HomeMy WebLinkAboutStaff Report 7597City of Palo Alto (ID # 7597)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 2/13/2017
City of Palo Alto Page 1
Summary Title: Adopt Pledged Revenue Resolution for Repayment of State
Revolving Fund (SRF) Loans.
Title: Adoption of a Resolution Establishing Pledge Sources of Revenue for
Repayment of State Revolving Fund (SRF) Loans for Planning, Design and
Construction of Wastewater Treatment Enterprise Fund Facilities at the Palo
Alto Regional Water Quality Control Plant (RWQCP), and Repealing
Resolution Number 9631
From: City Manager
Lead Department: Public Works
Recommendation
The Utilities Advisory Commission and Staff recommend that Council:
1.Repeal Resolution No. 9631 (Attachment C) and replace it with a Resolution
(Attachment A) pledging an additional source of revenue for the repayment
of two State Revolving Fund loans from the State Water Resources Control
Board: one loan for design and construction of the Regional Water Quality
Control Plant sludge dewatering and load-out facility and one for planning
and design of three additional projects,the laboratory/environmental
services building, primary sedimentation tank rehabilitation, and fixed film
reactor rehabilitation projects.
EXECUTIVE SUMMARY
The State Water Resources Control Board is requiring pledged revenues from
both the City’s Wastewater Collection fund and its Wastewater Treatment fund as
back-up in order to obtain low interest loans from the State for Wastewater
Treatment projects. The State considers the two City funds to be fully interrelated
since only one group of ratepayers and one Proposition 218 Process is involved.
This approach has been used by the City before and keeps the interest rate at half
City of Palo Alto Page 2
of what it would otherwise be. It also allows the City to retire its sludge
incinerators and reduce greenhouse gasses dramatically. It is therefore
recommended by the Utilities Advisory Commission and Staff that Council repeal
earlier Resolution 9631 and adopt a new one (Attachment A). This action is not
anticipated to impact the City’s Wastewater Collection fund, because agreements
with the Wastewater Plant’s Partner Agencies have been obtained in which they
individually agree to repay their portion of the State loans.
Background
The State Water Resources Control Board (SWRCB)administers the State
Revolving Fund (SRF)program. The SRF program has a fixed amount of funds
available each fiscal year and provides loans to wastewater treatment agencies on
a first-come-first-served basis. Under this program, eligible projects can apply for
loans with interest rates that are roughly half of the State General Obligation
Rate. These favorable terms help lower total project costs, minimizing the
financial impacts of projects on rate-payers.
On October 17, 2016, Council adopted resolutions authorizing the City Manager
to file applications for SRF loans for construction of the sludge dewatering and
truck load out facility (CWSRF Project No. 8104) and planning/design of the
laboratory/environmental services building, the primary sedimentation tank
rehabilitation, and fixed film reactor rehabilitation projects (CWSRF Project No.
8091-110) and pledging repayment sources for the SRF loans (SR ID
#7144/Attachment B).
Discussion
Section 603 of the Federal Clean Water Act Amendments requires each financing
recipient to establish one or more pledged sources of revenue for SRF assistance.
Resolution No. 9631 pledged net revenues of the City’s Wastewater Treatment
enterprise fund for repayment of SRF financing for CWSRF Project No. 8104 and
CWSRF Project No. 8091-110. However,the SWRCB subsequently determined
that the City must also pledge Wastewater Collection revenues for the SRF loans,
which is consistent with past SRF loan pledges for the Regional Water Quality
Control Plant.On February 1, 2017, the Utilities Advisory Commission
recommended that Council adopt a new resolution pledging both funds,and
repeal the earlier resolution (Attachment D).The current Staff Report is
forwarding that recommendation to Council.
City of Palo Alto Page 3
Resource Impact
No additional funds are associated with the adoption of the substitute resolution.
Pledging the Wastewater Collection revenues in addition to Wastewater
Treatment revenues is not anticipated to impact either fund.
Timeline
SRF draft agreement development July 2016 –February 2017
Palo Alto Council approval of SRF Agreements February 2017
Policy Implications
Adoption of the resolution does not represent a change in existing policies.
Environmental Review
The Council’s pledge of revenues to repay State Revolving Fund financing for the
above-referenced Projects does not meet the definition of a project for the
purposes of the California Environmental Quality Act, under Public Resources
Code Section 21065 and CEQA Guidelines Section 15378(b) (5), because it is an
administrative governmental activity which will not cause a direct or indirect
physical change in the environment. Council approved an Initial Study/Mitigated
Negative Declaration for the sludge-dewatering and loadout facility project on
March 28, 2016 (Staff Report ID# 6424).
Attachments:
·Attachment A: Resolution Pledged Revenue
·Attachment B: SR 7144 Approve Seven Documents
·Attachment C: Resolution 9631 Pledged Revenue To Be Rescinded
·Attachment D: Utilities Advisory Commission staff report (February 1, 2017)
Attachment A
NOT YET APPROVED
161220 jb 6053827 1
Resolution No. _____
Resolution of the Council of the City of Palo Alto Establishing Pledged
Sources of Revenue For Repayment of Funding Pursuant to the Federal
Clean Water Act Amendments and Repealing Resolution 9631
RECITALS
A. The CITY OF PALO ALTO (the “City”) desires to finance the costs of planning,
design, and/or construction of certain public facilities and improvements relating to its
wastewater system, including the planning/design of primary sedimentation tanks, fixed film
reactors, and the laboratory/environmental service building, and the construction of a sludge
treatment and load-out facility (the “Projects”) that were identified in the Regional Water
Quality Control Plant’s Long Range Facility Plan.
B. The City intends to finance the planning, design, and/or construction of the
Projects or portions of the Projects with moneys (“Project Funds”) provided by the State of
California, acting by and through the State Water Resources Control Board (the “Water Board”).
C. Section 603(d)(1)(C) of the Federal Clean Water Act Amendments require each
financing recipient to establish one or more pledged sources of revenue for Clean Water State
Revolving fund (CWSRF) financial assistance.
D. Revenue will be considered pledged when the City passes a resolution
committing a source of funds for repayment.
E. On October 17, 2016 the City Council adopted Resolution No. 9631, pledging
revenues of its Wastewater Treatment enterprise fund to repayment of Clean Water State
Revolving Fund financial assistance incurred for the planning, design, and/or construction of the
Projects, and, in response to additional direction from the Water Board, now wishes to repeal
Resolution No. 9631 and adopt this Resolution, in order to pledge revenue from both its
Wastewater Treatment and Wastewater Collection enterprise funds to repayment of Clean
Water State Revolving Fund financial assistance for the Projects.
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The City of Palo Alto hereby pledges Net Revenues of its Wastewater
Treatment enterprise fund and Wastewater Collection enterprise fund to repayment of any and
all Clean Water State Revolving Fund financing incurred for CWSRF Project No. 8104, including
the planning/design of primary sedimentation tanks, fixed film reactors, and
laboratory/environmental service building and CWSRF Project No. 8091-110, including the
design and construction of a sludge dewatering and load-out facility. Net Revenues of the City’s
Wastewater Treatment enterprise and Wastewater Collection enterprise are defined as follows:
Attachment A
NOT YET APPROVED
161220 jb 6053827 2
"Net Revenues" means, with respect to the Wastewater Treatment enterprise and
Wastewater Collection enterprise, for any period of computation, the amount of the
Gross Revenues received from the Wastewater Treatment enterprise and Wastewater
Collection enterprise during such period, less the amount of Maintenance and
Operation Costs of the Wastewater Treatment enterprise and Wastewater Collection
enterprise becoming payable during such period.
"Gross Revenues" means, for any period of computation, all gross charges received for,
and all other gross income and revenues derived by the City from, the ownership or
operation of the Wastewater Treatment enterprise and Wastewater Collection
enterprise or otherwise arising from the Wastewater Treatment enterprise and
Wastewater Collection enterprise during such period, including but not limited to (a) all
Charges received by the City for use of the Wastewater Treatment enterprise and
Wastewater Collection enterprise, (b) all receipts derived from the investment of funds,
(c) transfers from (but exclusive of any transfers to) any stabilization reserve funds, and
(d) all moneys received by the City from other public entities whose inhabitants are
served pursuant to contracts with the City.
