HomeMy WebLinkAbout13. Authorize the General Manager to proceed with the execution of SRF Loan Agreement documents for Solids Handling Facility Improvements Page 1 of 11
Item 13.
CENTRAL SAN BOARD OF DIRECTORS
POSITION PAPER
MEETING DATE: OCTOBER 21, 2021
SUBJECT: AUTHORIZE THE GENERAL MANAGER TO PROCEED WITH THE
EXECUTION OF STATE REVOLVING FUND (SRF) LOAN DOCUMENTS
FOR THE SOLIDS HANDLING FACILITY IMPROVEMENTS PROJECTAND
ADOPT RESOLUTION NO. 2021-077 APPROVING THE FINANCING
AGREEMENT FOR THE PROJECT
SUBMITTED BY: INITIATING DEPARTMENT:
DANEA GEMMELL, PLANNING AND ENG-PDS-DIVISION MANAGER
DEVELOPMENT SERVICES DIVISION
MANAGER
REVIEWED BY: EDGAR J. LOPEZ, CAPITAL PROJECTS DIVISION MANAGER
JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL
SERVICES
C -
Roger S. Bailey Kenton L. Alm
General Manager District Counsel
ISSUE
Board of Directors (Board) approval of a proposed 2021 financing transaction for up to $173,105,000
through a State of California's State Water Resources Control Board's (SWRCB) SRF Loan
Agreement is required.
BACKGROUND
The Comprehensive Wastewater Master Plan (CWMP)finalized in 2017 identified many improvements to
the solids and energy processes associated with the treatment plant (plant) and recommended a phased
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program approach for the necessary improvements required for current and future operations. The
following projects were outlined in the CWMP:
Current needs in the Fiscal Year(FY) 2021-22 Ten-Year Capital Improvement Plan (CI P) includes:
• Solids Handling Facility Improvements, Phase 1, District Project(DP) 7348 (Solids
Project);
• Steam Aeration & Blower Systems Renovations, DP 7349;
• Multiple Hearth Furnaces (MHFs) Replacement, DP 100009;
• Cogeneration (Co-Gen) Replacement (starting FY 2023-24); and
• Other Solids Handling Facility Improvements — Dissolved Air Flotation Thickener(DAFT)
Tanks (starting FY 2028-29).
Future and Long-term Planning Improvements (20-year+) includes:
• Solids Handling Facility Improvements, Phase 2 (Phase 2 Solids Project)which adds two anaerobic
digesters, considers conversion to biogas Co-Gen, and also considers adding high strength waste to
increase "green" gas production.
• Solids Handling Facility Improvements, Phase 3 which adds two additional anaerobic digesters and
replaces the MHFs with fluidized bed incinerator.
Central San staff initiated the design of the Solids Project in 2018.Additionally, staff applied for a
SWRCB SRF loan to fund the construction phase of the project.
On September 2, 2021, staff recommended that all bids be rejected due to the project costs were
significantly higher than anticipated or budgeted for the work. The total estimated project costs including
the construction contract amount would have totaled $261 million (M), which was approximately$78 M
more than the budget. The Board concurred with staff and rejected all bids.
It is expected that the existing MHFs will continue to be used for solids handling and disposal for at least
the next decade. Therefore, some elements of the project are required for reliability and to meet air permit
regulations. Therefore, staff is repackaging some of the key elements and rebid a reduced project. The
following elements will be included in the revised Solids Project:
• Replacement of the two wet scrubber systems with new air pollution control equipment to meet air
regulations, including a new Venturi scrubber capable of handling waste heat bypass events.
• Modify the mixing system on the existing sludge blending tank.
• Replacement of the centrifuges and cake pumps.
• Incinerator burner upgrades.
• Replacement of electrical, instrumentation, and controls (EI&C) associated with the new systems
and integrate with the remaining systems.
Some of the elements of the Solids Project have already been constructed and completed:
• Demolition of the abandoned digester tank near the Solids Conditioning Building (SCB).
• Construction of the SCB emergency stairway for the third-floor control room for safety egress.
• Construction modifications to the Emergency Sludge Loadout Facility to reliably operate and load
sludge for extended durations.
• Hearth Replacement, DP 100009 (ongoing).
