the EPA standardized their Closeout Agreement template and expanded how and where Program Income can be used. Terminating Closeout Agreement #2019-1023 by entering in the new 2022 Closeout Agreement with the EPA will allow the City to utilize Program Income for broader eligible activities.
Financial Considerations: Since 1997, the EPA awarded the City $2,509,793 in Revolving Loan Fund grants. As of December 31, 2022, $1,759,793 of those grant funds have been spent on loans and subgrants for environmental remediation, cleanup oversight, staff travel, grant reporting and portfolio management. On March 26, 2019, the City Council adopted Resolution 2019-0085 authorizing the City Manager or the City Manager’s Designee to execute Closeout Agreement #2019- 1023, establish the Brownfields Revolving Loan Program Income Project (I02180800), and adjust the project revenue and expenditures based on actual amounts received in interest and loan repayments at years end. As of December 31, 2022, the City accrued $1,562,137 in loan repayments and earned interest. In order to most effectively utilize the current balance and future repayments, the City must enter into the 2022 Closeout Agreement with the EPA.
Local Business Enterprise (LBE): Not applicable.
Contract #2019-1023
CLOSEOUT AGREEMENT
between
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
and
City of Sacramento (BF-00955601)
This agreement presents the closeout procedures for the U.S. Environmental Protection Agency (EPA) Brownfields Revolving Loan Fund (RLF) assistance agreement number: BF-00955601 awarded under CERCLA 104(k), and sets forth the terms and conditions for continued management and use of program income generated pre- and post-closeout. This closeout agreement has been prepared in accordance with the provisions of 2 CFR 200.307.
As of the effective date of this signed Closeout Agreement, EPA acknowledges that the City of Sacramento, the Cooperative Assistance Recipient (CAR), has met the substantive requirements of this RLF assistance agreement, and the City of Sacramento agrees to take over the management of all pre- and post-closeout program income, and use and track those funds in accordance with the requirements of this Closeout Agreement.
I. Program Income
As provided at 2 CFR 200.307(f) and 2 CFR 1500.7(c) after the end of the award period, the CAR may keep and use program income at the end of the cooperative agreement (retained program income) and use program income earned after the award period (post-closeout program income) in accordance with the following closeout agreement unless the CAR and EPA's Award Official or Grants Management Officer agree to modify the terms.
Program income shall include principal repayments, interest earned on outstanding loan principal, interest earned on accounts holding RLF program income not needed for immediate lending, all loan fees and loan-related charges received from borrowers and other income generated from RLF operations, including proceeds from the sale, collection, or liquidations of assets acquired through defaults of loans The CAR must deposit program income into an interest-bearing account. Interest earned on program income is considered additional program income.
The CAR shall use program income to continue to operate the RLF, or for some other brownfield purpose, as outlined in the terms of this Closeout Agreement.
EPA prefers the primary use of retained and post-closeout program income be for providing loans for Brownfields cleanups. In addition to Brownfields cleanup loans, program income may be used to fund the following Brownfields activities:
a. Cleanup subgrants to eligible entities and nonprofit organizations for allowable activities as described in the terms of the cooperative agreement; City of Sacramento Brownfields Revolving Loan Fund Closeout Agreement b. Phase I Environmental Site Assessments at brownfield sites performed in accordance with EPA All Appropriate Inquiries Final Rule or ASTM E1527-13 (or the most current version);
c. Phase II Environmental Site Assessments and cleanup planning activities at brownfield sites;
d. Area-wide planning for the assessment, cleanup and re-use of brownfield sites; and e. Programmatic costs to manage and oversee the work being performed.
The CAR must ensure that program income is used on a property that is a brownfield site as defined at CERCLA 101(39) and in accordance with Section IV.0 of the RLF Cooperative Agreement Terms and Conditions, Ineligible Uses of the funds for the CAR, Borrower, and/or Subrecipients, unless otherwise noted as an eligible use of post-closeout program income in the terms and conditions.