"Maintenance and Operation Costs" means the reasonable and necessary costs spent or
incurred by the City for maintaining and operating the Wastewater Treatment
enterprise and Wastewater Collection enterprise, calculated in accordance with sound
accounting principles, including the cost of supply of water, gas and electric energy
under contracts or otherwise, the funding of reasonable reserves, and all reasonable
and necessary expenses of management and repair and other expenses to maintain and
preserve the Wastewater Treatment enterprise and Wastewater Collection enterprise in
good repair and working order, and including all reasonable and necessary
administrative costs of the City attributable to the Wastewater Treatment enterprise
and Wastewater Collection enterprise and, any financing instruments incurred to
finance improvements to the Wastewater Treatment enterprise and Wastewater
Collection enterprise, such as salaries and wages and the necessary contribution to
retirement of employees, overhead, insurance, taxes (if any), expenses, compensation
and indemnification of any bond trustee or other lender, and fees of auditors,
accountants, attorneys or engineers, and including all other reasonable and necessary
costs of the City or charges required to be paid by it to comply with the terms of any
financing instrument related to the Wastewater Treatment enterprise and Wastewater
Collection enterprise, but excluding depreciation, replacement and obsolescence
charges or reserves therefor and amortization of intangibles or other bookkeeping
entries of a similar nature.
"Charges" means fees, tolls, assessments, rates and rentals prescribed under applicable
law by the City Council for the services and facilities of the Wastewater Treatment
enterprise and Wastewater Collection enterprise.
Attachment A
NOT YET APPROVED
161220 jb 6053827 3
This pledged source of revenue shall remain in effect until such financing is fully discharged
unless modification or change of such dedication is approved in writing by the State Water
Resources Control Board.
SECTION 2: The Council’s pledge of the revenues to repay State Revolving Fund
financing for the above-referenced Projects does not meet the definition of a project for the
purposes of the California Environmental Quality Act, under Public Resources Code Section
21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental
activity which will not cause a direct or indirect physical change in the environment. Council
approved an Initial Study/Mitigated Negative Declaration for the sludge-dewatering and
loadout facility project on March 28, 2016 (Staff Report ID# 6424).
SECTION 3: Resolution No. 9631, adopted on October 17, 2016, is hereby repealed.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
_________________________ ______________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
__________________________ ______________________________
Senior Deputy City Attorney City Manager
______________________________
Director of Public Works
______________________________
Director of Administrative Services
City of Palo Alto (ID # 7144)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 10/17/2016
City of Palo Alto Page 1
Summary Title: Partner Agreements and Resolutions for Sludge Dewatering
& Loadout Facility
Title: Adoption of Three Resolutions to Execute State Revolving Fund (SRF)
Financial Assistance Applications, Designate the Amount of Project
Expenditures to be Reimbursed by SRF Proceeds, and Pledge Revenue for
Repayment of SRF Loans; Amend the 2009 SRF Assistance Agreement; and
Authorize Contract Amendments with RWQCP Partners Mountain View and
Los Altos, East Palo Alto Sanitary District, and the Board of Trustees o f the
Leland Stanford Junior University for the Funding of the Sludge Dewatering
and Load Out Facility, the Primary Sedimentation Tank Rehabilitation, the
Fixed Film Reactor Rehabilitation, and the Laboratory Environmental Services
Building for the Wastewater Treatment Enterprise Fund Facilities at the Palo
Alto Regional Water Quality Control Plant (RWQCP)
From: City Manager
Lead Department: Public Works
Recommendation
Staff recommends that Council
1.Adopt a Resolution (Attachment A) authorizing the City Manager or his
designee to execute State Revolving Fund Financial Assistance Applications
from the State Water Resources Control Board (SWRCB) on behalf of the
Palo Alto Regional Water Quality Control Plant (RWQCP) for the planning,
design, and construction of projects identified in the RWQCP’s Long Range
Facility Plan;
2.Adopt a Resolution (Attachment B) designating the amount of sludge
dewatering and loadout facility project expenditures to be reimbursed by
proceeds from the State Revolving Fund;
3.Adopt a Resolution (Attachment C) pledging a dedicated source of revenue
for the repayment of two State Revolving Fund loans from the SWRCB: one
Attachment B
City of Palo Alto Page 2
for the construction of the sludge treatment facility, and one for the
planning of three additional projects: the laboratory/environmental
services building, the primary sedimentation tank rehabilitation, and fixed
film reactor rehabilitation projects;
4. Amend the City’s existing 2009 State Revolving Fund Financial Assistance
Agreement to be Subordinate to 1995 and 1999 Utility Revenue Bonds, and
on parity with the City’s 2007 SRF loan (Attachment D); and
5. Authorize the City Manager or his designee to execute the following
contract amendments with the RWQCP partners for the construction of the
sludge dewatering facility:
a. Addendum No. 8 to the Basic Agreement with the cities of Mountain
View and Los Altos (Attachment E);
b. Amendment No. 6 to Agreement No. C237 with East Palo Alto Sanitary
District (Attachment F); and
c. Amendment No. 4 to Agreement No. C869 with the Board of Trustees of
the Leland Stanford Junior University (Attachment G).
Executive Summary
A facility to replace the sewage sludge (“biosolids”) incinerators at the Regional
Water Quality Control Plant (RWQCP) has been designed (Capital Improvement
Program (CIP) project WQ-14001) and Council is being asked to approve the
application for a low interest loan from the State Water Resources Control Board
for construction. The facility will dewater the biosolids and allow it to be loaded
onto trucks and taken offsite for further treatment, until further treatment units
can be built onsite. The type of further treatment has not been decided, and
could be anaerobic digestion, gasification, or another technology.
Council is also being asked to approve the application for a second low interest
loan from the state to conduct planning for the next three major projects,
collectively referred to as Projects, the laboratory/environmental services
building, the primary sedimentation tank rehabilitation, and fixed film reactor
rehabilitation (CIP projects WQ-14002, WQ-14003, and WQ-14004, respectively).
To finalize the applications, Council authorization of several resolutions is
required.
Background
The RWQCP, originally constructed in 1934, has undergone several expansions
City of Palo Alto Page 3
and upgrades. The RWQCP is now an advanced (tertiary treatment) facility that
provides treatment and disposal of wastewater for Palo Alto, Mountain View, Los
Altos, Los Altos Hills, East Palo Alto Sanitary District, and Stanford University. A
Long Range Facilities Plan (LRFP) was prepared in 2012 to provide a plan for
future capital projects. A Biosolids Facility Plan (BFP) was completed in 2014 to
map the management of biosolids when the sewage sludge incinerators are
decommissioned.
State Revolving Fund Program
The State Water Resources Control Board (SWRCB), Division of Financial
Assistance administers the Clean Water State Revolving Fund (SRF) program. The
SRF program has a fixed amount of funds available each year and provides loans
to agencies on a first-come-first-served basis primarily for construction of
wastewater treatment projects. The program’s low interest rates, roughly half of
the State General Obligation Rate and currently 1.7%, and other favorable terms
help lower total project costs, maximizing benefits to rate-payers and partner
agencies.
Previously the City obtained SRF loans for the Ultraviolet Disinfection Facility ($8.5
million, 20-year term) and Palo Alto/Mountain View recycled water pipeline
project ($9.0 million, 20-year term).
Sludge Dewatering and Truck Loadout Facility Project
Council directed staff in May 2014 to initiate the design of the sludge dewatering
and truck loadout facility (CMR ID# 4744). Council approved a contract with
CH2MHILL Engineers in January 2015 to provide design and environmental
consulting services for the sludge dewatering and truck loadout facility to be
located at the RWQCP (CMR ID# 5295). Component One of BFP is a new sludge
dewatering and truck loadout facility, which will allow the retirement of the City’s
two sewage sludge incinerators. The facility will be used to load trucks with
dewatered sludge to be hauled to a regional facility outside of Palo Alto for
further treatment, such as composting, gasification and/or anaerobic digestion.
Staff will return to Council for approval of the sludge hauling contract and
identification of final treatment/disposal location(s) after commencement of
facility construction, closer to the anticipated date of the sludge dewatering
facility startup in early 2020.
City of Palo Alto Page 4
In March 2016, Council approved the Mitigated Negative Declaration, the
Mitigation and Monitoring Program, and the Record of Land Use approving the
Site and Design Review and Architectural Review application for the new
dewatering facility at RWQCP (CMR ID# 6424).
Discussion
Staff has submitted two draft applications to the SWRCB for SRF financing
including an application for 1) construction of the sludge dewatering and truck
loadout facility (CIP project WQ-14001) and 2) planning/design of the primary
sedimentation tank rehabilitation, fixed film reactor rehabilitation, and the
laboratory/environmental services building (CIP projects WQ-14002, WQ-14003,
and WQ-14004), (all four collectively referred to as the Projects). Each of these
Projects is further described in the LRFP. To finalize the applications, Council
authorization of several resolutions is required.
Staff is pursuing two SRF loans: one for the planning, design, construction, and
construction management of the sludge dewatering and loadout facility,
estimated at $30 million, and one for the planning/design of the primary
sedimentation tank rehabilitation, fixed film reactor rehabilitation, and the
laboratory/environmental services building projects, estimated at $6.75 million.