Funds will be needed to complete these necessary elements going forward; therefore, it is recommended
to execute the SRF loan agreement, which has been received and reviewed for execution.
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Staff met with the SW RCB to request amending the scope to include the potential Phase 2 Solids Project
scope and to include installation and funding of digesters with the reduced Solids Project. The request
was informally denied and staff was encouraged to submit a new SRF application for Phase 2 by the
deadline of December 31, 2021. The Loan Agreement, which is awaiting execution, was also discussed.
The state representatives advised to sign the loan in the full amount and then request an updated or
reduced amount once the project is repackaged and bid for the revised total project costs are known. It
should be noted that about$16 M of the $20 M expended to date on the Solids Project, could be
reimbursed for previous planning and design costs on the Solids Project, via the SRF loan on top of the
total costs of the repackage effort. Staff plans to submit a separate application for a SRF loan for Phase 2
if this project moves forward.
Prior Board Actions regarding the SRF Loan Application
At its December 6, 2018, the Board took the following actions regarding the Solids Project and associated
SRF Loan:
1. Adopted a resolution:
• Finding the project exempt from California Environmental Quality Act (CEQA); approving the Solids
Handling Facility Improvements Project;
• Directing staff to file a Notice of Exemption with the County Clerk and the State; and
• Authorizing the General Manager or his designee to be Central San's Authorized Representative in
the SRF funding eligibility process and any future financing agreement.
2. Adopted a pledge revenue and funds resolution.
3. Adopted a reimbursement resolution.
CEQA
At its December 6, 2018 meeting, the Board independently found that the Solids Project is exempt from
CEQA under Central San's CEQA Guidelines Section 15301, since it involves minor alterations to
existing public facilities involving no expansion of use, and CEQA Guidelines Section 15302, since it
involves replacement of existing public facilities at the same location and with the same purpose.
ALTERNATIVES/CONSIDERATIONS
The Board could decline to execute the Loan Agreement. This alternative is not recommended as Central
San still needs funds to finance any version of the Solids Project.
The Board could direct staff to finance the project with another form of debt such as certificates of
participation or revenue bonds, although this action would increase the financing costs as these
mechanisms would likely result in higher interest rates.
FINANCIAL IMPACTS
The current budget for the Solids Project is shown on page 236 in the FY 2021-22 Central San Budget at
$183,894,000. A new estimate for the reduced project has not been finalized, but will likely be in the range
of$80-$90 M. A revised cash flow projection will be updated once the project has been finalized.
Staff is requesting the Board to adopt a closing resolution and confirm that the General Manager is
authorized to execute the Initial Agreement.
After the initial agreement is executed, the final project amount and supporting documents need to be
submitted and will provide an opportunity for the Water Board to request the proper level of funding.
The not to exceed SRF loan amount for the Solids Project, including associated planning and design and
construction costs, is one hundred seventy-three million one hundred five thousand dollars and no cents
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($173,105,000.00). However, the reduced Solids Project will not use the full amount as stated before.
Also, staff anticipates reimbursement of approximately$16 M in planning and design costs, which can be
requested after the Loan Agreement is fully executed.
In accordance with Government Code Section 5852.1, the following information has been obtained and
disclosed to the Board prior to the entrance into the Agreement: (i)the estimated true interest cost of the
Agreement (being the rate necessary to discount the amounts payable on the respective principal and
interest payment dates) is 0.9%, (ii)the estimated finance charge of the Agreement (being the sum of all
fees and charges paid to third parties) is $25,227,630, (iii)the estimated proceeds of the Agreement
expected to be received, net of proceeds for finance charges in (ii) above to paid from the principal
amount of the Agreement and any reserves or capitalized interest paid or funded with Agreement is
$173,105,000, and (iv)the estimated total payment amount of the Agreement (being the sum of debt
service plus finance to be paid to final maturity, plus any financing costs not paid from proceeds of the
Agreement) is $198,332,630.
COMMITTEE RECOMMENDATION
The Engineering & Operations Committee received an update on the SRF Loan Agreement at its meeting
on October 12, 2021 and were informed that the recommended resolution would be brought to the Board.
In the essence of time and the need to respond within timeframes provided by SWRCB, the resolution
was not reviewed by the Committee.
