HomeMy WebLinkAbout2020-11-17; City Council; ; Authorization to apply for a loan and appropriate funds for the Wastewater Supervisory Control and Data Acquisition Project Meeting Date: Nov. 17, 2020
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Vicki Quiram, Utilities Director
vicki.quiram@carlsbadca.gov, 760-438-2722
Shoshana Aguilar, Senior Management Analyst
shoshana.aguilar@carlsbadca.gov, 760-814-0241
Subject: Authorization to apply for a loan and appropriate funds for the
Wastewater Supervisory Control and Data Acquisition Project
Recommended Actions
1. Adopt a resolution authorizing a financial assistance application to the State Water
Resources Control Board for the Supervisory Control and Data Acquisition Improvements
Project and designating the city manager or designee to sign and submit the application.
2. Adopt a resolution authorizing the reimbursement of funding for the SCADA Improvements
Project from the Water Resources Control Board.
Executive Summary
The Utilities Department is beginning replacement of the supervisory control and data
acquisition, or SCADA, systems that control and monitor wastewater, water and recycled water
networks. The project’s concept was approved by the City Council and the Board of Directors of
the Carlsbad Municipal Water District as part of the 2019 SCADA Master Plan and funded in the
approved fiscal year 2020-21 budget. The project is currently in the pre-design phase. Based on
the plan, the total estimated cost for design and construction ranges from $8.1 million to $13.2
million, with a maximum wastewater portion of $4.3 million.
To help fund project implementation, including design and construction, the Utilities
Department proposes to submit a financial assistance application to the Water Resources
Control Board, known as the State Water Board, for the wastewater SCADA system component.
The State Water Board provides low interest loans to assist local agencies in building and
upgrading water and wastewater infrastructure. The State Water Board requires that an
applying agency’s governing body authorize the submission of an application, which will be
accomplished through the accompanying resolution. (Exhibit 1)
The second resolution (Exhibit 2) would authorize reimbursement of funding for the project.
Exhibit 2 is adopted to demonstrate the city’s official intent to satisfy Treasury Regulation
§1.150-2 and any other regulations of the Internal Revenue Service regarding qualified
reimbursement of project costs. The financial assistance application will request $4,601,000
from the State Water Board’s Clean Water State Revolving Fund. This cost includes design,
construction and technological implementation as well as contingency and administration
Nov. 17, 2020 Item #2 Page 1 of 9
costs. The current interest rate on loans from the fund is 1.4%, with an expected repayment
term of 20 years.
Discussion
The City of Carlsbad’s water and wastewater systems are comprised of intricate networks of
pipes, pumps and lift stations, tanks and reservoirs and pressure reducing stations that control
the flow of water and wastewater. These systems must be monitored on a 24-hour per day
basis using what is known as a SCADA system to ensure public health and environmental
protection.
SCADA systems help prevent wastewater spills and maintain regulatory compliance by alerting
staff of potential issues with enough time to react accordingly. The Utilities Department's
existing SCADA systems require substantial updating. The current SCADA systems lack the
modern functionality needed to operate critical infrastructure systems, gather data needed for
decision making and regulatory reporting and provide system security efficiently and
effectively.
The city and CMWD completed a comprehensive Plan in June 2019, which the City Council
approved on Sept. 17, 2019. (Resolution No. 2019-184.) The plan analyzed the city’s SCADA
systems that control and monitor the wastewater, water and recycled water systems. Remote
sites were surveyed to assess the current condition, performance, security, age and support of
SCADA equipment.
The plan found that the existing systems use various methods and platforms of
communications. It also determined that the existing systems are outdated, at the end of their
useful life and require a complete upgrade. Applying for a Clean Water State Revolving Fund
loan will assist in financing the plan’s wastewater portion in a way that provides optimal future
rates for ratepayers. Staff anticipates completing the potable and recycled water portions of
the plan without a loan.
Fiscal Analysis
There is no fiscal impact to the city associated with submitting the financial assistance
application to the State Water Board, and no appropriations are needed at this time. The CIP
project is adequately funded for the current pre-design stage of the project.
The loan will be used to fund the wastewater design and construction phases, including
contingency and administration costs, for an estimated total cost of $4,601,000. The loan works
as a line of credit whereby the city does not need to incur the complete debt but will have it
available should it be necessary to complete the project. In order to fully fund the project, this
financial assistance package is a more desirable option over rate increases higher than those
planned.
Nov. 17, 2020 Item #2 Page 2 of 9
SCADA IMPROVEMENTS, CIP PROJECT NO. 55421 – Wastewater
Total appropriation to date $1,968,000
Total expenditures/encumbrances to date $192,000
CURRENT PROJECT ACCOUNT BALANCE $1,776,000
ADDITIONAL APPROPRIATION NEEDED $0
DETAILED ESTIMATED COST BREAKDOWN – CIP PROJECT NO. 55421 – Wastewater
Design (estimated) $519,000
Construction and technological implementation (estimated) $3,781,000
Contingency and administration (estimated) $301,000
TOTAL ESTIMATED COSTS $4,601,000
Staff anticipates the total loan amount to be authorized by the State Water Board to be up to
$4,601,000. The annual debt service would depend on the rate locked in when the loan is
finalized. Annual debt service is estimated at $270,000 over 20 years, anticipated to begin in
fiscal year 2025-26, with a forecasted interest rate of 1.4%. The debt service may vary if the
interest rate differs or the Utilities Department does not draw the maximum amount
authorized. Additionally, the Clean Water State Revolving Fund requires a debt service coverage
whereby annual net revenue must be at least 1.2% higher than annual debt service obligations.