The RWQCP partner agencies (Mountain View, Los Altos, East Palo Alto Sanitary
District, and Stanford University) have already approved the Projects, pursuit of
the SRF loans to fund the Projects, and agreed to repay their share of financial
obligations. City of Palo Alto has final approval of the Projects and loans as the
lead agency and SRF loan applicant. Staff will return to Council for approval of the
(a) final SRF loans, (b) sludge dewatering construction contract, and (c) sludge
dewatering construction management contract.
Several steps in the loan process will require Council action, including approval of
the final loan amounts, and staff will return to Council accordingly. The items
currently brought for Council approval are:
1. Adoption of Authorizing Resolution (Attachment A)
Authorizing the City Manager or his designee to apply for SRF loans for capital
improvement projects identified in the Long Range Facility Plan. While initially
staff plans to apply for two SRF loans, one to fund the sludge dewatering
construction project and one to fund planning of the sedimentation tank
City of Palo Alto Page 5
rehabilitation, fixed film reactor rehabilitation, and laboratory/environmental
sciences building, the resolution is drafted to authorize the City’s application
for any of the capital improvement projects listed in the LRFP. The resolution
also authorizes the City Manager or his designee, the Director of Public Works
or the Manager of the Water Quality Control Plant, to execute SRF financial
assistance agreements and any amendments with the SWRCB. SRF
applications will be submitted after Council approval of a funding strategy and
final construction contract for the relevant facilities.
2. Adoption of Reimbursement Resolution (Attachment B)
The SRF program requires the City to pay in advance for certain tasks such as
planning and design (eligible allowances) to be reimbursed by the SRF loan.
Through the Reimbursement Resolution, Council will designate a maximum of
$30 million in advance funding for expenditures for the sludge dewatering
project. Staff anticipates returning to Council at a later date with any
reimbursement resolutions required for the other three projects.
3. Adoption of Pledged Sources of Revenue Resolution (Attachment C)
Section 603 of the Federal Clean Water Act requires each financing recipient to
establish one or more pledged sources of revenue to be eligible for SRF
assistance. The City will pledge the Net Revenues of its Wastewater Treatment
enterprise fund for both SRF loans being sought this year. In compliance with
existing bond covenants and the requirements of Proposition 218, the revenue
pledge for both new SRF loans will be subordinate to the 1995 Storm Drain and
Water Enterprise Bonds, the 1999 Storm Drain, Wastewater Collection and
Treatment Bonds, the 2007 SRF loan for the Mountain View/Moffett Area
Reclaimed Water Pipeline Project and the 2009 SRF loan for the Ultraviolet
Disinfection Project.
4. Amend the 2009 SRF Financial Assistance Agreement (Attachment D)
The City’s bond counsel advised that the City’s existing 2009 SRF Financial
Assistance Agreement be amended so the City’s pledge of revenues as security
for its 2009 SRF repayment obligation is subordinate to the City’s 1995 and
1999 Utility Revenue Bonds, and on parity with the City’s 2007 SRF loan.
SWRCB agreed to this modification in concept. The City’s bond counsel has
drafted the attached Amendment No. 1 to the City’s 2009 SRF Financial
City of Palo Alto Page 6
Assistance Agreement and the City is awaiting feedback from SWRCB’s legal
department.
5. Approval of Changes to Partner Agencies’ Agreements (Attachments E, F & G)
Except for Los Altos Hills, partner agencies are required to approve the
Projects and promise to repay the SRF loans which will finance each Project’s
planning and construction. The City prepared amendments were made to each
of the partner agency’s relevant agreement, which each agency approved on
the dates listed below.
Mountain View City Council October 13, 2015
Stanford University January 25, 2016
Los Altos City Council February 23, 2016
Board of East Palo Alto Sanitary District Board September 22, 2016
The Addendum and Amendments document the partner agencies’ approval of
the Projects and establish the partner agencies’ acceptance of, and
responsibilities for, the terms and conditions of SRF Financial Assistance
Agreements and Project costs.
Timeline
Palo Alto Council approval of SRF Application
Submittal, Reimbursement and Revenue Pledge
Resolutions*
October 17, 2016
Palo Alto Council approval of Sludge Dewatering
Construction Contract and SRF Construction
Loan
January 2017
Construction Notice To Proceed February 2017
Sludge Dewatering Project completion February 2019
* If approved, staff anticipates bringing the SRF loan agreement for the three planning projects
to Council in 2017
Resource Impact
No financial impacts are associated with the adoption of the resolutions,
amendment of the 2009 SRF loan or approval of the Partner Agreement
addendum and amendments.
City of Palo Alto Page 7
Applying for SRF funds does not obligate the City to proceed with the Projects.
The resource impact of proceeding with Projects will be evaluated at the time
Council approval for each Project is requested.
Funding for the design and environmental consulting services for the dewatering
facility was in the Wastewater Treatment Fund CIP project WQ-80021 and the
fund reserve will be reimbursed with the SRF loan principal.
Repayment of the sludge dewatering 30-year SRF loan is expected to begin in
2020, a year after construction completion, and would be included as an expense
in the Fiscal Year 2020 Wastewater Treatment Fund operating budget.
Approximately 62% of the fund’s operating expenses are offset by revenue from
the RWQCP partner agencies.
Policy Implications
Adoption of the resolutions, amendment of the 2009 SRF loan and approval of the
addendum and amendments to the partner agencies’ agreements do not
represent a change in existing policies.
Environmental Review
The City of Palo Alto performed an environmental review for the sludge
dewatering and loadout facility under provisions of the California Environmental
Quality Act (CEQA). An Initial Study/Mitigated Negative Declaration was prepared
for the project and approved by Council on March 28, 2016 (CMR ID# 6424).
Adoption of the SRF application and funding resolutions, amendment of the 2009
SRF agreement and approval of the addendum and amendments to the partner
agencies’ agreements are not actions that require CEQA review. These actions do
not meet the definition of a project for the purposes of CEQA, under Public
Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because
they are administrative governmental activities which will not cause a direct or
indirect physical change in the environment.
Attachments:
Attachment A: Resolution Authorizing FINAL (PDF)
Attachment B: Resolution Reimbursement (PDF)
Attachment C: Resolution Pledged Revenue (PDF)
Attachment D: Amendment 1 2009 SRF Loan Agreemnt (DOCX)
City of Palo Alto Page 8
Attachment E: Amendment 8 Palo Alto--Mountain View--Los Altos (PDF)
Attachment F: Amendment 6 EPASD (PDF)
Attachment G: Amendment 4 Stanford University (DOCX)
NOT YET APPROVED
160928 jb 6053825 1
Resolution No. ______
Resolution of the Council of the City of Palo Alto Approving the
City’s Submittal of a Financial Assistance Application to the State Water
Resources Control Board for Capital Improvement Projects Applicable
to the Regional Water Quality Control Plant
R E C I T A L S
A. The State of California State Water Resources Control Board (the “Board”) has a
funding program entitled “Clean Water State Revolving Fund,” and pursuant to this program,
the Board makes funds available for various capital water-related projects.
B. The City of Palo Alto (the “City”) owns and operates the Regional Water Quality
Control Plant (the “Plant”), and engages in various capital improvement projects to improve
and maintain the Plant.
C. The City wishes to apply for State Revolving Fund funds to cover the cost of certain
capital improvement projects identified in the attached Long Range Facility Plan, Exhibit A.
D. The first State Revolving Fund application the City submits will cover the sludge
dewatering and load-out facility construction project. City staff anticipates seeking multiple
State Revolving Fund applications for other capital improvement projects identified in the Long
Range Facility Plan, under the authority granted by Council via this resolution.
The Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The Council hereby finds that it is in the City and the public’s interest in the
health, safety and welfare of the community to file Financial Assistance Application(s) with the
Board to seek funds made available under the State Revolving Fund for any of the CIP projects
listed in Exhibit A.
SECTION 2. The Council hereby authorizes and directs the City Manager or his designee,
the Director of Public Works or the Manager of the Plant, to:
(a) File and sign, for and on behalf of the City of Palo Alto, a Financial Assistance
Application for a financing agreement from the Board for the planning, design, and construction
of projects identified in the Plant’s Long Range Facility Plan, Exhibit A.
(b) Provide the assurances, certifications, and commitments required for the financial
assistance application, including executing a financial assistance agreement from the Board and
any amendments or changes thereto.
(c) 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.