RECOMMENDED BOARD ACTION
Authorize the General Manager to proceed with the execution of State Revolving Fund (SRF) Loan
Agreement in the maximum principal amount of$173,105,000 to finance the Solids Handling Facility
I mprovements, District Project 7348, also referenced as State Project No. 8489-110 and adopt the
proposed resolution approving the financing agreement for the project.
Strategic Plan Tie-In
GOAL TWO:Environmental Stewardship
Strategy 1—Achieve 100%compliance in all regulations
GOAL THREE:Fiscal Responsibility
Strategy 1—Maintain financial stability and sustainability, Strategy 2—Ensure integrity and transparency in financial
management
GOAL FIVE:Infrastructure Reliability
Strategy 1—Manage assets optimally to prolong their useful life, Strategy 2—Execute long-term capital renewal and
replacement program
ATTACHMENTS:
1. Proposed Resolution
2. Presentation
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ATTACHMENT 1
RESOLUTION NO. 2021-077
A RESOLUTION OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT
APPROVING THE CLEAN WATER STATE REVOLVING FUND FINANCING
AGREEMENT FOR THE SOLIDS HANDLING FACILITY
IMPROVEMENTS PROJECT (STATE PROJECT NO. 8489-110)
WHEREAS, the Central Contra Costa Sanitary District (the "Agency") desires to finance
the costs of constructing and/or reconstructing certain public facilities and
improvements relating to its wastewater system, including certain treatment facilities
and other related infrastructure; and
WHEREAS, the Agency applied to the State of California's State Water Resources
Control Board's (SWRCB) Clean Water State Revolving Fund (CWSRF) for funding of
the Solids Handling Facility Improvements, District Project 7348 (Project) and also
referenced as State Project No. 8489-110; and
WHEREAS, the reasonably expected maximum principal amount of the Project Funds
requested by the Agency is $173,105,000; and
WHEREAS, the SWRCB has provided the financing terms for the Loan Agreement
(Agreement) for the Project; and
WHEREAS, the information required to be obtained and disclosed by the Agency's
Board of Directors with respect to the Agreement pursuant to Government Code
Section 5852.1 is set forth in the staff report accompanying this Resolution; and
WHEREAS, the Agency's General Counsel and Bond Counsel have reviewed these
financing terms and rendered legal opinions for the Agreement that it is acceptable.
NOW, THEREFORE BE IT RESOLVED by the Board of Directors of the Central Contra
Costa Sanitary District as follows:
1. THAT the Agency does hereby approve the Loan Agreement.
2. THAT, the General Manager, Director of Finance and Administration, Planning
and Development Services Manager, the Board of Directors and its District
officers are each authorized and directed in the name and on behalf of the
District to execute and deliver such additional documents, that they or any of
them might deem necessary or appropriate, in order to effectuate the purpose
and intent of this Resolution. Whenever in this Resolution any officer of the
District is authorized to execute and deliver any document or take any action,
such execution, delivery or action may be taken on behalf of such officer by any
person designated by such officer to act on his or her behalf in the case such
officer is absent or unavailable.
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Central Contra Costa Sanitary District
Resolution No. 2021-077
Page 2 of 2
3. THAT the Agreement is valid and enforceable in accordance with its terms, in
compliance with all applicable debt management policies and prior resolutions,
and should any conflicts arise with them and the Agreement then, they will be
resolved in favor of the language of the agreement.
4. THAT the General Manager (the "Authorized Representative") or his designee is
hereby authorized and designated to represent the Agency in carrying out the
Agency's responsibilities under the financing agreement, including certifying
disbursement requests on behalf of the Entity and compliance with applicable
state and federal laws.
5. THAT this Agency so finds, determines, and represents all the recitals in this
Resolution are true and correct.
PASSED AND ADOPTED this 21St day of October 2021, by the Board of Directors of
the Central Contra Costa Sanitary District by the following vote:
AYES: Members:
NOES: Members:
ABSENT: Members:
Tad J. Pilecki
President of the Board of Directors
Central Contra Costa Sanitary District
County of Contra Costa, State of California
COUNTERSIGNED:
Katie Young
Secretary of the District
Central Contra Costa Sanitary District
County of Contra Costa, State of California
Approved as to form:
Kenton L. Alm, Esq.
