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5.2 Amendment No. 1 KDHE Loan Markley-MagnoliaCITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 09/26/22 4:00 P.M. AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL: NO: 5 BY: ITEM UTILITIES DEPARTMENT FINAL APP OVAL: NO: 2 Page I BY: Martha Tasker M 4f BY: ITEM: Authorize Amendment No. 1 to the Loan Agreement (Loan) between the Kansas Department of Health and Environment, acting on behalf of the State of Kansas, and the City of Salina, Kansas for the purpose of financing the Markley/Magnolia Sewer System Improvements. BACKGROUND: The Markley/Magnolia Sewer Improvements provided sanitary sewer service to the following areas: • Highland Meadows Hamlet Woodlands Addition • GreatLIFE Golf & Fitness - Former Elks Country Club • Valley View Addition — (Septic Tanks) • Magnolia Hills Estates • Undeveloped Area The project included: • Construct a new Wastewater Pump Station No. 57 and force main • Abandoning existing Wastewater Pump Station No. 57 • Install 7,725 Linear Feet of 8 -inch gravity sewer • Install 485 Linear Feet of 10 -inch gravity sewer • Electrical improvements On February 4, 2019, the City Commission authorized the loan for an amount not to exceed $2,250,000. The breakdown for the loan is as follows: Sanitary Sewer Collection System Contingency Engineering Loan Amount: Budget Final Cost $1,950,000 $1,310,978.00 $ 190,000 $ 0 $ 110,0000) $ 88,033.70 $2,250,000 $1,399,011.70 Amendment No. 1 decreases the amount of the loan from $2,250,000.00 to $1,399,011.70. FISCAL NOTE: The semi-annual (March and September) payments will be reduced from $90,662.15 to $49,395.91. COMMISSION ACTION: Staff has identified the following options for the City Commission's consideration: 1.) Authorize the Mayor to execute Addendum No. 1 to the Loan Agreement between the Kansas Department of Health and Environment, acting on behalf of the State of Kansas, and the City of Salina, Kansas for the purpose of financing of the Markley/Magnolia Sewer System Improvements. CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 09/26/22 4:00 P.M. AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL: NO: BY: ITEM UTILITIES DEPARTMENT FINAL APPROVAL: NO: Page 2 BY: Martha Tasker BY: 2.) Authorize execution of the Addendum No. 1 to the Loan Agreement with amendments as the City Commission deems appropriate. 3.) Postpone execution of the Addendum No. 1 to the Loan Agreement to a specified date and time and provide staff direction regarding additional information or amendments the City Commission would like to request for their further consideration. 4.) Vote to deny execution of the Addendum No. 1 to the Loan Agreement which would result in no decrease in the semi-annual payments. Staff recommends Option 1. FIRST AMENDMENT TO THE LOAN AGREEMENT By and Between THE KANSAS DEPARTMENT OF HEALTH AND ENVIRONMENT ACTING ON BEHALF OF THE STATE OF KANSAS AND CITY OF SALINA, KANSAS KWPCRF PROJECT NO,: C20 2050 01 ORIGINAL LOAN AGREEMENT EFFECTIVE AS OF DECEMBER 11, 2018 AMENDMENT NO.: 1 EFFECTIVE AS OF JUNE 27. 2022 First Amendment to the Loan Agreement by and between the Kansas Department of Health and Environment Acting on Behalf of the State of Kansas and the City of Salina, Kansas Effective As of June 27, 2022 WHEREAS, the City of Salina, Kansas (the Municipality) has entered into a Loan Agreement with the Kansas Department of Health and Environment, acting on behalf of the State of Kansas, effective as of December 11, 2018 (the "Loan Agreement'); and WHEREAS, said Loan Agreement was entered into for the benefit of the Municipality, KWPCRF Project No, C20 2050 01; and WHEREAS, the Municipality and KDHE hereby determines that it is necessary to