2003 SPE AGN MAY 20 I01 - Laserfiche WebLink

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Item #1 CITY OF COLTON AGENDA REPORT For City Council Meeting Joined with the City of Colton Utilities Commission Meeting of May 20, 2003 TO: HONORABLE CHAIRPERSON AND UTILITY AUTHORITY MEMBERS FROM: ERIC FRASER, DIRECTOR OF WATER AND WASTEWATER OPERATIONS SUBJECT: WORKSHOP TO DISCUSS THE STATUS OF THE WASTEWATER FUND AND THE RATE STRUCTURE REQUIREMENTS IN ACCORDANCE WITH THE CONDITIONS OF THE STATE REVOLVING FUND LOAN DATE: MAY 7, 2003 BACKGROUND The proposed $7M Wastewater budget for FY 2003/2004, with anticipated revenue of $5.6M will not cover the expenditures necessary for the increased salaries and benefits, capital improvements, operations of the WWTP and debt obligations at the current monthly sewer rate of $21.70. As a condition of the State Revolving Fund Loan (SRFL): The agency shall at all times maintain a dedicated source of revenue sufficient to provide reasonable assurance of repayment of this loan. The dedicated source of revenue shall comply with the requirements of the Federal Clean Water Act and any applicable federal and state regulations and shall have received SWRCB approval. The SFRL loan may be terminated by written notice during construction of the Project, or thereafter at any time prior to complete repayment by the Agency, at the option of the SWRCB, upon violation by the Agency of any material provision of this loan contract after such violation has been called to the attention of the Agency and after failure of the Agency to bring itself into compliance with the provisions of this contract within a reasonable time as established by the Division. In the event of such termination, the Agency agrees, upon demand, to immediately repay to the SWRCB an amount equal to the current balance due on the loan, including accrued interest, and all penalty assessments due. In the event of termination, interest shall accrue on all amounts due at the highest legal rate of interest from the date that notice of termination is mailed to the Agency to the date of full repayment by the Agency. In addition, the City is obligated to maintain a net revenue of 1.25 times principal and interest under the Rate Covenant of the Bond Agreement. The ratio is assurance to investors that sufficient revenues will be available after normal operating and administrative expenses are met. The State Board of Water Resources mandates that the recipient shall establish a Wastewater Capital Reserve Fund (WCRF) by ordinance and deposit sufficient funds to build up the WCRF at a minimum rate of one-half of one (0.5) percent of the SRF loan amount each year for a period of ten (10) years. Based upon a loan amount of $8,114,108.00, this equates to $40,570.54 annually.