FOR: Water Subcommittee Meeting [January 24, 2024]
TO: Honorable Water Subcommittee Members
APPROVAL: Stephen Dopudja, P.E., Interim Utilities Manager
Toyasha Sebbag, Assistant to the City Manager
...Title
Update on the Water Infrastructure Finance and Innovation Act (WIFIA) Loan Agreement by and between the City of Rialto/Rialto Utility Authority Board and Rialto Water Services.
(RECEIVE AND FILE)
...Body
BACKGROUND:
On July 13, 2021, the City/Rialto Utility Authority (RUA) authorized Rialto Water Services (RWS) to submit a Water Infrastructure Finance Innovation Act (WIFIA) Letter of Intent (LOI) application for the 2021 funding cycle on behalf of the City/RUA. The application was authorized for the following projects: Lake Rialto, Rialto Microgrid, Advanced Metering Infrastructure (AMI), and Security for Utility Sites. RWS was further authorized to contract with Black and Vetch to assist them in preparing the LOI for a not-to-exceed amount of $30,000. The City/RUA agreed to share in the cost of preparing the LOI by splitting the cost with the City’s portion not exceeding $15,000.
In March 2022, RWS received notification from WIFIA that they were invited to submit a loan application for $68 million for the projects identified in the WIFA LOI.
On January 25, 2023, at the Water Subcommittee Meeting, staff and RWS/Veolia updated the list of Capital Improvement Projects that could be considered for the WIFIA and State Revolving Fund (SRF) Loan Applications. A presentation was provided on the list of projects and the updated cost estimates. The list proposed a 5-year Capital Improvement Project from 2024 to 2028 for $39,050,000 for water and $90,820,000 for wastewater, with a total proposed cost of $129,870,000.
On March 30, 2023, RWS submitted a joint RWS/RUA application to WIFIA to fund $67,789,073 in CIP. This amount would cover the total estimated eligible project cost of $138,345,046. The slightly higher cost than the January 25, 2023, list presented to the Water Subcommittee was due to fine-tuning cost estimates and project list from the original WIFIA LOI from 2021.
On December 12, 2023, the City Council authorized staff to set a Public Hearing for water and wastewater services for a rate structure that supports a 5-year Capital Improvement Project costs from 2024 to 2028 for $6,000,000 for water and $31,100,000 for wastewater, with a total proposed cost of $37,100,000 to be funded by a 30-year loan at 6% interest. This list is designated as the High-Priority CIP and consists of a subset of the projects listed in the March 30, 2023, WIFIA application.
ANALYSIS/DISCUSSION
Staff and RWS met on August 25, 2023, and December 1, 2023, to discuss the WIFIA financing terms and the list of capital improvement projects.
Staff requests WIFIA loan documents from RWS that support High-Priority CIP with a WIFIA financing timeline of 18 years (one year less remaining on the Concession Agreement). The 18-year WIFIA financing timeline is preferred to the 30-year financing because the latter would require an extension of the Concession Agreement.
FINANCIAL IMPACT
The exact fiscal impact will be presented with the terms of the WIFIA loan agreement documents.
RECOMMENDATION:
Update on the Water Infrastructure Finance and Innovation Act (WIFIA) Loan Agreement by and between the City of Rialto/Rialto Utility Authority Board and Rialto Water Services.