REPORT TO THE CITY COUNCIL
June 25, 2015
FROM: THOMAS C. ESQUEDA, Director
Department of Public Utilities
BY: HENRY McLAUGHLIN, Business Manager
Department of Public Utilities - Water Division
SUBJECT
Title
***RESOLUTION - 50th amendment to the Annual Appropriation Resolution (AAR) No. 2014-95 to reallocate funding for various Water System capital improvement projects to provide for the drawdown of all remaining 2010 Water System Revenue Bond proceeds and; the payment of preliminary expenditures for the 2015 Water System Revenue Bonds which were not issued during FY 2015 (Citywide) (Requires 5 affirmative votes)
Body
RECOMMENDATION
Staff recommends that the City Council approve the 50th Amendment to the Annual Appropriation Resolution No. 2014-95 to appropriate funds for the final drawdowns of 2010 Water System Revenue Bond proceeds and covering expenditures originally budgeted in the 2015 Water System Revenue Bond Fund.
EXECUTIVE SUMMARY
The Department of Public Utilities Water Division (WD) is targeting the drawdown of all remaining proceeds from bonds issued in February 2010 by June 30, 2015. These proceeds total $14.8 million and will be used for prior and current expenditures made for various improvements to the water system. Also, the 2015 Water System Revenue Bonds were not issued during FY 2015, so the preliminary expenditures totaling $4.0 million need to be transferred to available funding sources.
BACKGROUND
The City of Fresno issued bonds in February 2010 totaling $158.2 million for funding various improvements to the water system. The major project was the water meter retrofit project. The bond proceeds are held by the bond trustee and are drawn down as requests are submitted based on actual expenditures.
In 2011 and 2012, two Safe Drinking Water State Revolving Fund no-interest loans were obtained from the State of California for a combined amount of $51.4 million for the Residential Meter Project. As these loans were acquired after the bonds were issued, the reallocation of both actual and planned expenditures for the meter project from the bond funds to the no-interest loan fund was required. This contributed to a delay in drawing down the remaining bond proceeds.
As of May 2015, a total of $14.8 million in unspent bond proceeds remain. To expedite the drawdown of these funds, some additional reallocation of funding and expenditures is required to transfer project costs eligible for reimbursement. The projects that will be funded include construction of water well replacements, main renewal and extensions, the downtown tank (T4) and the Chestnut Avenue Transmission Grid Main.
Also, as part of the FY 2015 Adopted Budget, the issuance of bonds was anticipated and funds were appropriated in a separate bond fund. In July 2014, the City Council rescinded the existing rate plan and returned rates to the prior lower level. This placed the issuance of bonds on hold due to insufficient customer user revenues that were available to cover debt service. In the meantime, preliminary work has proceeded on such tasks as engineering and design to keep up with project deadlines. The projects include water main renewals, regional transmission pipelines, the Friant Kern Canal/Northeast Surface Water Treatment Facility Pipeline, SE Fresno Surface Water Treatment Plant and Kings River Pipeline and recharge basins. These expenditures, totaling approximately $4.0 million, have been posted to the bond fund, but will be transferred to the Water Enterprise and DBCP Recovery funds.
Therefore, to drawdown all bond proceeds by June 30, 2015, and to cover preliminary project cost of projects budgeted in the 2015 Water System Revenue Bond Fund, the attached proposed amendment to the AAR is required to reallocate appropriations so that expenditures can be posted.
ENVIRONMENTAL FINDINGS
This is not a "project" for the purposes of CEQA pursuant to CEQA Guidelines ยง 15378(b)(5), as it is
an administrative action that will not result in direct or indirect physical changes to the environment.
LOCAL PREFERENCE
Local preference was not considered because approving the attached resolution does not include a bid or award of a construction or services contract.
FISCAL IMPACT
The expenditures, which are citywide, will not have any impact to the General Fund. The funding for these expenditures is available in the Water Enterprise Fund (40101), DBCP Recovery Fund (40110) and 2010 Water Revenue Bond Fund (40119) for FY 2015.
Attachment:
50th Amendment to the Annual Appropriation Resolution No. 2014-95