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Home My WebLink AboutMINUTES - 07242007 - SD.12 i SE -L Contra TO: BOARD OF SUPERVISORS FROM: MAURICE M. SHIU, PUBLIC WORKS DIRECTOR = - Costa DATE: JULY 24, 2007 s�,t-�oUt County SIx, r lowSUBJECT: ADOPT Resolution No. 2007/374 establishing a revolving fund pursuant to Government ode Section 23014 for the purpose of making a$485,000 loan to Contra Costa County Sanitation District No. 5,Port Costa,to be used for additional construction,engineering services,and related expenses;REALLOCATE $50,000 in'`return to source"funds from the Tormey Project to Contra Costa County Sanitation District No. 5. (District 2) SPECIFIC REQUEST(S)OR RECOMMENDATION(S)R BACKGROUND AND JUSTIFICA I'ION RECOMMENDED ACTION: 1. ADOPT Resolution No. 2007/374 establishing a $500,000 revolving fund pursuant to Government Code Section 23014 for the purpose of making a$485,000 loan to Contra Costa County Sanitation District No. 5, Port Costa, to be used for additional construction, engineering services, and related expenses. 2. REALLOCATE $50,000 in"return to source" funds from the Tormey landscaping project to Contra Costa County Sanitation District No. 5 for treatment facility upgrades. CONTINUED ON ATTACHMENT: p SIGNA URE. RECOMMENDATION OF COUNTY ADMINISTRATOR R CO: 1END.ATION OF BOARD COMMITTEE APPROVE OTHER SICNATURE(S): pJ ACTION OF BOARD ON (i �Q�� ,APPROVED AS RI--'COM MENDED �� 0NER� VOTE OF SUPERVISORS: I HEREBY CERTIFY THAT"I HIS IS A'IRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON UNANIMOUS(ABSENT ) MINUTES OF THE BOARD OF SUPERVISORS ON THE AYES: NOES: DATE SHOWN. ABSENT: ABSTAIN: Contact: : Julie Bucren(925)313-2342 J B:Iz G:\AdntinlIulie\Board Orders\SD5 board order 7-24-07.doc ATTESTED /,z Lj JOHN CULLET LERK OF THE BOAR OF SUPERVISORS cc Brian Balbas,Public Works David Schmidt,County Counsel BY: DEPUTY . - ,\ :\ \ � �� i �� `. \, � \ `, ,\ � 1 � �.. \ \ � \ . � ,� \ �, �� \ - � ` ,- \ \ .. � � � • , � � `. \ \. � � � � i �` ,,, y ,i .. � � `\ �� r SUBJECT: ADOPT Resolution No. 2007/374 establishing a revolving fund pursuant to Government Code Section 23014 for the purpose of making a$485,000 loan to Contra Costa County Sanitation District No. 5,Port Costa,to be used for additional construction,engineering services,and related expenses; REALLOCATE $50,000 in "return to source" funds from the Tormey Project to Contra Costa County Sanitation District No. 5. (District 2) DATE: JULY 24, 2007 PAGE: 2 of 3 3. DIRECT the County Auditor-Controller to take all steps necessary to establish the$500,000 revolving fund and disburse to Contra Costa County Sanitation District No. 5 the $485,000 in loan funds and $50,000 in reallocated"return to source" funds. FINANCIAL IMPACT: Contra Costa County Sanitation District No. 5 ("the District"), requires an estimated $535,000 to complete the California Regional Water Quality Control Board(RWQCB)Time Scheduled Order(TSO)dated October 19,2005, which mandates improvements to bring the treatment facility into compliance be complete by November 30,2007. Government Code Section 23014 authorizes a County to appropriate up to$500,000 to a revolving fund to be used by any county sanitation district,county flood control district,or county maintenance district for various purposes, including construction of structures or improvements and engineering services needed for district purposes. Before the funds can be transferred, the Board of Supervisors must approve an appropriate resolution and an agreement specifying the method by and the time within which the district will reimburse the revolving fund (i.e., County). Reimbursement may be made from service fees,connection charges,tax revenues,or other moneys available to the district, must occur within no more than 10 years, and must include interest at the rate earned by the County on similar investments. There is $50,000 in Unocal Reformulated Gas Project "Return to Source" funds available to assist with the completion of the required treatment facility improvements. This funding was previously allocated to a landscaping project in Tormey,but was not required to complete the project. The availability of this$50,000 leaves a$485,000 funding gap. Staff is recommending the loan of$485,000, from the County to the District to allow construction activities to stay on schedule to complete the work prior to November 30, 2007. The District