Counsel for the District
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ATTACHMENT 2
1 � STATE REVOLVING FUND (SRF) LOAN
AGREEMENT FOR
SOLIDS HANDLING FACILITY
IMPROVEMENTS
Board Meeting
(' October 21, 2021
?1
Edgar J. Lopez, Capital Projects Division Manager
Danea Gemmell, Planning and Development Division Manager
Jean-Marc Petit, Director of Engineering and Technical Services
JIM=
I
SOLIDS HANDLING FACILITY IMPROVEMENTS
SCOPE FOR REDUCED SOLIDS PROJECT
1 2 4 3 6 5&7
O
MODIFY MULTIPLE AIR POLLUTION NEW ASH ELECTRICAL CENTRIFUGE SOLIDS CONDITIONING
SLUDGE HEARTH CONTROL HANDLING SYSTEMS DEWATERING BUILDING RETROFIT
BLENDING/ FURNACES (NEW WET AND LOADOUT (LIMITED) SYSTEM (LIMITED)
STORAGE (SOME HEARTH SCRUBBERS)
(LIMITED REPLACEMENT)
X J X X X 2
1
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INSTALLATION OF NEW WET SCRUBBERS
FOR REGULATORY COMPLIANCE
ll
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r
■ G
a
Ig
RE-EVALUATE LONG-TERM PATH FOR
SOLIDS HANDLING AT CENTRAL SAN
Implement Phase 1:
Proceeding with some key Implement Phase 2: Re-
elements of the Solids Evaluate Long-Term Solids
Project Handling
• Wet Scrubbers Hiring Consultants
• Centrifuges and to Evaluate long-
and Cake term Biosolids,
Pumps including Adding
• Refurbish
Multiple Hearth Anaerobic Digestion
Furnaces and Biogas Co-Gen
Hearth and
Burner
Controls
CENTRALSAN
2
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Page 9 of 11
FISCAL YEAR (FY) 2021 -22
CAPITAL IMPROVEMENT BUDGET
Solids Handling Facility Improvements Budget &
Budget-to- FY 2021-22 FY 2022-23 Future FYs Total
Date
$1,000,000 $- $- $- $1,000,000
12,090,000 - - - 12,090,000
Construction 6,894,000 21,000,000 45,000,000 98,000,000 170,894,000
$19,984,000 $21,000,000 $45,000,000 $98,000,000 $183,894,000
The budget will need to be rebalanced to reflect reduced project spending.
ACV i
s
CENTRALSAN
CENTRAL SAN SRF
LOAN SEQUENCE
Sign Initial SRF Reduced Award to
Contractor
173.1 Million) Scope
3
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Page 10 of 11
PRIOR BOARD ACTIONS FOR SRF LOAN
At its December 6, 2018, the Board took the following
actions regarding the Solids Project and associated SRF
Loan:
•Adopted a resolution:
• finding the project exempt from California Environmental Quality
Act;
• approving the Solids Handling Facility Improvements Project;
• directing staff to file a Notice of Exemption with the County
Clerk and the State; and
• authorizing the General Manager or his designee to be Central
San's Authorized Representative in the SRF funding eligibility
process and any future financing agreement.
•Adopted a pledge revenue and funds resolution.
•Adopted a reimbursement resolution.
-� CENTRALSAN
ADDITIONAL SRF LOAN APPROVAL
RESOLUTION REQUIRED
• Notifications to the public in compliance with Government
Code 5852.1.
•A declaration of the applicant's authority to enter into the
agreement.
•A broad-based blessing of the agreement as being valid
and enforceable in accordance with its terms.
•Authorization and direction to the authorized representative
and other relevant officials to enter into the agreement and
perform all acts necessary and proper for executing the
agreement and carrying out its terms.
8
- CENTRALSAN
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4
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RECOMMENDED BOARD ACTION
• Authorize the General Manager to proceed with the execution
of State Revolving Fund Loan Agreement in the maximum
principal amount of$173,105,000 to finance the Solids
Handling Facility Improvements, District Project 7348, also
referenced as State Project No. 8489-110 and adopt Resolution
2021-077.
F MIR
9
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ho- CENTRALSAN
QUESTIONS?
CENTRALSAN
Io
5
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