The loan will allow the city to upgrade the SCADA system for more reliable wastewater
collection. Additionally, the low interest rate coupled with the long-term payback period will
have the effect of smoothing out future rate increases for wastewater ratepayers. Rate
increases above the current modelling may be required in future years, but this financial
assistance package is a more desirable option than the alternative of not obtaining a loan and
increasing rates to cover these needed SCADA upgrades.
Next Steps
Once City Council approval is given, staff will work with the city’s as-needed consultant to
complete the financial assistance application and submit it to the State Water Board.
Environmental Evaluation (CEQA)
This action does not constitute a “project” within the meaning of the California Environmental
Quality Act under Public Resources Code section 2106 in that it has no potential to cause either
a direct physical change in the environment, or a reasonably foreseeable indirect physical
change in the environment, and therefore does not require environmental review. City staff
will complete a notice of exemption for CEQA.
Nov. 17, 2020 Item #2 Page 3 of 9
Public Notification
Public notice of this item was posted in accordance with the Ralph M. Brown Act and it was
available for public viewing and review at least 72 hours prior to the scheduled meeting date.
Exhibits
1. City Council Resolution authorizing application
2. City Council Resolution authorizing reimbursement
Nov. 17, 2020 Item #2 Page 4 of 9
RESOLUTION NO. 2020-217
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING A FINANCIAL ASSISTANCE APPLICATION TO THE
STATE WATER RESOURCES CONTROL BOARD FOR THE SUPERVISORY
CONTROL AND DATA ACQUISITION (SCADA) IMPROVEMENTS PROJECT AND
DESIGNATING THE CITY MANAGER OR DESIGNEE TO SIGN AND SUBMIT THE
APPLICATION
WHEREAS, the City Council of the City of Carlsbad, California has determined that the city
desires to finance the costs of constructing and/or reconstructing certain public facilities and
improvements relating to its wastewater system, including specifically the SCADA Improvements
Project ("Project"); and
WHEREAS, the city intends to finance the construction and/or reconstruction of the Project or
portions of the Project with moneys ("Project Funds") provided by the State of California, acting by and
through the State Water Resources Control Board ("State Water Board"), for an amount up to
$4,601,000; and
WHEREAS, the State Water Board may fund the Project Funds with proceeds from the sale of
obligations, the interest upon which is excluded from gross income for federal income tax purposes
("Obligations"); and
WHEREAS, prior to either the issuance of the Obligations or the approval by the State Water
Board of the Project Funds, the city desires to incur certain capital expenditures ("Expenditures") with
respect to the Project from available moneys of the city; and
WHEREAS, the city planner has determined that Pursuant to Public Resources Code section
21065, this action does not constitute a "project" within the meaning of the California Environmental
Quality Act (CEQA) in that it has no potential to cause either a direct physical change in the
environment, or a reasonably foreseeable indirect physical change in the environment, and therefore
does not require environmental review. City will complete a Notice of Exemption for CEQA.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1. That the above recitations are true and correct.
2. That the city manager ("Authorized Representative") or designee is hereby authorized
and directed to sign and file, for and on behalf of the city, a Financial Assistance Application for a
Nov. 17, 2020 Item #2 Page 5 of 9
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financing agreement from the State Water Board for the planning, design, and construction of the
SCADA Improvements Project.
3. That this Authorized Representative or designee is designated to provide the
assurances, certifications and commitments required for the financial assistance application, including
executing a financial assistance agreement from the State Water Board and any amendments or
changes thereto.
4. That the Authorized Representative or designee is designated to represent the city in
carrying out the city's responsibilities under the financing agreement, including certifying disbursement
requests on behalf of the city and compliance with applicable state and federal laws.
5. That the city planner has determined that pursuant to Public Resources Code section
21065, this action does not constitute a "project" within the meaning of the California Environmental
Quality Act (CEQA) in that it has no potential to cause either a direct physical change in the
environment, or a reasonably foreseeable indirect physical change in the environment, and therefore
does not require environmental review. City will complete a Notice of Exemption for CEQA.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 17th day of November, 2020, by the following vote, to wit:
AYES: Hall, Blackburn, Bhat-Patel, Schumacher.
NAYS: None.
ABSENT: None.
