• Budget Information
• History
• Facts & Issues

Budget information

Note: Not entire project budget. See history for full budget details.

FUNDING SOURCE: 2009 American Recovery and Reinvestment Act (ARRA) through the Georgia Environmental Facilities Authority (GEFA) and their Clean Water State Revolving Loan Fund (CWSRLF)

HISTORY

• On December 6, 2006, the Mayor and Commission authorized staff to submit an application to GEFA and to accept, if awarded, $50 million in loans from the Georgia Fund and the Clean Water State Revolving Fund (CWSRF) Programs.
• On June 26, 2007, Mayor Davison received the fully executed Georgia Fund Contract, Loan/Project No. 2006-L52WS, in the amount of $20 million. The Georgia Fund Loan monies were utilized to pay for a portion of the construction cost for the upgrade/expansion of the J.G. Beacham Water Treatment Plant.
  
• On December 3, 2007, Mayor Davison received the fully executed Clean Water State Revolving Fund Contract, Loan/Project No. CWSRF 06-004 Phase 1, in the amount of $15 million. Clean Water State Revolving Funds (CWSRF) were designated to pay for the design and a portion of the construction cost for five (5) Interceptor Sewer Projects with a total combined estimated cost of $32,950,000. The remaining estimated balance of $17,950,000 ($32,950,000 - $15,000,000 = $17,950,000) was intended to be funded by an additional $15 million CWSRF Contract, Loan/Project No. CWSRF 06-004 Phase 2 and $2,950,000 from the Water and Sewer Enterprise Fund. The five (5) Interceptor Sewer Projects proposed for construction were as follows:
  • Trail Creek 1 Interceptor
    
  • Trail Creek 2 Interceptor
    
  • Upper North Oconee Interceptor
    
  • Shoal Creek/Whit Davis Road Pump Station/Force Main
    
  • Barnett Shoals Interceptor
    
• On March 16, 2009, PUD submitted a loan application for CWSRF 06-004 Phase 2, to complete the five (5) Interceptor Sewer Projects listed in History #3.
• On March 24, 2009, GEFA notified PUD that the loan application for CWSRF 06-004 Phase 2, to complete the five (5) Interceptor Projects listed in History #3, would be considered for Stimulus Funding under the American Recovery and Reinvestment Act (ARRA), however the maximum loan amount to any one community was $10 million.
  
• On June 16, 2009, GEFA’s Senior Program Manager advised staff that the GEFA Board had approved Athens-Clarke County’s CWSRF-ARRA Loan (Loan Number: CWSRF 06-004 Phase 2) in the amount of $10 million. The subject loan is from funds provided to the State by the American Recovery and Reinvestment Act (ARRA). The ARRA funding provides for 40% of the loan principal to be forgiven. Therefore, $4 million of the loan amount is a grant to the Unified Government.
• On July 7, the M&C approved a Resolution authorizing ACCUG to borrow $10 million from the Clean Water State Revolving Fund (CWSRF) administered by the Georgia Environmental Facilities Authority (GEFA) to complete the construction of four (4) interceptor projects and authorized the Mayor and appropriate staff to execute all related documents.
• A Notice to Proceed for the construction of these projects must be issued prior to November 1, 2009 to meet ARRA funding requirements (see Facts & Issues for dates).
• Public Utilities received an executed contract from GEFA on October 6, 2009.

FACTS & ISSUES

• Based on ARRA guidelines for Stimulus Funding, the maximum CWSRF-ARRA Loan to any one community is $10 million. In addition, a Notice to Proceed for construction of an approved project must be issued prior to November 1, 2009. Failure to meet this deadline may result in the applicant losing ARRA funding.
  
• The Barnett Shoals Interceptor Project was removed from consideration for funding as a part of the CWSRF-ARRA Loan based on the fact that a Notice to Proceed for project construction could not be issued before the November 1, 2009 deadline. A revised schedule for constructing the Barnett Shoals Interceptor will be established as a part of the update to the PUD Service Delivery Plan scheduled for completion in FY2010.
  
• The $10 million CWSRF–ARRA loan will be utilized to fund completion of construction on the remaining four (4) Interceptor Sewer Projects. A listing of the projects and the projected construction schedules are outlined below:

• GEFA has incorporated two (2) Special Conditions into the Loan Agreement. The Special Conditions and staff’s comments related to each are outlined below:
  • A. ACCUG will restrict a minimum of $1,400,000 in a separate bank account for the purpose of satisfying or guarantying the GEFA debt. This designated funding is to be in place until such time as: a) CWSRF 06-004 Phase I and II are paid in full; b) GEFA reduces this amount; or c) GEFA no longer requires such a debt service reserve. This account is to be fully funded no later than December 31, 2010.
  • Staff Comments:
    This requirement is very similar to the Debt Reserve Provision outlined in the 2008 Revenue Bonds and is typical for such loans. Staff is in agreement with this special condition.
  • B. The Unified Government will continue to take necessary actions to maintain the financial integrity of the utility system and meet all debt service coverage requirements. The financial plan and rate increase approved by the Mayor and Commission on June 2, 2009, and effective July 1, 2009 (FY2010) will generate additional annual revenues of about $4.3 million above the FY2009 system revenues. ACC will take further action, prior to July 1, 2010, to increase FY2011
    revenues by raising rates to generate not less than an additional $1.7 million to maintain the debt service coverage requirement.
    
  • Staff Comments:
    The debt service coverage requirement for the GEFA Loan is 1.05. To generate an additional $1.7 M in annual revenues in FY2011, assuming the sales volumes remain consistent with the 2008 sales, will require a rate increase of approximately 5%. This is less than the staff projected rate increase of 7.5% for FY2011 outlined in the Official Statement for the Series 2008 Water and Sewer Revenue Bonds. The PUD is scheduled to update the PUD Service Delivery Plan (SDP) in FY2010. This will include an update to the Financial Element of the SDP, which will project water and sewer rates for the next six (6) years. Based on the information provided, staff is in agreement with this special condition.
    
• The General Conditions of the $10 million CWSRF–ARRA Loan approved by GEFA on June 16, 2007 (History #6) are as follows:
  • A. Interest Rate: 3% Interest
  • B. Term: 20 years
  • C. Closing Fee: 2% of loan or $200,000
  • D. ARRA Financial Terms: 40% of the Principle ($4 million) to be forgiven
  • This is consistent with the provisions under the ARRA financial terms approved by the GEFA Board.