SUMMARY:
The San Antonio Water System (SAWS) requests that City Council approve:
A. A resolution authorizing the submittal of an application requesting financial assistance from the Texas Water Development Board (TWDB) in the amount not to exceed $75,955,000 through its Drinking Water State Revolving Fund for funding of certain qualified water projects.
B. A Resolution establishing the City's intention to reimburse itself for the prior lawful capital expenditures of funds from the proceeds of tax-exempt obligations not to exceed $75,955,000.
BACKGROUND INFORMATION:
TWDB's Drinking Water State Revolving Fund (DWSRF) provides loans at below-market interest rates for the planning, design, and construction for water infrastructure projects.
In March 2014, TWDB informed SAWS of additional funding available under the DWSRF, and indicated that SAWS' Water Resources Integration Program would qualify for financial assistance through a needs assessment, environmental impact and engineering review. The Water Resources Integration Program (WRIP) consists of approximately 45 miles of water transmission pipeline and a pump station that will convey water from SAWS' Twin Oaks Aquifer Storage and Recovery (ASR), Carrizo and Brackish Desalination programs located at the SAWS Twin Oaks Facility property in south Bexar County to new and existing facilities in western and northwestern Bexar County.
SAWS is expected to receive below market interest rate loans in amounts not to exceed $75,955,000 from the DWSRF. SAWS has previously received funding from TWDB for the planning and design of the WRIP, and the planning, design and construction of the Brackish Groundwater Desalination Project under TWDB's Water Infrastructure Fund.
The process to receive financial assistance under the DWSRF programs consists of the submittal of an application for participation. The acceptance of the application by TWDB is a commitment by TWDB to provide financing for the eligible projects. No financial commitment on SAWS' part is made during the application stage. SAWS will seek additional SAWS Board of Trustee and City Council approval prior to the issuance of any of the bonds relating to these programs.
A reimbursement resolution provides SAWS with the flexibility to use revenues to initially fund project costs. Generally, SAWS can reimburse itself for eligible expenditures made in the 60 days prior to the adoption of the resolution through the issuance of the bonds. SAWS is requesting approval of a reimbursement resolution in an amount not to exceed $75,955,000. The reimbursement resolution complies with the requirements of the Internal Revenue Service and Texas law.
ISSUE:
The resolution authorizing the applications for financial assistance to the TWDB provides an opportunity to receive below-market interest rate loans to finance water projects.
ALTERNATIVES:
Should the application for financial assistance not be submitted, SAWS would miss an opportunity to receive below-market interest rate loans to finance necessary water projects.
FISCAL IMPACT:
The submittal of the application for financial assistance has no fiscal impact to the City. However, the benefit of participation for SAWS in the DWSRF program is a reduction in interest rates of 125 basis points or 1.25% at the time of issuance.
RECOMMENDATION:
City Staff recommends approval of the proposed resolutions.