All assessment and cleanup work funded with program income must continue to be performed in accordance with state or tribal environmental rules and regulations and be protective of human health and the environment. If the CAR chooses not to have borrowers or subrecipients conduct assessments or cleanups through a regulatory program, such as the State or Tribal response program, then the CAR is required to consult with EPA to ensure the proposed assessment/cleanup is protective of human health and the environment.
All brownfield sites that use the program income must be located within jurisdiction of the CAR as described in the scope of work for this cooperative agreement.
Retained and post-closeout program income shall not be used for site inventory work.
When possible, the CAR must continue to perform community involvement activities to solicit input from local communities. These outreach activities may take place with potential environmental justice communities, communities with a health risk related to exposure to hazardous waste or other public health concerns, economically disadvantaged or remote areas, regarding the need for site specific assessments, loans and subgrants.
Program income may not be used to assess or cleanup a site at which the CAR, the borrower, or the subrecipient is potentially liable under CERCLA 107 unless they qualify for a limitation or defense to liability under CERCLA. The CAR and borrower or subrecipient must make and retain a certification to that effect as part of the records for this Closeout Agreement. In asserting a limitation or defense to liability, the borrower, or subrecipient must state the basis for that assertion. When using program income for petroleum-contaminated brownfield sites, the CAR, borrower, or subrecipient shall certify that they are not a viable responsible party or potentially liable for the petroleum contamination at the site and retain a certification to that effect as part of the records for this closeout agreement. The CAR may consult with EPA for assistance with this matter.
II. Post-Closeout Reporting Requirements
In accordance with 2 CFR 200.333(e), the CAR shall maintain appropriate records to document compliance with the requirements of the closeout agreement (i.e., records relating March 2018 Page 2 of 9
City of Sacramento Brownfields Revolving Loan Fund Closeout Agreement to the use of accrued and post-award program income). EPA may request access to these records to verify that retained and post-closeout program income has been used in accordance with the terms and conditions of this Closeout Agreement.
The CAR shall submit Annual Reports for the first five (5) years following the effective date of this Closeout Agreement, and thereafter, the CAR shall submit a report once every five years until there is no program income. The effective date of the Closeout Agreement is defined as the day after the cooperative agreement is closed. The annual reports/five-year report(s) shall include the following information:
a. A cover page indicating the CAR's organization, cooperative agreement number, annual report number (i.e., 1, 2, or 3), dates for the reporting period, persons/organizations preparing and submitting the report, and the date of the report submission.
b. A summary of the activities conducted during the reporting period, a list of reports and documents generated during the reporting period, and a budget summary table reflecting the expenses incurred and program income received. c. Site data consistent with information requested in current Property Profile Forms as required by the Section III.E. of the RLF Cooperative Agreement Terms and Conditions, Property Profile Submission, of the cooperative agreement or a list of sites created and/or updated in the ACRES database.
III. Records Retention Requirements
The CAR must maintain adequate accounting records for how retained and post-closeout program income is managed and spent as well as all other appropriate records and documents related to the activities conducted using retained and post-closeout program income.
All records and documents relating to performing the Closeout Agreement must be retained for a period of three (3) years following termination or discontinuation of this Closeout Agreement. Records and documents relating solely to performing the cooperative agreement prior to close out may be disposed of in accordance with 2 CFR 200.333.