NOT YET APPROVED
160928 jb 6053825 2
SECTION 3. The Council finds that the filing of a Financial Assistance Application with
the State Water Resources Control Board does not constitute a project requiring California
Environmental Quality Act (CEQA) review. This action does not meet the definition of a project
under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because
it is an administrative governmental activity which will not cause a direct or indirect physical
change in the environment. An Initial Study/Mitigated Negative Declaration was prepared for
the sludge dewatering and loadout facility project and approved by Council on March 28, 2016
(Staff Report ID# 6424). Implementation of the primary sedimentation tanks, fixed film
reactors, and the laboratory/environmental service building projects is subject to future CEQA
analysis.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ _____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ _____________________________
Senior Deputy City Attorney City Manager
_____________________________
Director of Public Works
_____________________________
Director of Administrative Services
NOT YET APPROVED
160928 jb 6053826
Resolution No. _________
Resolution of the Council of the City of Palo Alto Authorizing the Reimbursement
of Funding for the Regional Water Quality Control Plant Sludge Dewatering and
Loadout Facility Project from the State Water Resource Control Board
R E C I T A L S
A. The City of Palo Alto (the “City”) desires to finance the costs of constructing and/or
reconstructing certain public facilities and improvements relating to its water and wastewater
system, including certain treatment facilities, pipelines and other infrastructure (the "Project").
B. 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).
C. 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 (the "Obligations").
D. Prior to either the issuance of the Obligations or the approval by the State Water
Board of the Project Funds the City has incurred certain capital expenditures (the
"Expenditures") with respect to planning and design of the Project from available moneys of the
City.
E. The City has determined that those moneys to be advanced on and after the date
hereof to pay the Expenditures are available only for a temporary period and it is necessary for
the State Water Board to reimburse the City for the Expenditures from the proceeds of the
Obligations.
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. 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.
SECTION 2. The reasonably expected maximum principal amount of the Project Funds
is $30,000,000.
SECTION 3. 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.
SECTION 4. Each City expenditure will be of a type properly chargeable to a capital
account under general federal income tax principles.
NOT YET APPROVED
160928 jb 6053826
SECTION 5. 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.
SECTION 6. 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
relating to the qualification for reimbursement of Project costs.
SECTION 7. All the recitals in this Resolution are true and correct and this City so finds,
determines and represents.
SECTION 8. The Council finds that its authorization of funding reimbursement does not
constitute a project requiring review under the California Environmental Quality Act (CEQA) or
CEQA Guidelines. This action does not meet the definition of a project under Public Resources
Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative
governmental activity which will not cause a direct or indirect physical change in the
environment.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
_________________________ ______________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
__________________________ ______________________________
Senior Deputy City Attorney City Manager
______________________________
Director of Public Works
______________________________
Director of Administrative Services
NOT YET APPROVED
160928 jb 6053827 1
Resolution No. _____
Resolution of the Council of the City of Palo Alto Establishing One or
More Pledged Sources of Revenue For Repayment of Funding Pursuant
to The Federal Clean Water Act Amendments
R E C I T A L S
A. The City of Palo Alto (the “City”) desires to finance the costs of planning, design,
and/or construction of certain public facilities and improvements relating to its wastewater
system, including the planning/design of primary sedimentation tanks, fixed film reactors, and
the laboratory/environmental service building, and the construction of a sludge treatment and
load-out facility (the “Projects”) that were identified in the Regional Water Quality Control
Plant’s Long Range Facility Plan.
B. The City intends to finance the planning, design, and/or construction of the
Projects or portions of the Projects with moneys (“Project Funds”) provided by the State of
California, acting by and through the State Water Resources Control Board (the “Water Boards”).
C. Section 603(d)(1)(C) of the Federal Clean Water Act Amendments require each
financing recipient to establish one or more pledged sources of revenue for Clean Water State
Revolving fund (CWSRF) financial assistance.
D. Revenue will be considered pledged when the City adopts a resolution
committing a source of funds for repayment.
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The City of Palo Alto hereby pledges Net Revenues of its Wastewater
Treatment enterprise fund to repayment of any and all Clean Water State Revolving Fund
financing incurred for CWSRF Project No. 8104, including the planning/design of primary
sedimentation tanks, fixed film reactors, and a laboratory/environmental service building, and
CWSRF Project No. 8091-110, including the design and construction of a sludge dewatering and
load-out facility. Net Revenues of the City’s Wastewater Treatment enterprise, and other terms
relevant to this action, are defined as follows:
"Net Revenues" means, with respect to the Wastewater Treatment enterprise, for
any period of computation, the amount of the Gross Revenues received from the Wastewater
Treatment enterprise during such period, less the amount of Maintenance and Operation Costs
of the Wastewater Treatment enterprise becoming payable during such period.
"Gross Revenues" means, for any period of computation, all gross charges received
for, and all other gross income and revenues derived by the City from, the ownership or
operation of the Wastewater Treatment enterprise or otherwise arising from the Wastewater
Treatment enterprise during such period, including but not limited to (a) all Charges received by
NOT YET APPROVED
160928 jb 6053827 2
the City for use of the Wastewater Treatment enterprise, (b) all receipts derived from the
investment of funds, (c) transfers from (but exclusive of any transfers to) any stabilization
reserve funds, and (d) all moneys received by the City from other entities whose customers are
served pursuant to contracts between those entities and the City.
"Maintenance and Operation Costs" means the reasonable and necessary costs
spent or incurred by the City for maintaining and operating the Wastewater Treatment
enterprise, calculated in accordance with sound accounting principles, including the cost of
supply of water, gas and electric energy under contracts or otherwise, the funding of
reasonable reserves, and all reasonable and necessary expenses of management and repair and
other expenses to maintain and preserve the Wastewater Treatment enterprise in good repair
and working order, and including all reasonable and necessary administrative costs of the City
attributable to the Wastewater Treatment enterprise and any financing instruments incurred to
finance improvements to the Wastewater Treatment enterprise, such as salaries and wages and
the necessary contribution to retirement of employees, overhead, insurance, taxes (if any),
expenses, compensation and indemnification of any bond trustee or other lender, and fees of
auditors, accountants, attorneys or engineers, and including all other reasonable and necessary
costs of the City or charges required to be paid by it to comply with the terms of any financing
instrument related to the Wastewater Treatment enterprise, but excluding depreciation,
replacement and obsolescence charges or reserves therefor and amortization of intangibles or
other bookkeeping entries of a similar nature.
"Charges" means fees, tolls, assessments, rates and rentals prescribed under
applicable law by the City Council for the services and facilities of the Wastewater Treatment
enterprise.
This pledged source of revenue shall remain in effect until such financing is fully
discharged unless modification or change of such dedication is approved in writing by the State
Water Resources Control Board.
SECTION 2: The Council’s pledge of the revenues to repay State Revolving Fund
financing for the above-referenced projects does not meet the definition of a project for the
purposes of the California Environmental Quality Act, under Public Resources Code Section
21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental
activity which will not cause a direct or indirect physical change in the environment. Council
approved an Initial Study/Mitigated Negative Declaration for the sludge-dewatering and
loadout facility project on March 28, 2016 (Staff Report ID# 6424).
/ /
/ /
/ /
/ /
NOT YET APPROVED
160928 jb 6053827 3
Implementation of the primary sedimentation tanks, fixed film reactors, and the
laboratory/environmental service building projects is subject to future CEQA analysis.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
_________________________ ______________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
__________________________ ______________________________
Senior Deputy City Attorney City Manager
______________________________
Director of Public Works
______________________________
Director of Administrative Services
Attachment D
AMENDMENT NO. 1 TO
PROJECT FINANCE AGREEMENT
STATE REVOLVING FUND PROJECT NO. C-06-5044-110 AGREEMENT NO. 09-814-550
This Amendment No. 1 to Project Finance Agreement (including all exhibits and attachments
hereto, this “Amendment No. 1”) is dated as of ____, 2016, and is by and between the State Water Resources Control Board, an administrative and regulatory agency of the State of California (the “State Water Board”), and the City of Palo Alto, a charter city duly organized and
existing under the laws of the State of California (the “Recipient”). WITNESSETH
WHEREAS, the State Water Board and the Recipient previously entered into Project Finance Agreement No. 09-814-550 (the “Original Agreement”) to provide financing for the Project
described therein;
WHEREAS, the Original Agreement provides that the Recipient’s Obligation under the Original
Agreement is secured by a lien on and pledge of Net Revenues in priority as specified in Exhibit F to the Original Agreement;
WHEREAS, Exhibit D of the Original Agreement provides that that the Recipient’s obligations under the Original Agreement shall be secured on a parity with the outstanding 1999 Series A
Revenue Bonds; WHEREAS, the State Water Board and the Recipient wish to amend Exhibits D and F to correct
the priority relationship of the Obligation to other System Obligations; NOW, THEREFORE, in consideration of the premises and of the mutual representations,
covenants and agreements herein set forth, the State Water Board and the Recipient, each binding itself, its successor and assigns, do mutually promise, covenant and agree as follows:
ARTICLE I
DEFINITIONS
All capitalized terms used in this Amendment No. 1 and not defined in this Amendment No. 1
have the meaning given such terms in the Original Agreement.
ARTICLE II
AMENDMENT OF THE ORIGINAL AGREEMENT 2.1 Section D of the Original Agreement is hereby amended and restated in its entirety as
shown on Attachment 1.