will repay the loan over a period of no more than 10 years, with payment in full no later than July 24, 2017. The District shall reimburse the County from annual sewer service charges,sewer connection fees,tax revenues,or any other moneys available to the District. The County will continue to assist the District to identify grants or other sources of funding to facilitate early repayment of the loan. REASONS FOR RECOMMENDATIONS AND BACKGROUND: The RWQCB identified certain violations in the effluent from the treatment plant between 2001 and 2003. A fine of $57,000 was proposed by the RWQCB which was subsequently waived in exchange for that sum of money being applied toward upgrades to the treatment plant which would provide a more reliable quality effluent. A Time Schedule Order(TSO)was issued by the RWQCB on October 19,2005 mandating the treatment.plant upgrades be completed by November 30. 2007. The total project cost to upgrade the treatment plan is $1,085,000 with contingencies. A loan for$550,000 was secured in 2006, but there is still a funding gap of$535,000. On July 10, 2007, the Board of Supervisors approved the concept of establishing a $500,000 revolving fund pursuant to Government Code Section 23014 for the purpose of making a loan to Contra Costa County Sanitation District No. 5, Port Costa, to be used for additional construction, engineering services, and related expenses and directed the Public Works Director and the County Administrator to prepare and place on the Board's July 24,2007 SUBJECT: ADOPT Resolution No. 2007/374 establishing a revolving fund pursuant to Government Code Section 23014 for the purpose of making a$485,000 loan to Contra Costa County Sanitation District No. 5,Port Costa,to be used for additional construction,engineering services,and related expenses; REALLOCATE $50,000 in "return to source" funds from the Tormey Project to Contra Costa County Sanitation District No. 5. (District 2) DATE: JULY 24, 2007 PAGE: 3 of 3 agenda an appropriate resolution and agreement establishing the revolving fund and providing for reimbursement to the County by the District in compliance with Government Code Section 23014 and to investigate sources for $35,000 in additional funding. CONSEQUENCES OF NEGATIVE ACTION: We will have to cancel the construction contract for the treatment plant upgrades and the RWQCB-mandated improvements will not be completed as outlined in the TSO dated October 19, 2005. This will result in two direct consequences: 1. The RWQCB will presumably impose new fines. The exact amount of those fines is unknown at this time. 2. The pending transfer of Sanitary District 5 to the Crockett CSD will not be completed as outlined in the LAFCO resolution. There are also several consequences that could result from not completing the mandated improvements. The overall integrity of the sanitary sewer system in Port Costa could be jeopardized. Given the financial constraints the District currently faces,operation and maintenance of the treatment facility and the collection system will be compromised. This could ultimately negatively affect the health of the San Francisco Bay and Delta,possibly leading to a"cease and desist"order from the RWQCB,a prohibition on continued operation of the Port Costa system,and additional actions and fines by state and federal agencies. TO: Board of Supervisors of Contra Costa County Board of Supervisors, ex officio the governing board of Contra Costa County Sanitation District No. 5 FROM: Maurice M. Shiu, Public Works Director/Chief Engineer DATE: July 24, 2007 SUBJECT: Establishment of County Revolving Fund and Loan to County Sanitation District No. 5 for Port Costa Treatment Facility Upgrades Project RESOLUTION NO. 2007/374 SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION(S) A. Pursuant to Government Code Section 23014, ESTABLISH a revolving fund to be used by any Board-governed sanitation district, county flood control district, or county maintenance district for various purposes, including construction of structures or improvements and engineering services needed for district purposes, and APPROPRIATE $500,000 from the County General Fund to such revolving fund. B. APPROVE "Agreement between Contra Costa County Sanitation District No. 5 and Contra Costa County for Reimbursement of Revolving Fund," and AUTHORIZE the Board Chair to execute the Agreement for the District and the