amend certain exhibits to the Loan Agreement, and WHEREAS, this First Amendment to the Loan Agreement is entered into and effective as of June 27, 2022; THEREFORE, the Loan Agreement is amended as follows: SECTION 1. Article If, Loan Terms, Section 2.01, Amount of Loan and Exhibit B of the LOAN AGREEMENT BY AND BETWEEN THE KANSAS DEPARTMENT OF HEALTH AND ENVIRONMENT AND THE CITY OF SALINA, KANSAS are/is hereby amended to read as set forth on the pages attached hereto. SECTION 2. Except as herein specifically set out, the Loan Agreement is confirmed and ratified. First Amendment Effective as of June 27, 2022 2 IN WITNESS WHEREOF, KDHE and the Municipality have caused this First Amendment to the Loan Agreement for the Municipality to be executed, sealed and delivered, effective as of June 27, 2022. PER �•'++t r��*�* Kan sas Department of Health and Environment The KANSAS DEPARTMENT OF HEALTH AND ENVIRONMENT, acting on behalf of THE STATE OF KANSAS gy�/S��ki Jan t Stanek Secretary Kansas Department of Health and Environment Date:I�-202.2—� 022 SALINA, KANSAS By Title: Mayor (Seal) ATTEST z Date: First Amendment Effective as of June 27. 2022 The "Municipality" ARTICLE II LOAN TERMS Section 2.01. Amount of the Loan. Subject to all of the terms, provisions and conditions of this Loan Agreement, and subject to the availability of State and Federal funds, KDHE will loan an amount not to exceed {$2,250,000j One Million Three Hundred Ninety Nine Thousand Eleven Dollars and Seventy Cents ($1,399.011.701 to the Municipality to pay the costs of the Project described in Exhibit A hereto. The final actual amount of the Loan may be reduced without revision of any other terms, provisions or conditions of this Loan Agreement, other than the Loan Repayment Schedule Exhibit B hereto), to reflect reductions in the estimated or actual total Project Costs as impacted by opening of bids for construction, change orders, final actual costs, and prepayments. The Municipality shall be responsible for any costs incurred by the Municipality in connection with the Project in addition to the amount of the Loan. An amendment to Exhibit B must be accomplished by an Amendment to the Loan Agreement executed by all parties. First Amendment Effective as of June 27, 2022 4 EXHIBIT B LOAN REPAYMENT SCHEDULE (See Page 6) DEDICATED SOURCE OF REVENUES AND LOAN REPAYMENT SCHEDULE Dedicated Source of Revenue. The Municipality shall impose and collect such rates, fees and charges for the use and services furnished by or through the System, including all improvements and additions thereto hereafter constructed or acquired by the Municipality as will provide System Revenues or levy ad valorem taxes without limitation as to rate or amount upon all the taxable tangible property, real or personal, within the territorial limits of the Municipality to produce amounts which are sufficient to (a) pay the cost of the operation and maintenance of the System, (b) pay the principal of and interest on the Loan as and when the same become due, and (c) pay all other amounts due at any time under the Loan Agreement; provided, however, no lien or other security interest is granted by the Municipality to KDHE on the System Revenues under this Agreement. In the event that the System Revenues are insufficient to meet the obligations under the Loan and the Loan Agreement, the Municipality shall levy ad valorem taxes without limitation as to rate or amount upon all the taxable tangible property, real or personal, within the territorial limits of the Municipality to produce the amounts necessary for the prompt payment of the obligations under the Loan and Loan Agreement. The Loan Repayment Schedule The Municipality and KDHE have agreed that