2.2 Section F of the Original Agreement is hereby amended and restated in its entirety as shown on Attachment 2.
ARTICLE III
MISCELLANEOUS
3.1 In the event of any conflict between the Original Agreement and this Amendment No. 1, the terms of this Amendment No. 1 shall govern. Otherwise, the Original Agreement shall remain in full force and effect.
3.2 This contract is governed by and shall be interpreted in accordance with the laws of the State of California.
3.3 The State Water Board and the Recipient hereby agree that any action arising out of this
Amendment No. 1 shall be filed and maintained in the Superior Court in and for the County of
Sacramento, California, or in the United States District Court in and for the Eastern District of California.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto.
CITY OF PALO ALTO
By:
Name: Title:
Date:
STATE WATER RESOURCES CONTROL BOARD
By:
Name:
Title:
Date:
City of Palo Alto Amendment No. 1 to
Agreement No.: 09-814-550
Project No.: C-06-5044-110
Attachment 1 AMENDMENT OF EXHIBIT D
Exhibit D of the Original Agreement is hereby amended and restated in its entirety as follows:
EXHIBIT D -- SPECIAL CONDITIONS Special condition as follows:
D.1 The financing agreement shall be subordinate to the outstanding 1999 Series A
Revenue Bonds; and
D.2 The financing agreement shall be subordinate to the outstanding 1995 Series A
Revenue Bonds; and
D.3 The City of Palo Alto shall fund a reserve fund of one year’s debt service and maintain it
throughout the term of the financing agreement.
Attachment 2 AMENDMENT OF EXHIBIT F
Exhibit F of the Original Agreement is hereby amended and restated in its entirety as follows:
EXHIBIT F -- SCHEDULE OF SYSTEM OBLIGATIONS
Except for the following and the Obligation evidenced by this Agreement, the Recipient certifies that it has no outstanding System Obligations:
The following outstanding debt is senior to the Obligation: Title Interest Rate Total Amount Amount Remaining End Date
1995 Utility
Revenue Bonds
5-0-6.25% $8,640,000 $5,650,000 June 1, 2020
1999 Utility
Revenue Bonds
3.25-5.25% $17,735,000 $14,670,000 June 1, 2024
The following outstanding debt is on parity with the Obligation:
Title
Interest
Rate
Total
Amount
Amount
Remaining
End
Date
Mountain
View/Moffett Area Reclaimed
Water Pipeline
Project SRF Contract #07-
814-550-0
Project #C-06-4132-110
0%* $9,000,000 $9,000,000 June 30, 2029
* Local Match Financing
The following outstanding debt is subordinate to the Obligation:
Title Interest Rate Total Amount Amount Remaining End Date
Not Applicable
ADDENDUM NO. EIGHT TO THE BASIC AGREEMENT
BETWEEN THE CITY OF PALO ALTO, THE CITY OF MOUNTAIN VIEW AND THE
CITY OF LOS ALTOS FOR THE ACQUISITION, CONSTRUCTION AND
MAINTENANCE OF A JOINT SEWER SYSTEM This Addendum No. Eight (8) to the Basic Agreement for the Acquisition, Construction
and Maintenance of a Joint Sewer System is made and entered into on
_______________________, by and among the CITY OF PALO ALTO (“Palo Alto”), the CITY
OF MOUNTAIN VIEW (“Mountain View”), and the CITY OF LOS ALTOS (“Los Altos”) (individually, a “Party”, collectively, the “Parties”), all municipal corporations under the laws of the State of California.
R E C I T A L S:
A. The Parties have entered into that certain Basic Agreement Between the City of Palo Alto, the City of Mountain View and the City of Los Altos for the Acquisition,
Construction, and Maintenance of a Joint Sewer System, executed on October 10, 1968, as
amended by the Addenda described below (collectively, the “Basic Agreement”). The Basic
Agreement has been amended seven times by addenda, as follows: Addendum No. One (1) to Basic Agreement Between the Cities of Palo Alto, Mountain View, and Los Altos for Acquisition, Construction and Maintenance of a Joint Sewer System, dated as of December 5,
1977; Addendum No. Two (2) to Basic Agreement Between the Cities of Palo Alto, Mountain
View, and Los Altos for Acquisition, Construction and Maintenance of a Joint Sewer System
dated as of January 14, 1980; Addendum No. Three (3) to an Agreement By and Between the Cities of Palo Alto, Mountain View, and Los Altos for Acquisition, Construction and Maintenance of a Joint Sewer System, dated as of April 9, 1985; Addendum No. Four (4) to the
Agreement By and Between the Cities of Mountain View, Los Altos, and Palo Alto as further
amended and dated May 30, 1991; Addendum No. Five (5) to Basic Agreement Between the
Cities of Palo Alto, Mountain View, and Los Altos for Acquisition, Construction and Maintenance of a Joint Sewer System, dated as of July 31, 1992; Addendum No. Six (6) to Basic
Agreement Between the City of Palo Alto, the City of Mountain View, and the City of Los Altos
for Acquisition, Construction and Maintenance of a Joint Sewer System dated as of March 16,
1998; and Addendum No. Seven (7) to Basic Agreement Between the City of Palo Alto, the City
of Mountain View, and the City of Los Altos for Acquisition, Construction and Maintenance of a Joint Sewer System dated as of April 15, 2009 (collectively, the “Addenda”).
B. Palo Alto owns and operates the sanitary sewerage treatment and disposal works
and system (the “Joint System”) pursuant to the Basic Agreement, and is responsible for making
capital additions to the Joint System. Under the Basic Agreement, any major capital additions for the replacement of obsolete or worn-out units require an agreement by the Parties amending
the Basic Agreement. The Parties now desire to agree upon and implement projects to improve
the Joint System by planning and designing the rehabilitation of the primary sedimentation tanks,
the fixed film reactors, a new laboratory/Environmental Service building, and constructing and
implementing a sludge dewatering and load-out facility (individually, “Project”, collectively, the “Projects”). The Parties also agree to provide for the sharing of costs associated with the
Projects. The Projects will become part of the regional water quality control plant (the “Plant”),
which is owned and operated by Palo Alto as part of the Joint System.
NOW, THEREFORE, in consideration of the terms, conditions and covenants set forth in this
Addendum No. Eight (8), the Basic Agreement is hereby amended, as follows:
Section 2. Paragraph 38 is hereby added to the Basic Agreement to read, as follows: “38. IMPLEMENTATION OF THE PROJECTS. Palo Alto, Mountain View,
and Los Altos hereby approve the Projects for planning/design of the primary
sedimentation tanks, the fixed film reactors, a new laboratory/Environmental Service
building, and the design/construction of a sludge dewatering and load-out facility (the “Projects”). Each Party shall pay its share of the Projects Costs, in proportion to the capacity it owns in the Joint System or portion thereof as shown in Exhibit “H” to
Addendum No. Six (6) to the Basic Agreement. “Project Costs” means all costs
incurred in connection with the planning, design, construction and implementation of
the Projects. Without limiting the generality of the foregoing, Project Costs shall include, but not be limited to: design, engineering, and other consultants’ fees and costs, including fees incurred pursuant to agreements with engineers, contractors and
other consulting, design and construction professionals; environmental analysis and
approval costs, including cost of compliance with the California Environmental
Quality Act; deposits, applicable permit fees; all costs to apply for and secure necessary permits from all required regional, state, and federal agencies; plan check fees, and inspection fees; construction costs; initial maintenance; attorneys’ fees and
costs; insurance; interest from the date of payment on any contracts.
The Parties authorize Palo Alto to pursue State Revolving Fund (“SRF”) loans from the State Water Resources Control Board (“SWRCB”) to fund the costs of the Projects. The maximum amount of the SRF planning/design loan sought for the
planning/design of the primary sedimentation tanks, the fixed film reactors, and a new
laboratory/Environmental Service building will be $6.75 million. The maximum
amount of the SRF construction loan sought for the design/construction of a sludge dewatering and load-out facility will be $28 million. The loan will have a thirty-year
repayment term. The repayments of the SRF loan shall be treated in the same manner
as debt services under the Basic Agreement and its Addenda, and repaid by the
Parties in the same proportionate shares as shown on Exhibit “H” to Addendum No.
Six (6) to the Basic Agreement. The Parties further agree that, if necessary, each Party shall propose to raise their sewer use rates for the repayment of the SRF loan,
operations, and/or maintenance of the Projects, following any appropriate process
executed under California Constitution article XIII C and D (Proposition 218).
If the SWRCB terminates its loan commitment unexpectedly following execution of the planning and/or construction contract(s) for the Projects or the Project, Palo Alto
shall notify the Parties promptly. Following notification of the termination of the
SRF, the Parties shall meet in a timely manner to discuss alternative funding sources
and strategies for completion of the Projects. If the Parties are unable to agree on
new funding sources in a timely manner, then Palo Alto shall have the right to terminate the Project or the Projects.
