Agenda Item - 2023-02-21 - Number 5.2 - Authorizing payment to the EPA 5.2
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Subject: Authorize Payment to the Environmental Protection Agency (EPA) for the Water
Infrastructure Financing and Innovation Act (WIFIA) Program for the Wastewater Treatment
Facility Project.
Meeting Date: February 21, 2023 Staff Member: Anthony Hooper, Deputy City Manager
Report Date: February 7, 2023 Department: City Manager's Office
Action Required Advisory Board/Commission Recommendation
❑ Motion ❑ Approval
❑ Public Hearing ❑ Denial
❑ Ordinance ❑ None Forwarded
❑ Resolution ❑X Not Applicable
❑ Information Only Comments:
❑ Council Direction
❑X Consent Agenda
Staff Recommendation: Authorize Payment of$283,401.80 to the EPA.
Recommended Language for Motion: Move to authorize the City Manager to make a
payment of$283,401.80 to the EPA.
Project/ Issue Relates To: Wastewater Treatment Facility Project.
Issue before Council (Highlight Policy Question):
❑X Council Goals/Priorities ❑Adopted Master Plan(s) ❑Not Applicable
Respect. Excellence. Trust. Servi: .
503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034
WWW.LAKEOSWEGO.CITY
Page 2
BACKGROUND
In December 2021, the project was selected to apply for a low-cost, long-term, Water
Infrastructure Finance and Innovation Act (WIFIA) loan through the Environmental Protection
Agency. There are a lot of benefits to the WIFIA program, which are outlined in Attachment 1.
In addition, the selection was noteworthy in that EPCOR Foothills Water Partners (EFWP) is
anticipated to be the borrower of the loan, as opposed to the City, based on the project finance
arrangements set forth in the Preliminary Services Agreement. As part of the Agreement, the
City was to pay the processing costs to obtain the WIFIA loan. The City elected to pay this cost
directly rather than to have EPCOR pay it so as to avoid fees and markups.
The City received an invoice addressed to EPCOR from the EPA for$283,401.80, which is shown
Attachment 2. The actual amount was $383,401.80; however, the City already made a deposit
of$100,000, which was credited against the total. As part of the WIFIA loan, there is a lot of
due diligence that the EPA needs to complete to make sure this is a good investment and they
have subcontracted with attorneys and financial consultants to do the work. As the project
progressed through the due diligence process, the feedback from the EPA is that we are on
track to receive the loan.
There will be additional costs when we get to financial close with the EPA on the WIFIA loan,
which will be timed with financial close on the project after a "go/no go" decision is made on
whether to enter into a long-term deal with EPCOR. These costs are estimated to be in the
$100,000 to $200,000 range.
Finally, the invoice asks that the payment be made 30 days from January 19, which would be
February 18; however, the EPA has agreed to give us an extension so as to get Council
authorization to pay the invoice.
FISCAL IMPACT
There is the budget available in the Wastewater Fund to make this payment. The City of
Portland is responsible for reimbursing the City for 30%of this $283,401.80 payment if the
project moves forward with a long-term deal with EPCOR and 50% if the project doesn't move
forward.
ATTACHMENTS
1. WIFIA Fact Sheet
2. Notice of Credit Processing Fee from the EPA
Respect, I.x:.c crc.c. Trust. Sc'vic.c:.
503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034
WWW.LAKEOSWEGO.CITY
ATTACHMENT 1
The Water Infrastructure Finance and Innovation Act (WIFIA)
program accelerates investment in our nation's water infrastructure
wIFIA by providing long-term, low-cost supplemental loans for nationally
PR OGR AM and regionally significant projects. Borrowers benefit from receiving
low,fixed interest rate loans with flexible financial terms.
WIFIA LOANS OFFER A LOW, FIXED INTEREST RATE
A SINGLE FIXED RATE IS ESTABLISHED AT CLOSING.A borrower may receive multiple
disbursements over several years at the same fixed interest rate.