interest becoming due semiannually on the Loan during the construction period for the Project may be capitalized and repaid as a part of the Loan. In this regard, KDHE shall give the Municipality written notice of each semiannual installment of interest becoming due during the construction period. At its option, the Municipality may elect to pay such amounts, and if so elected, must pay such amounts within 30 days of receipt of the notice of their becoming due. If the Municipality does not elect to pay such amounts within 30 days of receipt of such notice, the amount then due and owing as semiannual interest on the Loan shall be capitalized and added to the principal amount of the Loan and shall bear interest at the rate of interest set forth in Section 2.02 hereof. First Amendment Effective as of June 27, 2022 KANSAS WATER POLLUTION CONTROL REVOLVINGFUND Actual Draws - Actual Interest Rate Amortization of Loan Costs as of 6/27/2022 Prepared for. City of Salina - Matldey/Magnolia, Project No. C20 2050 01 Gross Interest Rate Allocation thru 3/1/2024 after 3/1/2024 Service Fee Rate: 2.29% 0.25% Net Loan Interest Rate: 0.25% 2.290/a Project Principal: 1,399,011.70 Interest During Const.: 0.00 Service Fee During Const.: 0.00 Gross Loan Costs: 1,399,011.70 Gross Interest Rate: 2.54% First Payment Date: 9/1/2020 Number of Payments: 30 Payment Payment Beginning Interest Principal Service Total Ending Number Date Balance Payment Payment Fee Payment Balance 1 9/1/2020 1,399,011.70 850.31 82,073.02 7,788.82 90,662.15 1,316,988.68 2 3/1/2021 1,316,988.68 1,315.55 77,296.20 12,050.40 90,662.15 1,239,692.48 3 9/1/2021 1,239,692.48 1,460.19 75,826.62 13,375.34 90,662.15 1,163,865.86 4 3/1/2022 1,163,865.86 1,45333 75,896.30 13,312.52 90,662.15 1,087,969.56 5 9/1/2022 1,087,969.56 1,360.03 35,578.02 12,457.86 49,395.91 1,052,391.54 6 3/1/2023 1,052,391.54 1,315.49 36,030.54 12,049.88 49,395.91 1,016,361.00 7 9/1/2023 1,016,361.00 1,270.45 36,488.13 11,63733 49,395.91 979,872.87 8 3/1/2024 979,872.87 1,224.84 36,951.53 11,219.54 49,395.91 942,92134 9 9/1/2024 942,921.34 10,796.45 37,420.81 1,178.65 49,395.91 905,500.53 10 3/1/2025 905,500.53 10,367.98 37,896.05 1,131.88 49,395.91 867,604.48 11 9/1/2025 867,604.48 9,934.07 3877.33 1,084.51 49,395.91 829,227.15 12 3/1/2026 829,227.15 9,494.65 38,864.73 1,036.53 49,395.91 790,362.42 13 9/1/2026 790,362.42 9,049.65 39,35831 987.95 49,395.91 751,004.11 14 3/1/2027 751,004.11 8,599.00 39,858.15 938.76 49,395.91 711,145.96 15 9/1/2027 711,145.96 8,142.62 40,364.36 888.93 49,395.91 670,781.60 16 3/1/2028 670,781.60 7,680.45 40,876.98 838.48 49,395.91 629,904.62 17 9/1/2028 629,904.62 7,212.41 41,396.12 78738 49,395.91 588,508.50 18 3/1/2029 588,508.50 6,738.42 41,921.85 735.64 49,395.91 546,586.65 19 9/1/2029 546,586.65 6,258.42 42,454.26 683.23 49,395.91 504,132.39 20 3/1/2030 504,132.39 5,77232 42,993.42 630.17 49,395.91 461,138.97 21 9/1/2030 461,138.97 5,280.04 43,539.45 576.42 49,395.91 417,599.52 22 3/l/2D31 417,599.52 4,781.51 44,092.40 52200 49,395.91 373,507.12 23 9/1/2031 373,507.12 4,276.66 44,65237 466.88 49,395.91 328,854.75 24 3/1/2032 328,854.75 3,765.39 45,219.45 411.07 49,395.91 283,635.30 25 9/1/2032 283,635.30 3,247.62 45,793.75 354.54 49,395.91 237,841.55 26 3/1/2033 237,841.55 2,723.29 46,375.32 297.30 49,395.91 191,46623 27 9/1/2033 191,466.23 2,192.29 46,964.29 239.33 49,395.91 144,501.94 28 3/1/2034 144,501.94 1,654.55 47,56D.73 180.63 49,395.91 96,941.21 29 9/1/2034 96,941.21 1,109.98 48,164.75 121.18 49,395.91 48,776.46 30 3/1/2035 48,776.46 558.49 48,776.46 60.96 49,395.91 0.00 Totals 139,886.45 1,399,011.70 108,044.11 1,646,942.26 Prepared by the Department of Administration First Amendment Effective as of June 27, 2022 6