The Parties shall remain responsible for Project costs and loans incurred, whether
before or after termination of the Project/Projects, in connection with the termination
of the Project planning/design/construction contract, in the same proportion to each
organization’s share of plant capacity, as stated in Exhibit “H” to Addendum No. Six
(6) of the Basic Agreement. Total project costs shall not exceed the authorized
maximum SRF loan approved by Parties without prior approval of each party’s governing body. Unless earlier terminated, the obligations and responsibilities of the Parties shall commence with the execution of this addendum No. Eight and be in
force for the term of the SRF loan.
Mountain View and Los Altos shall pay their respective shares of any Project Costs within thirty (30) business days of receipt of the quarterly billing statement sent by Palo Alto. Palo Alto shall not send more than one invoice in any thirty-day period. If
a Party disputes the correctness of an invoice, it shall pay the invoice in full and the
dispute shall be resolved after payment in accordance with Section 19 of the Basic
Agreement, and shall not offset against any payment due.
Section 1. Paragraph 27. TERM. is amended to read as follows:
The Basic Agreement shall commence upon execution and will terminate on
December 31, 2060, provided that any party hereto who wishes to withdraw from the Basic Agreement shall tender written notice of withdrawal at least ten (10) years preceding the date of withdrawal.
Section 3. Except as modified herein, the Basic Agreement shall remain unchanged, and is
hereby ratified and confirmed. [SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have by their duly authorized representatives
executed this Addendum as of the date first written above.
ATTEST:
__________________________________
City Clerk
APPROVED AS TO FORM:
__________________________________
Deputy City Attorney
APPROVED AS TO CONTENT:
__________________________________ City Manager
CITY OF PALO ALTO By: __________________________________
Mayor
ATTEST:
__________________________________ City Clerk
APPROVED AS TO FORM:
__________________________________
City Attorney
APPROVED AS TO CONTENT:
__________________________________
FINANCIAL APPROVAL:
________________________________
Finance and Administrative Services Director
CITY OF MOUNTAIN VIEW
By: __________________________________ City Manager
ATTEST:
__________________________________
City Clerk
APPROVED AS TO FORM:
__________________________________ City Attorney
APPROVED AS TO CONTENT:
__________________________________ City Manager
CITY OF LOS ALTOS
By: __________________________________
Mayor
AMENDMENT NO. SIX TO
CONTRACT RESTATEMENT AND AMENDMENT NO. C237
BETWEEN THE CITY OF PALO ALTO AND
THE EAST PALO ALTO SANITARY DISTRICT
This Amendment No. Six (6) to the Contract Restatement and Amendment No. C237 is made and entered into on _______________________, by and between the CITY OF PALO
ALTO, a chartered municipal corporation of the State of California (the “City”) and East Palo
Alto Sanitary District, a public corporation under the laws of the State of California (the
“District”) (individually, a “Party”, collectively, the “Parties”).
R E C I T A L S:
A. On March 11, 1940, the Parties entered into a contract, “Contract Restatement and
Amendment No. C237,” whereby the City agreed to provide treatment of the District’s wastewater, which contract was subsequently amended by amendments dated September 10, 1963, June 25, 1964, and May 1971 (the “Original Agreement”);
B. On October 10, 1968, the City joined with the cities of Mountain View and Los Altos to
fund the construction, operation, and maintenance of a regional sewage treatment plant
(the “Treatment Plant”) that is part of a sewerage system (“System”), owned and operated by the City;
C. In May 1971, the City and District agreed that the District’s share of the
primary/secondary design capacity of the Treatment Plant would be 2.25 mgd (ADWF).
The Treatment Plant was subsequently expanded to include tertiary treatment, and the
District’s share of tertiary capacity was established at 1.9 mgd (ADWF);
D. On March 16, 1989, the Parties restated and amended the Original Agreement (the “1989 Agreement”) to provide for the District’s participation in financing an expansion of the
Treatment Plant’s capacity from 35.0 primary/secondary capacity to 38.0 mgd (ADWF)
(40.0 AAF) and from a tertiary capacity of 30.6 mgd to 38.0 mgd ADWF (40.0 AAF);
E. On May 30, 1989, the Parties amended the 1989 Agreement to revise the billing and payment provisions in Paragraph 6.b of the 1989 Agreement (“Amendment No. 1”);
F. On December 18, 1989, the Parties amended the 1989 Agreement to provide specific
measures and procedures for complying with federal and state laws and regulations
regarding wastewater collection, transmission, treatment and disposal in Paragraph 9 of
the 1989 Agreement (“Amendment No. 2”);
G. On December 7, 1998, the Parties amended the 1989 Agreement to add Paragraph 26 to
permit the rehabilitation of the City’s incinerators (“Amendment No. 3”);
H. On November 19, 2003, the Parties executed an agreement entitled “Settlement and
Release Agreement” and amended Paragraphs 6.a and 8 of the 1989 Agreement on June
2, 2005 to be consistent with the Settlement and Release Agreement (“Amendment No. 4”);
I. On March 19, 2009, the Parties amended the 1989 Agreement to add Paragraph 28,
which provided for the funding, design, and construction of an ultra violet treatment
system at the Treatment Plan (“Amendment No. 5”). The 1989 Agreement and Amendment Nos. 1-5 are referred to collectively, herein as the “Contract.”
J. The City owns and operates the System pursuant to the Contract, is responsible for
making capital additions to the System, and intends to renovate the Treatment Plant. The
Parties desire to amend the Contract to clarify the indemnity provision applicable to the
Contract and to set forth the terms of their agreement for the sharing of costs associated with the planning and design of the rehabilitation of the primary sedimentation tanks, the fixed film reactors, a new laboratory/Environmental Service building, and the design and
construction of a sludge dewatering and load-out facility (individually, the “Project”,
collectively, the “Projects”). The Projects are set forth in more detail in Exhibit I,
attached to this Amendment No. Six. The Projects will become part of the Treatment Plant, which is owned and operated by the City as part of the System.
NOW, THEREFORE, in consideration of the terms, conditions and covenants set forth in this
Amendment No. Six (6), the Contract is hereby amended as follows:
Section 1. Paragraph 29 is hereby added to the Contract to read, as follows:
“29. IMPLEMENTATION OF THE PROJECTS. City and District hereby
approve the Projects. Each Party shall pay its share of Project Costs for the Projects
in proportion as it owns capacity in the Joint System or portion thereof, as shown in Exhibit “H” to Amendment No. Three (3) to the Contract. “Project Costs” means all costs incurred in connection with the planning, design, construction and
implementation of the Projects. Without limiting the generality of the foregoing,
Project Costs shall include, but not be limited to: design, engineering, and other
consultants’ fees and costs, including fees incurred pursuant to agreements with engineers, contractors and other consulting, design and construction professionals;
environmental analysis and approval costs, including cost of compliance with the
California Environmental Quality Act; deposits, applicable permit fees; all costs to
apply for and secure necessary permits from all required regional, state, and federal
agencies; plan check fees, and inspection fees; construction costs; initial maintenance; attorneys’ fees and costs; insurance; interest from the date of payment on any
contracts.
The Parties authorize the City to pursue State Revolving Fund (“SRF”) loans from the
State Water Resources Control Board (“SWRCB”) to fund the costs of the Projects. The maximum amount of the SRF planning/design loan sought for the
planning/design of the primary sedimentation tanks, the fixed film reactors, and a new
laboratory/Environmental Service building will be $6.75 million. The maximum
amount of the SRF construction loan sought for the design/construction of a sludge
dewatering and load-out facility will be $28 million. The loan will have a thirty year repayment term. The SRF loan shall be repaid in the same proportionate share, as
shown on Exhibit “H” to Amendment No. Three (3) to the Contract. The Parties
further agree that, if necessary, each Party shall raise their sewer use rates for the
repayment of the SRF loan, operations, and/or maintenance of the Project, following any appropriate process under California Constitution article XIII C and D (Proposition 218).
If the SWRCB terminates its loan commitment unexpectedly following execution of
the planning and/or construction contract(s) for a Project or the Projects, Palo Alto shall notify the Parties promptly. Following notification of the termination of the SRF, the Parties shall meet in a timely manner to discuss alternative funding sources
and strategies for completion of the Projects. If the Parties are unable to agree on
new funding sources in a timely manner, then Palo Alto shall have the right to
terminate the Project or the Projects immediately. The Parties shall remain responsible for Project Costs and loans incurred, whether
before or after termination of the Project, in connection with the termination of the
Project construction contract, in the same proportion to each organization’s share, as
shown on Exhibit “H” to Amendment No. Three (3) to the Contract. Unless earlier terminated, the obligations and responsibilities of the Parties shall commence with the execution of this amendment and be in force for the life of the SRF loan.
