ORD-2014-035 McGowan Creek Sewer Interceptor Project and Approval of Budget Amendment #1-B

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I station to the newly completed Brookhollow pump station, which was designed to handle this future flow. Eliminating the McGowan Creek pump station will lower the annual maintenance costs of the Efland Sewer System and take out of service a 25 year -old pump station that would otherwise need refurbishing at an estimated cost of over $450,000. On January 23, 2014 the BOCC approved a Resolution of Acceptance for an SRF loan for this project in the amount of $774,904. During the course of construction of the project, it became apparent that this loan amount would not be sufficient to pay for the construction of the project due to a large amount of unexpected subsurface rock that was encountered. On June 17, 2014, the BOCC authorized a change order for the additional rock and pursuing additional SRF loan money, estimated at $421,869, to cover the additional cost. The actual additional SRF loan money needed was $390,630, or approximately $31,000 less than estimated. The new SRF loan amount will be $1,165,534, which represents an increase of $390,630 over the previous loan amount. Because the budget amendment approved at the June 17, 2014 meeting was for the estimated additional loan funds needed, the budget amendment which is proposed as part of this item represents a reduction in the amount of the budget. To summarize, the SRF loan amount is increasing, but it is increasing less than anticipated, which means that Budget Amendment #1 -B will show a reduction in the budget amount, as seen in the table below. The State has sent the County a State Loan Offer and Acceptance letter (Attachment 1) for the SRF loan needed to finance the McGowan Creek Sewer Interceptor. In order to finalize the loan process and make the additional money from the loan available, this signed letter and a signed Resolution of Acceptance of the Loan (Attachment 2) must be returned to the State Division of Water Infrastructure. FINANCIAL IMPACT: The SRF Loan to fund the McGowan Creek Sewer Interceptor project is in the amount of $1,165,534. The project is complete, so the full amount of the loan is expected to be used. County staff will submit the final invoices for the project to the State and the State will then reimburse the County using the loan. The money borrowed is repaid over a 20 year period at an annual interest rate of 2 %. The project is completed, so repayment will begin in this fiscal year (2014- 2015). There is a 2% closing fee for the loan which must be paid up front. The closing fee for the original loan amount of $774,904 has been paid previously, so the additional closing fee is expected to be $7,813. This should be invoiced once the State receives the County's acceptance letter and Resolution of Acceptance. The annual debt service for the loan will be $82,122. Budget Amendment #1 -B provides for the revised SRF Loan amount, and amends the Capital Project Ordinance as follows: McGowan Creek Outfall - Project # 30043 Revenues for this nroiect- FY 2014 -15 Current Budget September 16, 2014 Amendment FY 2014 -15 Revised Budget SRF Loan Proceeds $1,196,773 $31,239 $1,165,534 Article 46 Sales Tax Proceeds $57,814 $0 $57,814 Total Project Funding $1,254,587 $31,239 $1,223,348