State Revolving Loan Fund SRF Apps
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MEMORANDUM
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October 31 , 2006
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TO: Honorable Mayor and City Council Members
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FROM:
Michael C. Van Milligen, City Manager
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SUBJECT: State Revolving Loan Applications Submitted
On September 29, 2006, the City of Dubuque submitted six (6) applications totaling
$5,861,371 to the Iowa Department of Natural Resources (DNR) requesting State
Revolving Loan Funds (SRF) to complete construction for current projects and planning
and design work for upcoming projects. The budget included these projects to be
funded with General Obligation (GO) bond financing at estimated interest costs of 4.5%
for 20 years. If the applications are approved, the City would be eligible for 3% interest
plus a .25% annual servicing fee on construction loans for eligible wastewater,
stormwater and drinking water project costs and 0% interest for three years on planning
and design work for future anticipated construction projects.
I respectfully request Mayor City Council approval to apply for the State Revolving Loan
funds and use the funds in place of GO Bond financing if the applications are approved
by the DNR.
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Michael C. Van Milligen
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cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Dawn Lang & Jenny Larson, Budget Directors
Ken TeKippe, Finance Director
Gus Psi hoyos, City Engineer
Deron Muehring, Civil Engineer
Jonathan Brown, Water Pollution Control Plant Manager
Mark Schneider, ECIA Community Development Director
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MEMORANDUM
October 31,2006
TO:
Michael C. Van Milligen, City Manager
FROM:
Dawn Lang, Budget Director
Jenny Larson, Budget Director
SUBJECT: State Revolving Loan Applications Submitted
Introduction
On September 29, 2006, the City of Dubuque submitted six (6) applications to the Iowa
Department of Natural Resources (DNR) requesting State Revolving Loan Funds (SRF)
to complete construction for current projects and planning and design work for
upcoming projects. The budget included these projects to be funded with General
Obligation (GO) bond financing at estimated interest costs of 4.5% for 20 years. If the
applications are approved, the City would be eligible for 3% interest plus a .25% annual
servicing fee on construction loans for eligible wastewater, stormwater and drinking
water project costs and 0% interest for three years on planning and design work for
future anticipated construction projects.
To give an idea of the savings potential in debt service from using this program, the City
would save an estimated $2.8M on debt service over the life of the borrowing relating to
the Stormwater Basin Master Plan alone if all costs going forward are deemed eligible.
These savings are important as costs are escalating at a greater rate then originally
anticipated and there will be reduced gaming revenues to support the stormwater
projects.
Backaround
To be fiscally responsible, the City of Dubuque is constantly looking at ways to complete
projects with the least amount of debt service. Mark Schneider, the Community
Development Director of East Central Intergovernmental Association (ECIA), informed
the City that the State Revolving Loan Fund had changes in their rules that allowed
storrnwater projects to be eligible. The City hired Schneider of ECIA to assist in the
application process. This was important since Mark has existing relationships with the
DNR and experience with the SRF program. Due to changes in the scheduling of DNR
board meetings, the December deadline for the applications was changed to the end of
September 2006.
Discussion
City staff, with the assistance of Mark Schneider, identified eligible planning and design
projects and construction projects to submit to the Iowa DNR for review and approval at
the DNR's December 5th board meeting. Applications were then completed and
submitted for the following projects totaling $5,861,371:
PLANNING AND DESIGN APPLICATIONS FOR FUTURE CONSTRUCTION
1. Water Pollution Control Plant Study - Wastewater Treatment. The study
involves a Plan of Action Study for the Water Pollution Control Plant. It will
look at the current system and identify where changes are required. A major
portion of the study will be associated with sludge disposal techniques.
($85,000).
2. North Fork Catfish Creek Project -- The project involves improvements to the
existing stormwater and sanitary collection systems. Historically, capacity and
hydraulic deficiencies have resulted in street flooding to unsafe levels and
infiltration and inflow to levels that cause the sewer system to surcharge,
backing up into basements. This project involves storm and sanitary utility
funds. ($400,550).
3. Lower Bee Branch Creek Restoration Project. The project involves
quadrupling the conveyance capacity of the existing storm sewer. The
existing sewer is of insufficient capacity to convey runoff from larger
rainstorms resulting in street flooding to unsafe levels and infiltration and
inflow has overwhelmed sanitary sewers contributing to sewage backups into
basements. ($1,040,000).
4. Upper Bee Branch Creek Restoration Project. The project involves the day-
lighting or restoration of approximately 2,180 feet of the buried Bee Branch
Creek. The existing sewer is of insufficient capacity to convey runoff from
larger rainstorms resulting in street flooding to unsafe levels and infiltration
and inflow has overwhelmed sanitary sewers contributing to sewage backups
into basements. ($617,821).
CONSTRUCTION APPLICATIONS
5. The Asbury Plaza Area Sanitary Sewer Extension project entails the
construction of approximately 6,500 feet of force main and four lift stations to
provide sanitary sewer service to approximately 250 acres currently under
development and without service. ($1,260,000).
6. The West 32nd Street Detention Basin project involves the construction of a
detention basin to alleviate flooding to over 1,000 downstream properties and
subsequent inflow and infiltration of the sanitary sewer system. ($2,458,000).
Action
Applications were submitted in order to meet the deadline, but the City is currently not
committed to borrow through this program. We are respectfully requesting City Council
approval to apply for the State Revolving Loan funds and use the funds in place of GO
Bond financing if the applications are approved by the DNR. This provides opportunity
to reduce debt service costs on large capital projects in the future. Should this be
approved by both City Council and the DNR, we would recommend incorporating this
reduced debt service plan in the FY 08 budget.
We were informed that property acquisition costs were not allowed, but are continuing
to work with the DNR to clarify this fact. We will continue to evaluate other opportunities
to use State Revolving Loan Funds in the future.
Dll/jml
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Dawn Lang & Jenny Larson, Budget Directors
Ken TeKippe, Finance Director
Gus Psihoyos, City Engineer
Deron Muehring, Civil Engineer
Jonathan Brown, Water Pollution Control Plant Manager
Mark Schneider, ECIA Community Development Director