AGENDA ITEM SUMMARY

Consider approval of a Resolution authorizing a Loan Agreement and Promissory Note in the amount not to exceed $11,100,000 from the Georgia Environmental Finance Authority to replace the intake pumps at the Flint River Pumping Station, the installation of SCADA equipment, and move the Station above flood level; and to expand and upgrade the Potato Creek WWTP from 2.0 mgd to 3.0 mgd, and all related appurtenances.   City Attorney Andrew J. Whalen, III will address.  Approved.

If approved, the City will borrow an amount not to exceed $11,100,000 from GEFA to construct and improve environmental facilities.  This loan will be an "intergovernment contract", under Art. IX of the Constitution, to which the City pledges its "full faith & credit"; however, its terms are similar to those found in a Revenue Bond and the City covenants to maintain water and sewer rates so as to achieve a debt coverage ratio of not less than 1.05%.  The rate of interest is 1.4%.  Upon completion of the Project (estimated to be December 1, 2017), repayment will be made in 239 equal monthly installments, and remaining balance in the 240th installment (20 year amortization).

Staff recommends approval.

The loan will be drawdown as the Project is constructed.  In addition to repayment of the loan, the City agrees to pay GEFA a loan origination fee equal to one (1.0%) percent of the maximum amount of the loan.  To the extent authorized by law, the City agrees to indemnify and hold GEFA harmless from all claims, liabilities, losses, costs, and expenses arising out of this transaction, other than those caused by GEFA's own gross negligence or willful misconduct.  Other fees may apply for incidental services over the life of the loan.  It should be noted that GEFA Loan documents contain a default provision if the Borrower borrows other funds to finance environmental facilities, such as issues a traditional water & sewer revenue bond; however, in practice, GEFA has waived this provision.