County. C. APPROVE the loan and disbursement of$485,000 from the revolving fund to County Sanitation District No. 5 for use in completing the Port Costa Treatment Facility Upgrades project. D. DIRECT the County Auditor-Controller to take all necessary steps to set up the revolving fund and disburse the loaned funds to County Sanitation District No. 5. FINANCIAL IMPACT No ultimate impact on the General Fund. The loaned funds will be reimbursed to the revolving fund within ten years, as required by Government Code ction 23014. CONTINUED ON ATTACHMENT: X YES SIG URE X RECOMMENDATION OF COUNTY ADMINISTRATOR _ RECOMM DATION BOARD COMMITTEE APPROVE T. SIGNATURE(S): ACTION OF BOARD ON APPROVED AS RECOMMENDED VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON THE MINUTES OF THE BOARD UNANIMOUS(ABSENT ni(JY1Q� ) OF SUPERVISORS ON THE DATE SHOWN. AYES: NOES: ABSENT: ABSTAIN: ATTESTED:JOHN LLEN,CLERK OF THE BOARD OF SUPERVISOR AND COUN INISTRATOR Contact: Julie Bueren,(925)313-2342 Ong.Dept.: Public Works Dept. G:\Hdmin\Julie\Board Orders\SD5 resolution 7-24-07.doc BY DEPUTY cc: County Administrator County Counsel Auditor/Controller Establishment of County Revolving Fund and Loan to County Sanitation District No. 5 for Port Costa Treatment Facility Upgrades Project July 24, 2007 Page 2 BACKGROUND/REASONS FOR RECOMMENDATION(S) County Sanitation District No. 5 ("District") is in the process of upgrading its Port Costa wastewater treatment plant and has awarded a construction contract to a general contractor (Valentine Corporation) to perform the Port Costa Treatment Facility Upgrades project ("Project"). To complete the Project in a timely manner, the District requires additional funding to cover certain Project expenses that were not anticipated when bids were solicited for the Project. The District, which does not have sufficient funds, has requested that Contra Costa County ("County") loan the District$485,000 for use . in completing the Project. Government Code Section 23014 authorizes a county to appropriate up to $500,000 of its available moneys to a revolving fund to be used by any county sanitation district, county flood control district, or county maintenance district for the acquisition of real or personal property, environmental impact studies, fiscal analysis, engineering services, or the construction of structures or improvements needed in whole or in part for district purposes. Before money can be disbursed from the revolving fund, the district must enter into a written agreement specifying the method by which, and the time within which, the district will reimburse the revolving fund. The district is required to reimburse the fund within ten years after disbursement, together with interest at the current rate per annum received on similar types of investments by the county as determined by the county treasurer. To enable the County to loan $485,000 to the District, as requested, it is recommended that the Board adopt this Resolution to: Establish a revolving fund pursuant to Section 23014 Appropriate $500,000 from the County General Fund to the revolving fund Approve the Reimbursement Agreement between the District and the County Authorize the Board Chair,to execute the Agreement for the District and the County Approve the loan and disbursement of$485,000 from the revolving fund to the District for use in completing the Project Direct the County Auditor-Controller to take all necessary steps to set up the revolving fund and disburse the loaned funds to the District As set forth in the Reimbursement Agreement, the District will reimburse the revolving fund in ten annual installments of principal and interest. The first such payment is due by June 30, 2008, and the final payment is due no later than July 24, 2017. CONSEQUENCES OF NEGATIVE ACTION If the requested loan is not approved, the District will have to cancel the construction contract for the Project and will be unable to comply with the October 19, 2005 Time Scheduled Order issued by the Regional Water Quality Control Board. Other consequences probably would include the imposition of fines against the District and disruption of the transfer of the District to the Crockett Community Services District. AGREEMENT BETWEEN CONTRA COSTA COUNTY SANITATION DISTRICT NO. 5 AND CONTRA COSTA COUNTY FOR REIMBURSEMENT OF REVOLVING FUND This Agreement is made July 24, 2007 by and between Contra Costa