Pursuant to Paragraph 6.c of the Contract, the City will supply the District with all
information supporting the City’s determinations regarding the Project Costs, including but not limited to, information relating to the computation of the relative shares of each organization. The City will make available all such information
(historical and current) to the District’s auditors, on request.
District shall pay its share of any Project Costs within ten (10) business days of receipt of the quarterly billing statement sent by the City. If District disputes the
correctness of an invoice, it shall pay the invoice in full and the dispute shall be
resolved after payment in accordance with the Contract, and shall not offset against
any payment due. The Parties shall undertake any dispute resolution in accordance
with Paragraph 10 of the Contract.
Section 2. Paragraph 19 of the Contract and Paragraph 7 of Amendment No. 2 are hereby
deleted and replaced with the following:
Indemnity. Each of the Parties shall defend, indemnify and hold the other party harmless of and from all claims, liabilities, actions, causes of action, proceedings, damages, fines,
penalties, costs, expenses, attorneys’ fees or any other forms of pecuniary or non-
pecuniary relief which result from:
(i) That party's violation of laws and regulations governing the collection, transmission, treatment and disposal of wastewater or wastewater byproducts,
including, without limitation, laws and regulations governing disruption of
treatment processes or operations, degradation of sludge quality, and NPDES
permit violations attributable to the conduct of that party or other persons, including industrial waste dischargers for whom that party exercises regulatory responsibility.
(ii) That party's failure to exercise reasonable care in the operation and
maintenance of its wastewater facilities.
Section 3. Except as modified herein, the Contract shall remain unchanged, and is hereby ratified and confirmed.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment No. Six to the Contract Restatement and Amendment No. C237
Between the City of Palo Alto and The East Palo Alto Sanitary District as of the date first written
above.
ATTEST:
__________________________________ City Clerk
APPROVED AS TO FORM:
__________________________________ Deputy City Attorney
APPROVED AS TO CONTENT:
__________________________________ City Manager
CITY OF PALO ALTO
By: __________________________ Mayor
ATTEST:
__________________________________
APPROVED AS TO FORM:
__________________________________ Attorney
APPROVED AS TO CONTENT:
__________________________________
EAST PALO ALTO SANITARY DISTRICT
By: __________________________
Name: .
Title: .
EXHIBIT I
PROJECT DESCRIPTION / DEPICTION
ATTACHMENT G
AMENDMENT NO. FOUR TO CONTRACT NO. C869
BETWEEN THE CITY OF PALO ALTO AND THE BOARD OF
TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY
This Amendment No. Four (4) to the Contract is made and entered into on
_______________________, by and between the CITY OF PALO ALTO, a chartered city and a
chartered municipal corporation of the State of California (“City”) and the BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate
powers under the laws of the State of California (“Stanford”) (individually, a “Party”;
collectively, the “Parties”).
R E C I T A L S:
A. The Parties have entered into that certain Contract Between Palo Alto and
Stanford, executed on November 30, 1956, as amended by the Addendum and Amendments
described below (collectively, the “Contract”). The Contract has been amended three times as
follows: Addendum No. One (1) to the Contract Between the City of Palo Alto and Stanford, dated as of June 11, 1971; Amendment No. Two (2) to the Contract Between the City of Palo
Alto and Stanford, dated as of November 2, 1998; and Amendment No. Three (3) to the
Contract Between the City of Palo Alto and Stanford, dated as of March 16, 2009.
B. Palo Alto owns and operates the sewerage system (the “System”) pursuant to the Contract, and is responsible for making capital additions to the System. Under the Contract,
prior to commencement of construction of any capital additions or enlargements of the System,
City and Stanford shall agree upon the terms of payment by Stanford of its proportionate cost.
The Parties now desire to agree upon the sharing of costs associated with the planning and design
of the rehabilitation of the primary sedimentation tanks, the fixed film reactors, a new laboratory/Environmental Service building, and the design and construction of a sludge
dewatering and load-out facility (individually, the “Project”, collectively, the “Projects”). The
Projects will become part of the regional water quality control plant (the “Plant”), which is
owned and operated by Palo Alto as part of the System.
NOW, THEREFORE, in consideration of the terms, conditions and covenants set forth in this
Amendment No. Four (4), the Contract is hereby amended as follows:
Section 1. Paragraph 24 is hereby added to the Contract to read, as follows:
“24. IMPLEMENTATION OF THE PROJECTS. Palo Alto and Stanford hereby
approve the planning/design of the rehabilitation of the primary sedimentation tanks,
the fixed film reactors, a new laboratory/Environmental Service building, and the
design/construction of a sludge dewatering and load-out facility (individually, the
“Project”, collectively, the “Projects”). Each Party shall pay its share of the Project Costs for the Projects in proportion to the capacity it owns in the Joint System or
portion thereof as shown in Exhibit “H” to Amendment No. 2 to the Contract.
“Project Costs” means all costs incurred in connection with the planning, design,
construction and implementation of the Projects. Without limiting the generality of
the foregoing, Project Costs shall include, but not be limited to: design, engineering, and other consultants’ fees and costs, including fees incurred pursuant to agreements with engineers, contractors and other consulting, design and construction
professionals; environmental analysis and approval costs, including cost of
compliance with the California Environmental Quality Act; deposits, applicable
permit fees; all costs to apply for and secure necessary permits from all required regional, state, and federal agencies; plan check fees, and inspection fees; construction costs; initial maintenance; attorneys’ fees and costs; insurance; interest
from the date of payment on any contracts.
The Parties authorize Palo Alto to pursue State Revolving Fund (“SRF”) loans from the State Water Resources Control Board (“SWRCB”) to fund the costs of the Projects. The maximum amount of the SRF planning/design loan sought for the
planning/design of the primary sedimentation tanks, the fixed film reactors, and a new
laboratory/Environmental Service building will be $6.75 million. The maximum
amount of the SRF construction loan sought for the design/construction of a sludge dewatering and load-out facility will be $28 million. The loan will have a thirty-year repayment term. The SRF loan shall be repaid by the Parties in the same
proportionate shares as shown on Exhibit “H” to Amendment No. Two to the
Contract.
If the SWRCB terminates its loan commitment unexpectedly following execution of the planning and/or construction contract(s) for the Project or the Projects, Palo Alto
shall notify the Parties promptly. Following notification of the termination of the
SRF, the Parties shall meet in a timely manner to discuss alternative funding sources
and strategies for completion of the Projects. If the Parties are unable to agree on new funding sources in a timely manner, then Palo Alto shall have the right to terminate the Project or Projects immediately.
The Parties shall remain responsible for Project Costs and loans incurred, whether
before or after termination of the Project/Projects, in connection with the termination of the Project planning/design/construction contract(s), in the same proportion to each organization’s share, as shown on Exhibit “H” to Amendment No. Two (2) to the
Contract. Unless earlier terminated, the obligations and responsibilities of the Parties
shall commence with the execution of this Amendment No. Four and be in force for
the term of the SRF loan.
Stanford shall pay its share of any Project Costs within ten (10) business days of
receipt of the annual billing statement sent by Palo Alto. If Stanford disputes the
correctness of an invoice, it shall pay the invoice in full and the dispute shall be
resolved after payment in accordance with the Contract, and shall not offset against
any payment due.
Section 2. Except as modified herein, the Contract shall remain unchanged, and is hereby
ratified and confirmed.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have by their duly authorized representatives
executed this Amendment as of the date first written above.
ATTEST:
__________________________________ City Clerk
APPROVED AS TO FORM:
Deputy City Attorney
APPROVED AS TO CONTENT:
__________________________________
City Manager
CITY OF PALO ALTO
By: __________________________________ Mayor
ATTEST:
__________________________________
APPROVED AS TO FORM:
__________________________________ Attorney
APPROVED AS TO CONTENT:
__________________________________
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
By: __________________________________ Name: __________________________________
Title: __________________________________
160928 jb 6053827 1
Resolution No. 9631
Resolution of the Council of the City of Palo Alto Establishing One or
More Pledged Sources of Revenue For Repayment of Funding Pursuant
to The Federal Clean Water Act Amendments
R E C I T A L S
A. The City of Palo Alto City
and/or construction of certain public facilities and improvements relating to its wastewater
system, including the planning/design of primary sedimentation tanks, fixed film reactors, and
the laboratory/environmental service building, and the construction of a sludge treatment and
loadout facility that were identified in the Regional Water Quality Control
Long Range Facility Plan.
B. The City intends to finance the planning, design, and/or construction of the
Projects or portions of the Projects
.
C. Section 603(d)(1)(C) of the Federal Clean Water Act Amendments require each
financing recipient to establish one or more pledged sources of revenue for Clean Water State
Revolving fund (CWSRF) financial assistance.
D. Revenue will be considered pledged when the City adopts a resolution
committing a source of funds for repayment.