IV. Termination of this Agreement
Termination of this Closeout Agreement occurs when no program income remains to be disbursed and all loans have been repaid; the recipient decides to discontinue carrying out the activities described in Section I. and requests termination of the Closeout Agreement; or EPA determines that the CAR is not effectively deploying the program income. a. No remaining program income or future loan repayments. The CAR shall notify EPA's Grants Management Officer in writing when this occurs and certify that all funds have been expended in accordance with the terms and conditions of this Closeout Agreement. The notification must provide a final report regarding the March 2018 Page 3 of 9
City of Sacramento Brownfields Revolving Loan Fund Closeout Agreement relevant cooperative agreement infonnation in the format specified in Section II. of this Closeout Agreement. EPA has 90 days from receipt of this notification to submit any objections to the termination of this Closeout Agreement. If EPA does not object within that time period, then this Closeout Agreement will terminate with no further action.
b. Discontinuance of the Closeout Agreement. The CAR shall notify EPA's Grants Management Officer and Project Officer in writing that it has decided to discontinue performing the Closeout Agreement. The notification must provide a final report with the relevant cooperative agreement information in the format specified in Section II. of this Closeout Agreement. The CAR must account for and return all program income to EPA in accordance with instructions provided by the EPA's Grants Management Officer. The CAR must also describe the status and amounts of principal and interest payments that will take place after the Closeout Agreement is terminated. Unless waived by the Grants Management Officer, the CAR must remit to EPA on a quarterly basis program income earned after the Closeout Agreement has been terminated.
c. EPA revocation of the Closeout Agreement. If the recipient holds more than $500,000 in program income three years after the effective date of this Closeout Agreement EPA may assess whether the CAR has adequately carried out the Closeout Agreement. This assessment will take into account the amount of program income the CAR has disbursed within the three-year period, whether the program income being held is retained program income or post-close out program income, and other factors relevant to ensuring that the recipient deploys program income in a timely manner.
EPA may revoke the Closeout Agreement and direct the recipient to return the unused program income to EPA based on this assessment.
V. Modifications
EPA's Award Official or Grants Management Officer and the CAR must agree to any modifications to this Closeout Agreement. Agreed-upon modifications must be in writing.
Oral or unilateral modifications shall not be effective or binding.
VI. Enforcement of this Agreement
If the CAR expends retained program income in a manner inconsistent with this Closeout Agreement, EPA may take actions authorized under 2 CFR §§ 200.338 through 200.342, Remedies for Noncompliance.
If any provisions of this Closeout Agreement are invalidated by a court of law, the parties shall remain bound to comply with the provisions of this Closeout Agreement that have not been invalidated.
March 2018 Page 4 of 9
City of ...Sacramento Browqfields Revolving Loan Fund Closeout Agreement No other federal requirements apply to the use of program income under the terms of this Closeout Agreement.
VII. Points of Contact
Denise Malvetti
Office of Innovation and Economic Development
City of Sacramento
(916) 808-7064, [email protected]
Nova Blazej
Brownfields Program
U.S. Environmental Protection Agency, Region 9
(415) 972-3846, [email protected]
(Signature Page Follows)
March 2018 Page 5 of 9
By:
Assist City C rk
City of Sacramento Broilyifields Revolving Loan Fund Closeout Agreemmt City of Sacramento
CHRIS CONLIN, ASSISTANT CITY MANAGER
FOR HOWARD CHAN. CITY MANAGER
1 Date: 41 3 , 2019
Approved as to Form
Sacramento City Attorney
U.S. Environmental Protection Agency
By:
Will Duncan III, Assistant Director
Region 9
Superfund Division
Date: 400.4d , 2019
By:
Michael Sparks
Senior Deputy City Attorney
Attest:
OtilloV7
Attachment A: Status of City of Sacramento RLF Program at Closeout Attachment B: RLF Program Income Proposed Budget
March 2018 Page 6 of 9
City of Sacramento Brownfields Revolving Loan Fund Closeout Agreement Attachment A
Status of City of Sacramento RLF Program at Closeout
Background
In 2007, the City of Sacramento received Revolving Loan Fund award and two subsequent supplemental awards totaling a $1,759,793 (with the 20% match included the total was $2,111,752), which was transitioned to the new RLF Brownfields guidelines as assistance agreement BF-00955601 under CERCLA Section 104(k) in the same amount of $1,759,793. The project end date was December 31, 2018.