County Sanitation District No. 5, a special district ("DISTRICT"), and Contra Costa County, a political subdivision of the State of California("COUNTY"). RECITALS This Agreement is made with reference to the following facts: A. DISTRICT is in the process of upgrading its Port Costa wastewater treatment plant and has awarded a construction contract to a general contractor to perform the Port Costa Treatment Facility Upgrades project ("Project"). B. To complete the Project in a timely manner, DISTRICT requires additional funding to cover certain Project expenses that were not anticipated when bids were solicited for the Project. C. Government Code Section 23014 authorizes a county to appropriate up to $500,000 for a revolving fund to be used by any county sanitation district, county flood control district, or county maintenance district for various purposes, including construction of structures or improvements and engineering services needed for district purposes. D. COUNTY has established a revolving fund pursuant to Section 23014 and has appropriated $500,000 to such fund. E. DISTRICT has requested a $485,000 loan from the revolving fund established by COUNTY to enable DISTRICT to complete the PROJECT in a timely manner. E. COUNTY is willing to loan $485,000 to DISTRICT subject to DISTRICT's agreement to reimburse the revolving fund in full, including applicable interest, within ten years, as provided in Section 23014. AGREEMENT Based on the above Recitals, DISTRICT and COUNTY agree as follows: I. Pursuant to Government Code Section 23014, from its revolving fund, COUNTY shall loan to DISTRICT the sum of$485,000 to be used by DISTRICT in completing the PROJECT. The loaned funds shall be transferred from COUNTY's revolving fund to l DISTRICT's account for DISTRICT's use in making progress payments under the PROJECT construction contract and paying other PROJECT-related expenses. 2. DISTRICT shall reimburse the $485,000 to COUNTY according to the following payment schedule: a. DISTRICT shall make ten annual principal payments of at least $48,500 payable on or before June 30 of each year, starting with June 30, 2008. b. Each annual payment shall include interest at the annual pooled apportionment rate established by the County Treasurer and County Auditor-Controller. C. Payment in full shall be made no later than July 24, 2017. d. At its option, DISTRICT may prepay the loan or any loan installment at any time without prepayment penalty. 3. DISTRICT shall make reimbursement from annual sewer service charges, sewer connection fees, tax revenues, or any other moneys available to DISTRICT. To ensure reimbursement, DISTRICT pledges and assigns to COUNTY, as security for repayment, all of the annual sewer service charges, sewer connection fees, tax revenues, or other moneys received by, held by, or available to DISTRICT. 4. Should DISTRICT fail to make any payment according to the schedule set forth in Section 2, at its option, COUNTY may declare the entire balance due and payable and commence legal action against DISTRICT to recover the principal balance and all accrued interest. 5. In any litigation relating to this Agreement, COUNTY shall be awarded reasonable attorney's fees, costs, and other litigation expenses in addition to . 6. In addition to the remedies set forth in Sections 4 and 5, COUNTY shall have all other remedies available in law or equity. 7. Should COUNTY accept a late payment from DISTRICT or otherwise not insist upon strict compliance with any of the terms of this Agreement, this shall not constitute a waiver of any of the terms of this Agreement and shall not affect any of the rights or remedies available to COUNTY. 8. This Agreement contains the entire understanding between DISTRICT and COUNTY relating to the above-described loan and PROJECT. Any alleged representation, promise, or warranty not set forth in writing in this Agreement shall be unenforceable. 2 CONTRA COSTA COUNTY SANITATION CONTRA CO TA OUNTY ("COUNTY") DISTRICT NO. 5TRICT") B By: Boar Boa ATTEST: ATTEST: John Cullen, Clerk of the Board of John Cullen, Clerk of the Board of Supervisors and County Administrator Supervisors and County Administrator By: By: D y Clerk D Clerk APPRO D AS TO FORM: APPRO D AS TO FORM: Silvano B. Marchesi, County Counsel Silvano B. Marchesi, County Counsel By: By: David F. Schmidt, Deputy County David F. Schmidt, Deputy County Counsel Counsel 3