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The City of Palo Alto hereby pledges Net Revenues of its Wastewater
Treatment enterprise fund to repayment of any and all Clean Water State Revolving Fund
financing incurred for CWSRF Project No. 8104, including the planning/design of primary
sedimentation tanks, fixed film reactors, and a laboratory/environmental service building, and
CWSRF Project No. 8091110, including the design and construction of a sludge dewatering and
loadout facility , and other terms
relevant to this action, are defined as follows:
"Net Revenues" means, with respect to the Wastewater Treatment enterprise, for
any period of computation, the amount of the Gross Revenues received from the Wastewater
Treatment enterprise during such period, less the amount of Maintenance and Operation Costs
of the Wastewater Treatment enterprise becoming payable during such period.
"Gross Revenues" means, for any period of computation, all gross charges received
for, and all other gross income and revenues derived by the City from, the ownership or
operation of the Wastewater Treatment enterprise or otherwise arising from the Wastewater
Treatment enterprise during such period, including but not limited to (a) all Charges received by
DocuSign Envelope ID: 20B08DF8-BEC8-4A2E-94C6-F71DD76B96EF
160928 jb 6053827 2
the City for use of the Wastewater Treatment enterprise, (b) all receipts derived from the
investment of funds, (c) transfers from (but exclusive of any transfers to) any stabilization
reserve funds, and (d) all moneys received by the City from other entities whose customers are
served pursuant to contracts between those entities and the City.
"Maintenance and Operation Costs" means the reasonable and necessary costs
spent or incurred by the City for maintaining and operating the Wastewater Treatment
enterprise, calculated in accordance with sound accounting principles, including the cost of
supply of water, gas and electric energy under contracts or otherwise, the funding of
reasonable reserves, and all reasonable and necessary expenses of management and repair and
other expenses to maintain and preserve the Wastewater Treatment enterprise in good repair
and working order, and including all reasonable and necessary administrative costs of the City
attributable to the Wastewater Treatment enterprise and any financing instruments incurred to
finance improvements to the Wastewater Treatment enterprise, such as salaries and wages and
the necessary contribution to retirement of employees, overhead, insurance, taxes (if any),
expenses, compensation and indemnification of any bond trustee or other lender, and fees of
auditors, accountants, attorneys or engineers, and including all other reasonable and necessary
costs of the City or charges required to be paid by it to comply with the terms of any financing
instrument related to the Wastewater Treatment enterprise, but excluding depreciation,
replacement and obsolescence charges or reserves therefor and amortization of intangibles or
other bookkeeping entries of a similar nature.
"Charges" means fees, tolls, assessments, rates and rentals prescribed under
applicable law by the City Council for the services and facilities of the Wastewater Treatment
enterprise.
This pledged source of revenue shall remain in effect until such financing is fully
discharged unless modification or change of such dedication is approved in writing by the State
Water Resources Control Board.
SECTION 2:
financing for the abovereferenced projects does not meet the definition of a project for the
purposes of the California Environmental Quality Act, under Public Resources Code Section
21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental
activity which will not cause a direct or indirect physical change in the environment. Council
approved an Initial Study/Mitigated Negative Declaration for the sludgedewatering and
loadout facility project on March 28, 2016 (Staff Report ID# 6424).
/ /
/ /
/ /
/ /
DocuSign Envelope ID: 20B08DF8-BEC8-4A2E-94C6-F71DD76B96EF
160928 jb 6053827 3
Implementation of the primary sedimentation tanks, fixed film reactors, and the
laboratory/environmental service building projects is subject to future CEQA analysis.
INTRODUCED AND PASSED: October 17, 2016
AYES: BERMAN, BURT, DUBOIS, FILSETH, HOLMAN, KNISS, SCHARFF, SCHMID, WOLBACH
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Senior Deputy City Attorney City Manager
Director of Public Works
Director of Administrative Services
DocuSign Envelope ID: 20B08DF8-BEC8-4A2E-94C6-F71DD76B96EF
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On October 17, 2016, Council adopted three resolutions authorizing the City Manager to file
applications for SRF loans for construction of the sludge dewatering and truck load out facility
(CWSRF Project No. 8190-110) and planning/design of the laboratory/environmental services
building, the primary sedimentation tank rehabilitation, and fixed film reactor rehabilitation
projects (CWSRF Project No. 8104-110), designating the amount of project expenditures to be
reimbursed by SRF proceeds, pledging repayment revenue for the SRF loans, and authorizing
amendments with RWQCP Partners to obligate their SRF loan repayment (SR#7144 I
Attachment B).
DISCUSSION
Section 603 of the Federal Clean Water Act Amendments requires each financing recipient to
establish one or more pledged sources of revenue for SRF assistance. Resolution No. 9631
pledged revenues of the City's Wastewater Treatment enterprise fund for repayment of SRF
financing for CWSRF Project No. 8190-110 and CWSRF Project No. 8104-110. After Council's
adoption of Resolution No. 9631, and the SWRCB's review of the City's SRF application, the
SWRCB determined that the City must also pledge Wastewater Collection revenues for
repayment of the SRF loans. The dual pledge of funds has been required on past debts,
including SWRCB SRF loans for a 2007 recycled water pipeline project and a 2009 ultraviolet
disinfection facility project as well as the City's 1999 bond issuance for RWQCP and storm drain
improvements. Therefore, staff proposes that Council adopt a new resolution pledging both
funds, and repealing the earlier resolution.
Securing these SRF loans will also allow the City to retire its sludge incinerators, reducing
greenhouse gasses dramatically. All of the five Wastewater Treatment Plant's Partner Agencies
have executed agreements in which they individually agree to repay the Palo Alto Wastewater
Treatment Fund their portion of the State loans, which will be paid annually by the Wastewater
Treatment Fund. Pledging of the Wastewater Collection Fund is consistent with the actions
taken by the Partner agencies.
NEXT STEPS
Construction Contract Bid Opening
SRF Installment Sales Agreement development
Palo Alto Council approval of SRF Installment Sales Agreement
RESOURCE IMPACT
February 2017
February 2017
March 2017
No new additional funds are associated with the adoption of the substitute resolution. Pledging
the Wastewater Collection revenues in addition to Wastewater Treatment revenues is not
anticipated to negatively impact the viability of either fund. Loan expenses, which are directly
paid by the Wastewater Treatment Fund to the State, have been included in budget planning
for each fund. Each of the Wastewater Treatment Plant Partner Agencies has executed
agreements in which they agree to repay their portion of the State loans.
The construction loan for the sludge dewatering and truck loadout facility is estimated to be
$27.8 million with an annual debt service payment required for 30 years. Based on an
Page 2 of 3
estimated 1.8% interest rate, the Palo Alto portion of the debt service is estimated .at $0.458
million per year (37.89% share) and the other five partner agencies portion is estimated at
$0.750 million per year (62.11% share). The estimated $6.75 million planning and design loan
for the primary sedimentation tank rehabilitation, fixed film reactor rehabilitation, an.d the
environmental services/laboratory building is a 10-year loan that can be refinanced into a 30-
year SRF construction loan. Based on an estimated 1.8% interest rate, the Palo Alto portion of
the ten-year debt service payment for the planning loan is estimated at $0.282 million per year
{37.89% share) and the other five partner agencies portion is estimated at $0.462 million per
year {62.11% share) for ten years.
POLICY IMPLICATIONS
Adoption of the resolution does not represent a change in existing policies.
ENVIRONMENTAL REVIEW
The Commission's recommendation that Council approve a revenue pledge resolution to repay
State Revolving Fund financing for the above-referenced Projects does not meet the definition
of a project for the purposes of the California Environmental Quality Act, under Public
Resources Code Section 21065 and CEQA Guidelines Section 15378{b}(S), because it is an
administrative governmental activity which will not cause a direct or indirect physical change in
the environment. Council approved an Initial Study/Mitigated Negative Declaration for the
sludge-dewatering and loadout facility project on March 28, 2016 (Staff Report ID# 6424).
ATTACHMENTS
A. Resolution 9631: Resolution of the Council of the City of Palo Alto Establishing One or
More Pledged Sources of Revenue For Repayment of Funding Pursuant to The Federal
Clean Water Act Amendments
B. Staff Report 7144 Partner Agreements and Resolutions for Sludge Dewatering &
Loadout Facility
C. Adoption of a Resolution Establishing Pledge Sources of Revenue for Repayment of
State Revolving Fund {SRF) Loans for Planning, Design and Construction of Wastewater
Treatment Enterprise Fund Facilities at the Palo Alto Regional Water Quality Control
Plant (RWQCP), a~d Re ealing Resolution No. 9631
PREPARED BY: MES ALLEN, Manager, Water Quality Control Plant
REVIEWED BY: HIL BOBEL, Assistant Director of Public Works
':?:?~Division
APPROVED BY: ~
ED SHIKADA
Utilities General Manager
Page 3 of 3