Memorandum 15-014 Authorization to Secure Loan for Water Storage/Distribution Improvements

Memorandum ID: 
15-014
Memorandum Status: 
No Status

Details

Memorandum 15-014

TO:                       Marvin Yoder - City Manager

THRU:                 Carey Meyer – Public Works Director

DATE:                  January 19, 2015

SUBJECT:         Request Authorization to Secure Loan

                              Matching Grant Financing

                              Homer Water Storage/Distribution Improvements

                             

 

 

The Homer City Council authorized the design of various water storage and water distribution system improvements utilizing an EPA SAAP grant. The Council’s legislative capital project priority list designated this project as our #1 priority.

 

These water system improvements improve reliability and water quality; especially to the Spit and the hospital/medical complex.

 

Public Works has completed the coordination of the design of these water system improvements. Public Works has made application for a Municipal Matching Grant from the ADEC for the construction of the first phase of this project (70% state/30% local match). The application resulted in the first phase of this project being ranked second in the State and the current State budget contains funding for the project.

 

In the past, The City has secured a low interest loan (1.5%) through the Alaska Drinking Water Fund to finance the City’s portion of the grant. This spread the cost of the City’s match over 10-20 years and protected the cash balance of the HAWSP fund. The fund also earned more interest than the cost of borrowing money.

 

The health of the HAWSP fund, and the economic conditions we find ourselves in, need to be evaluated by the council before committing to the grant match, but applications for the low interest loans are due in early February. Applying for the loan does not commit the City to accepting the loan. Further Council action is required, after a matching funds identification strategy has been developed.

 

Recommendation: The City Council authorize submitting an application for an Alaska Drinking Water Fund low-interest loan to finance the City match for the Homer Water Storage/Distribution Improvements grant.