MEMORANDUM 06-124

To: Walt Wrede, City Manager

From: Carey Meyer, Public Works Director

Date: July 21, 2006

Subject: ADEC Clean/Drinking Water Revolving Loan Fund

Recommendation to Execute Loan Agreement

Funding for 2006 Water Sewer LID Construction

The City of Homer has helped property owners extend water and sewer mains into their neighborhoods through the Homer Accelerated Water Sewer Program (HAWSP). This effort is continuing with the construction this summer of Ocean Drive Loop Sewer and Kachemak Drive (Phase I) Water and Sewer Projects.

To finance these projects the City has routinely borrowed low interest funds from the above referenced federal loan program.

ADEC has prepared loan documents that will finance the construction of this years water and sewer LID’s. This loan will also finance the design of the next project – Kachemak Drive (Phase II).

The maximum loan amount is $3,720,000 ($3,250,000 for sewer, $470,000 for water). The sewer loans are 1.5% and the water loans are 2.5%. The term of the loan is 20 years.

Recommendations:

The City Council authorize the City Manager to execute the loan agreement.