SAN JOSÉ MUNICIPALWATER
ADMINISTRATIVE & OPERATIONS BUILDING
PROJECT FINANCING
Matt Loesch, Director of Public Works
Jeff Provenzano, Deputy Director of Environmental Services Qianyu Sun, Deputy Director of Finance –Debt & Treasury Management COUNCIL AGENDA: JUNE 20, 2023
ITEM: 6.1
FILE: 23-926
JOINT COUNCIL/CSJFA AGENDA: JUNE 20, 2023
ITEM: 2
FILE: 23-940
MUNI WATER EXISTING FACILITY
• Existing Facility
Three existing staff workspaces: converted equipment garage, temporary office trailer,administration building
Water system operations control center
Water quality room
Communications tower and equipment
Onsite water wells and backup power generation
Meter shop, hazmat storage, specialty utilityequipment, City fleet, welding equipment, miscellaneous emergency and replacement water appurtenances, and electrical/instrumentation facilities
• Site improvements needed: deteriorating infrastructure, seismic/structural upgrades, mechanical improvements,investments to address staff health and safety, and implementation of net-zero carbon objectives 2 MUNI WATERADMINISTRATIVE & OPERATIONS
BUILDING PROJECT DEVELOPMENT
• Public Works led 2019 study (IBI Group)
T uersRoad Site Improvements – three options:
Purchase/remodel existing commercial/warehouse building Purchase vacant land and build new
Rebuild onsite (selected)
• New facility designed by Studio G Architects (2020-present) • Project includes the construction of:
Two-story office building: 22,280 square feet
Storage building: 6,000 square feet
Sitework including:
* New communication tower and pad
* New parking lot
* New emergency generator
3 MUNI WAT E RPROJECT AWARD
• Project Timeline:
Bid Advertisement: April 2023
Bid Opening: June 15, 2023
City Council Authorization to Award: June 20, 2023
Contract Award: July 2023
Construction Duration: Sept 2023 to Sept 2025
• City Council Authorization to Award:
Enable contract to be executed while City Council is in recess
Enable construction of Project to be completed prior to lease expiration of ESD temporary facility
• Engineer’s Estimate:
Base Bid: $33,230,000
Bid Alternate 1: $450,000
Bid Alternate 2: $2,145,000
4 MUNI WATER PROJECT FINANCING
• Short-Te r m
Issue Tax-Exempt Commercial Paper Notes by City of San José Financing Authority (CSJFA)
• Long-Te r m
Refund Tax-Exempt Commercial Paper (CP) Notes with future lease revenue bonds
5 COMMERCIAL PAPER PROGRAM
• A City-wide flexible short-term lease financing program started in 2004 • Pledged Assets
• Secured by direct-pay Letter of Credit from US Bank until March 2025 • CSJFA can issue up to $175.0 million of CP Notes
• Each CP Note may be outstanding up to 270 days
• Maturing notes can be paid off fully, partially, or “rolled” to another maturity date • Outstanding CPs are amortized up to 7 years after project completion • CP Notes issuance requires T wo-Thirds Vote (8) by the City Council 6 T ech Museum Fire Stations 1 and 3 Police Communications Center Animal Care Center South San José Police Substation COMMERCIAL PAPER PROGRAM –
BENEFITS VS. RISKS
• Benefits
Short-term financing with amortization flexibility
Alternative to other medium term (7-10 years) financing vehicles Lower cost of funds
No additional liens on improvements being financed
• Risks
Letter of Credit renewal
Variable interest rate
Letter of Credit bank downgrade
Marketability
7 8
PROPOSED CP PROGRAM UTILIZATION
PROJECT
CP
OUTSTANDING
REMAINING CP
AUTHORIZATION
CP OUTSTANDING
& AUTHORIZED
PROPOSED
AUTHORIZATION
CHANGES
CP PROGRAM
UTILIZATION
A B C = A + B D E = C + D
Flood Improvement Recovery –
Parks, Recreation, and Neighborhood
Services*
$6,400,000 $6,400,000 $6,400,000
Energy Purchases –
San José Clean Energy $20,000,000 75,000,000 $95,000,000 ($20,000,000) 75,000,000 ESCO Conservation Project –
Public Works** 6,415,000 $6,415,000 6,415,000
Muni Water Building Infrastructure –
Environmental Services 40,000,000 40,000,000
To t a l $26,415,000 $81,400,000 $107,815,000 $20,000,000 $127,815,000 * $500,000 projected to be issued in June 2023
** One time authorization of $10 million. CP notes issued are amortized over 7 years. Approximately $700,000 will be paid on the outstanding principal of $6,415,000 in June 2023.
JOINT CITY COUNCIL/CSJFA FINANCING
AUTHORITY BOARD RECOMMENDATION (ITEM 2)
1) Conduct a public hearing in accordance with California Code Government Code Section 6586.5; and
2) Adopt a resolution of the CSJFA to approve and authorize the issuance of CSJFA CP Notes for $40 million to finance the construction of the Muni Water Project, and reduce the authorization of CSJFA CP Notes for San José Clean Energy to $75 million, further amending Authority Resolution No. 152, and authorizing other connected actions; and
3) Adopt a resolution of the City Council to approve and authorize the issuance of CSJFA CP Notes for $40 million to finance the construction of the Muni Water Project and reduce the authorization of CSJFA CP Notes for San José Clean Energy to $75 million, further amending Council Resolution No. 80125 and authorizing other connected actions.
9 CITY COUNCIL RECOMMENDATION
(CITY COUNCIL ITEM 6.1)
a) Adopt a resolution adopting the Initial Study/Mitigated Negative Declaration for the San José Municipal Water New Offices Project, and the related Mitigation Monitoring and Reporting Plan, in accordance with the California Environmental Quality Act.
b) Adopt a resolution authorizing the Director of Public Works to:
1) Award and execute a contract for the construction of 9813 - San José Municipal Water New Offices Project to the lowest responsive, responsible bidder in an amount not to exceed $38,214,500;
2) Decide any timely bid protest(s) and make the City’s final determination as to the lowest responsive bidder that is responsible as needed to award the contract; and 3) Approve a contingency of up to 15% of the amount of the construction contract for the Project.
10 SAN JOSÉ MUNICIPALWATER
ADMINISTRATIVE & OPERATIONS BUILDING
PROJECT FINANCING
Matt Loesch, Director of Public Works
Jeff Provenzano, Deputy Director of Environmental Services Qianyu Sun, Deputy Director of Finance –Debt & Treasury Management COUNCIL AGENDA: JUNE 20, 2023
ITEM: 6.1
FILE: 23-926
JOINT COUNCIL/CSJFA AGENDA: JUNE 20, 2023
ITEM: 2
FILE: 23-940