RATE IS EQUAL TO THE U.S. TREASURY RATE OF A SIMILAR MATURITY. The WIFIA program
sets its interest rate based on the U.S.Treasury rate on the date of loan closing.The rate is calculated using the
weighted average(WAL) life of the loan rather than the loan maturity date.The WAL is generally shorter than the
loan's actual length, resulting in a lower interest rate.
RATE IS NOT IMPACTED BY BORROWER'S CREDIT OR LOAN STRUCTURE. All borrowers
benefit from the AAA Treasury rate, regardless of whether they are rated AA or BBB.The WIFIA program does not
charge a higher rate for flexible financial terms.
WIFIA LOANS PROVIDE FLEXIBLE FINANCIAL TERMS
CUSTOMIZED REPAYMENT SCHEDULES. Borrowers can customize their repayments to match their
anticipated revenues and expenses for the life of the loan. This flexibility provides borrowers with the time they
may need to phase-in rate increases to generate revenue to repay the loan.
LONG REPAYMENT PERIOD. WIFIA loans may have a length of up to 35 years after substantial completion,
allowing payment amounts to be smaller throughout the life of the loan.
DEFERRED PAYMENTS. Payments may be deferred up to 5 years after the project's substantial completion.
SUBORDINATION. Under certain circumstances,WIFIA may take a subordinate position in payment priority,
increasing coverage ratios for senior bond holders.
WIFIA LOANS CAN BE COMBINED WITH VARIOUS FUNDING SOURCES.WIFIA loans can be
combined with private equity, revenue bonds,corporate debt,grants, and State Revolving Fund (SRF) loans.
Example of a customized debt repayment structure for a$100 million project
$4,000,000 WIFIA deferral period during WIFIA loan's
construction and 5-years afterwards flexible
I repayment
/ schedule
$2,000,000 / allows for
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=Bond Payment =WIFIA Payment —Rate Revenues
WEBSITE:www.epa.gov/wifia
'.EPA EMAIL:wifia@epa.gov
ANNOUNCEMENTS:Sign-up at https://tinyurl.com/wifianews
ATTACHMENT 2
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WIFIA Program
1200 Pennsylvania Avenue, N.W.
Washington, D.C. 20460
i PR9
Notice of Credit Processing Fee
Loan number — N21111OR - FEE03
January 19, 2023
Lee Ward
Senior Manager, Project Development
EPCOR Services, Inc.
2355 West Pinnacle Peak Road
Phoenix,AZ 85027
Subject: Lake Oswego Wastewater Treatment Replacement Project (N211110R)
Dear Mr. Ward,
Under the terms of the application of EPCOR Foothills Water Project Inc. for the above referenced project,
received by EPA on March 15, 2022, the applicant agrees to pay EPA the fees and expenses of the EPA's Lender's
counsel, financial advisors, and any auditors or other consultants retained by the WIFIA Lender in conjunction
with the negotiation of the WIFIA loan to date. After a review of costs, we have determined that the below costs
were incurred:
Legal Processing Costs $334,796.08
Financial Services $48,605.72
Technical Services $0.00
Total Costs Incurred by WIFIA $383,401.80
Less Application Fee received on 4/6/2022 ($100,000.00)
Total Outstanding Balance Due $283,401.80
Please remit the total at your earliest convenience, but no later than 30 days from the date of this notice.
For initiating and transmitting the required Fee payment,the attached document, "HOW TO MAKE A PAYMENT
TO EPA—WIFIA Program" identifies the payment methods we accept as well as the office to contact if there are
questions. Please note the loan number of N21111OR—FEE03 and payment type 'Credit Processing Fee' in your
payment submission.
Sincerely,
Jorianne Jernberg
Director, WIFIA Management Division
cc EPA's Office of the Controller: OCFO-OC-ACAD-WIFIA@epa.gov
WIFIA Portfolio Management: WIFIA_portfolio@epa.gov
Elizabeth Tran: Tran.elizabeth@epa.gov