MATT HALL, Mayor
BARBARA ENGLESON, City CI7
(SEAL)
Nov. 17, 2020 Item #2 Page 6 of 9
RESOLUTION NO. 2020-218
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE REIMBURSEMENT OF FUNDING FOR
SUPERVISORY CONTROL AND DATA ACQUISITION (SCADA)
IMPROVEMENTS PROJECT FROM THE STATE WATER RESOURCES
CONTROL BOARD
WHEREAS, the City Council of the City of Carlsbad, California has determined that city
desires to finance the costs of constructing and/or reconstructing certain public facilities and
improvements relating to its wastewater system, specifically the SCADA Improvements Project
("Project"); and
WHEREAS, the city intends to finance the construction and/or reconstruction of the
Project or portions of the Project with moneys ("Project Funds") provided by the State of
California, acting by and through the State Water Resources Control Board ("State Water
Board"); and
WHEREAS, the State Water Board may fund the Project Funds with proceeds from the
sale of obligations, the interest upon which is excluded from gross income for federal income
tax purposes ("Obligations"); and
WHEREAS, prior to either the issuance of the obligations or the approval by the State
Water Board of the Project Funds, the city desires to incur certain capital expenditures
("Expenditures") with respect to the Project from available moneys of the city; and
WHEREAS, the city has determined that those moneys to be advanced on and after the
date hereof to pay for the expenditures are available only for a temporary period and it is
necessary to reimburse the city for the expenditures from the proceeds of the obligations; and
WHEREAS, the city planner has determined that pursuant to Public Resources Code
section 21065, this action does not constitute a "project" within the meaning of the California
Environmental Quality Act (CEQA) in that it has no potential to cause either a direct physical
change in the environment, or a reasonably foreseeable indirect physical change in the
Nov. 17, 2020 Item #2 Page 7 of 9
environment, and therefore does not require environmental review. City will complete a Notice
of Exemption for CEQA.
NOW, THEREFORE, BE IT resolved by the City Council of the City of Carlsbad, as follows
that:
1. The above recitals are true and correct.
2. The city hereby states its intention and reasonably expects to reimburse
Expenditures paid prior to the issuance of the Obligations or the approval by the State Water
Board of the Project Funds.
3. The reasonably expected maximum principal amount of the Project Funds is
$4,601,000.
4. This resolution is being adopted no later than 60 days after the date on which
the city will expend moneys for the construction portion of the Project costs to be reimbursed
with Project Funds.
5. Each city expenditure will be of a type properly chargeable to a capital account
under general federal income tax principles.
6. To the best of our knowledge, the city is not aware of the previous adoption of
official intents by the city that have been made as a matter of course for the purpose of
reimbursing expenditures and for which tax-exempt obligations have not been issued.
7. This resolution is adopted as official intent of the city in order to comply with
Treasury Regulation §1.150-2 and any other regulations of the Internal Revenue Service
regarding qualified reimbursement of Project costs.
8. The city planner has determined that pursuant to Public Resources Code section
21065, this action does not constitute a "project" within the meaning of the California
Environmental Quality Act (CEQA) in that it has no potential to cause either a direct physical
change in the environment, or a reasonably foreseeable indirect physical change in the
environment, and therefore does not require environmental review. City will complete a Notice
of Exemption for CEQA.
Nov. 17, 2020 Item #2 Page 8 of 9
'c-)p./Ctinii.,D0(tAct
BARBARA ENGLESON, CitylZfe°rk
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City
of Carlsbad on the 17th day of November, 2020, by the following vote, to wit:
AYES: Hall, Blackburn, Bhat-Patel, Schumacher.
NAYS: None.
ABSENT: None.
MATT HALL, Mayor
(SEAL)
Nov. 17, 2020 Item #2 Page 9 of 9
Vicki Quiram, Utilities Director
Shoshana Aguilar, Senior Management Analyst
Ryan Green, Assistant Finance Director
Nov. 17, 2020
Authorization to Apply for a Loan and
Appropriate Funds for the Wastewater
Supervisory Control and Data Acquisition
Project
Recommendation
•Adopt a resolution authorizing a financial assistance application to the State Water Resources Control Board for the Supervisory Control and Data Acquisition Improvements Project and designating the city manager or designee to sign and submit the application
•Adopt a resolution authorizing the reimbursement of funding for the SCADA Improvements Project from the Water Resources Control Board
Background
•Utilities Department is beginning replacement of the supervisory control and data acquisition (SCADA) systems that control and monitor wastewater, water and recycled water systems
•To help fund project implementation, including design and construction, staff proposes to submit a financial assistance application to the State Water Resources Control Board, or State Water Board, for the wastewater SCADA system component
•Applying for a Clean Water State Revolving Fund loan will assist in financing the plan’s wastewater portion in a way that provides optimal future rates for ratepayers
Loan Application Details
•Application will be for $4,601,000
•Cost includes design, construction and technological implementation as well as contingency and administration costs
•Current interest rate on loans from the fund is 1.4%
•Expected repayment term of 20 years
Next Steps
•Upon City Council approval, staff will work
with the city’s as-needed consultant to
complete the financial assistance application
and submit it to the State Water Board
Recommendation
•Adopt a resolution authorizing a financial assistance application to the State Water Resources Control Board for the Supervisory Control and Data Acquisition Improvements Project and designating the city manager or designee to sign and submit the application
•Adopt a resolution authorizing the reimbursement of funding for the SCADA Improvements Project from the Water Resources Control Board
Thank you