The purpose of assistance agreement BF-00955601 was to capitalize a brownfields revolving loan fund. Monies in this assistance agreement were available as loans and subgrants to eligible recipients for cleanup work on brownfields sites. The following loans and subgrants were made:
Property Name Recipient Type Amount Status
800 K Street Redevelopment
Agency
Subgrant $20,500 Closed. Cleanup not
completed due to elimination
of the Redevelopment
Agency.
Curtis Park Village:
Sutterville Road and
Crocker Drive
Calvine Elk
Grove-Florin,
LLC
Loan $900,000 Cleanup completed 2012.
Loan fully repaid.
Powerhouse Science Center:
400 Jibboom Road
Powerhouse
Science Center
Loan $139,832.39 Cleanup completed 2016.
Borrower is current on their
loan. I
Rio Linda Superblock Site 1 Housing
Authority
Subgrant $178,052.18 Cleanup completed 2018
Rio Linda Superblock Site 2 Housing
Authority
Subgrant $178,051.89 Cleanup completed 2018
Rio Linda Superblock Site 3 Housing
Authority
Subgrant $178,051.89 Cleanup completed 2018
1224 D Street Housing
Authority
Subgrant $19,681.80 Cleanup planning completed
2018
CADA Warehouse: 1108 R
Street Loan 1 2
Capital Area
Development
Authority
(CADA)
Loan $200,000 Cleanup completed 2004.
Loan Fully Repaid
CADA Warehouse: 1108 R
Street Loan 2 2
CADA Loan $250,000 Cleanup completed 2004.
Borrower is current on their
loan I
I See Repayment Schedule below.
2 The CADA loans were made from the EPA Brownfields Program Pre-Law funding and are not part of the $1,759,793. They are included in this report since one of loans is still being repaid.
RLF Status at Closeout
EPA Funds: As of the date of this Closeout Agreement,
i. $1,759,793 in RLF funds has been awarded to capitalize a brownfields revolving loan fund.
March 2018 Page 7 of 9
City of Sacramento Brownfields Revolving Loan Fund Closeout Agreement $1,039,832.39 was expended in loans, $574,338 was expended in subgrants, $42,123.45 will be returned to EPA and the balance of the grant was expended on personnel, travel, cleanup oversight and portfolio management Program Income: As of the date of this Closeout Agreement, j. $1,466,519.40 in program income has been generated from loans made with the funds from this assistance agreement.
ii. Additional program income in the amount of $220,843.82 is anticipated over the next five years.
Brownfields RLF Loan Repayment Schedule
2019 2020 2021 2022 2023 Totals
Powerhouse Science
Center $26,854.18 $26,854.18 $26,854.18 $26,854.18 $20,140.64 $127,557.36 CADA Loan #2 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $100,000.00 Annual Loan
Revenue $51,854.18 $51,854.18 $51,854.18 $51,854.18 $20,140.64 $227,557.36 March 2018 Page 8 of 9
City of Sacramento Brownfields Revolving Loan Fund Closeout Agreement Attachment B
RLF Program Income Proposed Budget
Activity
Proposed
Budget
Costs
Incurred
this Year
Cumulative
Costs
Incurred to
Date
Total
Remaining
Loans and Grants Program
Marketing and Outreach 43,996
Loans and Grants 879,912
Cleanup Oversight 102,656
Subtotal Loans and Grants Program $1,026,564
Assessment and Planning
Phase I ESA $73,326
Phase II ESA $219,978
Reuse Planning $73,326
Subtotal Assessment and Planning $366,630
Administration
Grant Reporting 36,663
Staff Travel 14,665
Portfolio Management and Legal 21,998
Subtotal Administration $73,326
TOTAL $1,466,519
3This budget reflects the current Program Income balance. The budget will be adjusted annually based on additional Program Income and the adjustments will be reported in the Annual Report. Expenditures that are consistent with the proposed budget will be approved by the Office of Innovation and Economic Development and will be reported in the Annual Report.
March 2018 Page 9 of 9