COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

October 15, 2009

BOARD MEETING DATE:

November 3, 2009

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

James C. Porter, Director of Public Works

SUBJECT:

Establishment of a Dedicated Source of Revenue for Payment of the Funds Accessed through the Clean Water State Revolving Fund For Construction Of Wastewater Treatment Facilities (CWSRF)

RECOMMENDATION:

Acting as the governing board of the ten County Sewer/Sanitation Districts, adopt a resolution establishing the “capital improvement program component” of the annual revenue collected through the Sewer Service Charges as a dedicated source of revenue for payment of the funds accessed through the “Clean Water State Revolving Fund For Construction Of Wastewater Treatment Facilities” (CWSRF), which will be used to finance Capital Improvement Projects in nine (9) of the ten (10) Districts.

BACKGROUND:

On May 19, 2009, your Board adopted Resolution No. 070109 authorizing the Director of Public Works to submit a Financial Assistance Application and execute the Financing agreement(s) with the State Water Resources Control Board (SWRCB) for Clean Water State Revolving Funds (CWSRF) to fund the construction of Capital Improvement Projects (CIP) in the various County Sewer/Sanitation Districts (Districts).

Your Board has adopted sewer service rates for each of the ten Districts. A portion of the rate is intended to support CIPs within nine of the districts. The identified CIPs will increase the size of sewer mains where capacity is insufficient or replace sewer mains in poor condition. The Edgewood Sewer Maintenance District sewer service rate does not include a CIP component because it is a new sewer system.

DISCUSSION:

The operation, maintenance, repair, and replacement of the Districts’ sanitary sewer facilities are funded by the annual sewer service charges collected from property owners in the Districts. Some CIPs have been postponed because the annual sewer service rates had not been sufficient to fund the identified CIPs based on a “pay-as-you go” basis. We believe it is cost effective to fund the design and construction of the CIPs through the CWSRF loan program to realize the effectiveness of economies of scale and enable a substantial amount of work to be completed at one time. The sewer service rates have been calculated to include sufficient funding to repay a CWSRF loan at a low interest rate and with a twenty (20) year term. As required by the California Water Code Section 13480, the CWSRF combined funding interest and loan service rate is set at a rate that does not exceed 50 percent of the interest rate paid by the State on the most recent sale of State General Obligation bonds. Each district has a separate budget and will be financially responsible for the CIP costs incurred for the specific district.

The CWSRF loan program requires that local agencies adopt an ordinance or resolution, which commits a funding source for payments on the loan. We recommend that the “capital improvement program component” of the annual revenue collected through the Sewer Service Charges be established as the dedicated source of revenue for payment of the funds accessed through the “Clean Water State Revolving Fund For Construction Of Wastewater Treatment Facilities” (CWSRF), which will be used to finance Capital Improvement Projects in nine of the ten Districts. A copy of the ordinance or resolution must be submitted as part of the funding application and is required for approval of the loan. The recommended resolution will meet the credit review requirements of the SWRCB Division of Financial Assistance.

County Counsel has reviewed and approved the Resolution as to form.

Adoption of the Resolution will contribute to the Shared Vision 2025 outcome of a Healthy Community by enabling the Districts to secure a loan to finance the CIPs, which are an integral part of maintaining the integrity of the sanitary sewer infrastructure that protects the environment for the benefit of the public.

FISCAL IMPACT:

The twenty (20) year low interest CWSRF loan is expected to be in the amount equal to $11,000,000 and will be repaid by the Districts’ revenue from the sewer service charges levied on properties receiving sewer service from the Districts.

There is no impact to the General Fund.