The Pella City Council approved a resolution during last week’s regular meeting in regards to instituting proceedings to take additional action for the authorization of a loan and disbursement agreement and the Issuance of not to Exceed $15,000,000 Water Revenue Capital Loan Notes.
The purpose of the Notes is for paying costs of acquisition, construction, reconstruction, extending, remodeling, improving, repairing, and equipping all or part of the Municipal Water System.
As background on this issue, on April 2, 2013 Council approved an engineering services agreement with with HR Green, Inc. (HR Green, Engineer) in the amount of $945,500 for the design of a reverse osmosis system (RO), an additional Jordan Well, Water Treatment plant improvements and a new raw water main from the new Jordan Well to the Treatment Plant. This contract was approved after HR Green conducted an extensive infrastructure analysis for our water utility. Listed below were key points of the analysis:
-The existing water infrastructure is capable of meeting water demands; however, due to potential water quality issues as well as a lack of adequate water source backup, HR Green stated the City needs to consider in the foreseeable future the addition of a 3.0 million gallon per day (MGD) reverse osmosis plant along with an additional Jordan Well.
-The long-term water supply plan outlined by FIR Green involves utilization of the Des Moines River alluvial well system and existing lime softening plant and a new 3.0 MGD reverse osmosis plant along with an additional Jordan Well.
-The Iowa Department of Natural Resources (IDNR) recommends that communities should be able to cover their load if their largest source of water is out of service. In our case, if the Jordan Well is out of service it appears we are not able to meet this requirement during periods of high water usage and low river flows at the Des Moines River. This type of scenario is most likely to occur during the time periods of August and September.
The City’s long-term water supply plan involves a new Jordan Well, a new 3 million gallon per day (mgd) reverse osmosis treatment process (RO) and extensive improvements to our current lime softening water treatment plant.
Pella City Staff is proposing to utilize both cash reserves and a loan through the State Revolving Fund (SRF) to finance the City’s long-term water supply plan. At this time the current interest rate for an SRF loan is approximately two percent over a twenty year time period. In addition, if Council were to proceed with a loan through the SRF program, Pella would be able to secure an interest free loan for the planning and design work that is currently underway.
With the assistance of bond counsel, this resolution directs the City Council to proceed with the preparation of documents and proceedings as necessary to authorize the City’s participation in the Drinking Water State Revolving Fund Loan Program, to select a suitable date for final City Council authorization of the required Loan and Disbursement Agreement and issuance of the Note, and to take other actions as deemed necessary to permit the completion of a loan favorable to the City and acceptable to Council.