CC Agenda Packet 05-14-18 Work Session

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Metropolitan Wastewater Management Commission Capital Improvement Program Capital Program Funding and Financial Planning Methods and Policies This annual budget document presents the FY 18-19 CIP Budget, the FY 18-19 AMCP Budget, and 5-Year Capital Plan which includes the CIP and AMCP Capital Plan. The MWMC CIP financial planning and funding methods are in accordance with the financial management policies put forth in the MWMC 2005 Financial Management Plan. Each of the two RWP capital programs relies on funding mechanisms to achieve RWP objectives described above. The CIP is funded primarily through proceeds from revenue bond sales, system development charges, and transfers from the Operating Fund to Capital Reserves. The AMCP is funded through wastewater user fees. In addition to revenue bond sales, financing for qualified CIP projects was also secured through the State of Oregon Department of Environmental Quality (DEQ) Clean Water State Revolving Fund (CWSRF) loan program. From 2008-2010, the MWMC secured several CWSRF loan agreements totaling $20.5 million. These 20-year loans provide the MWMC below-market interest rates, along with additional financial benefits, including: $450,000 of CWSRF funding derived from the sponsorship option, which derives additional principal over the life of the loan by an in-kind reduction in the interest rate. The sponsorship option is limited in use as an incentive to invest in watershed improvement projects. The MWMC’s sponsorship option funding was allocated for riparian shade tree planting pilot projects as a potential strategy to address the MWMC’s pending thermal load obligations. In year 2010, the Odorous Air Treatment project received $4 million funded through the American Reinvestment and Recovery Act (ARRA, or “Stimulus”). The ARRA funding provided 50% of the loan in principal forgiveness (not requiring repayment), and the remaining 50% of principal payment bearing 0% interest. This resulted in $2 million of net revenue to the CIP in addition to interest savings. The RWP’s operating fund is maintained to pay for operations, administration, debt service, equipment replacement contributions and capital contributions associated with the RWP. The operating fund derives the majority of its revenue from regional wastewater user fees that are collected by the City of Eugene and City of Springfield from their respective customers. In accordance with the MWMC 2005 Financial Plan, funds remaining in excess of budgeted operational expenditures can be transferred from the Operating Fund to the Capital Reserve fund. The Capital Reserve accumulates revenue to help fund capital projects, including major rehabilitation, to reduce the amount of borrowing necessary to finance capital projects. The AMCP consists of three programs managed by the City of Eugene and funded through regional wastewater user fees: The Equipment Replacement Program, which funds replacement of equipment valued at or over $10,000 but less than $200,000; The Major Rehabilitation Program, which funds rehabilitation of the MWMC infrastructure such as roof replacements, structure coatings, etc.; and the Major Capital Outlay Program for capital items (new or replacement) with costs greater than $200,000. The MWMC assets are tracked throughout their Page 38FY 18-19 BUDGET AND CIP