TO: Mayor and City Council
THROUGH: Krishna Namburi, Interim City Manager
FROM: Josh Eggleston, Chief Financial Officer
SUBJECT:
title
Oregon Department of Environmental Quality Ferry Street Wastewater Pump Station Loan
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Good Governance; Natural Environment Stewardship; Safe, Reliable and Efficient Infrastructure.
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SUMMARY:
summary
The Ferry Street Wastewater Pump Station is over 60 years old and is nearing the end of its useful life. Operation and maintenance of the facility is dangerous for Public Works staff since the station is located underground in the median of a busy Oregon Department of Transportation highway. Additionally, the existing station lacks features for resiliency and redundancy, increasing the risk of overflows. The Public Works Department in an effort to be proactive and secure outside funding, has applied and been awarded a partially forgivable loan by the Oregon Department of Environmental Quality to replace the station. Approval of the resolution will allow staff to execute the loan agreement.
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ISSUE:
Shall the City Council adopt Resolution 2025-07 authorizing the Interim City Manager to enter into a partially forgivable loan agreement with the Oregon Department of Environmental Quality?
RECOMMENDATION:
recommendation
Adopt Resolution 2025-07 authorizing the Interim City Manager to enter into a partially forgivable loan agreement with the Oregon Department of Environmental Quality.
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FACTS AND FINDINGS:
The Ferry Street Wastewater Pump Station is located in the median of Front Street SE near Ferry Street SE and Trade Street SE. The station serves a 69-acre area of southern downtown and has been in service for 65 years. The station requires supplemental manually operated pumping during peak flow events, lacks a standby emergency power generator, and has no dedicated emergency overflow point resulting in potential for sewage backup into downtown basements.
To be good stewards of rate-payer dollars, the Public Works Department is always looking for programs to make large capital improvements that would otherwise need to be paid for by a bond or rate funds. The Oregon Department of Environmental Quality (DEQ) administers the Clean Water State Revolving Fund program which offers low-interest financing with principal forgiveness for wastewater and stormwater projects to public agencies. As the City offers a rate payer hardship program and the Ferry Street Pump Station project is a green / sustainable project, the City qualifies for this loan program.
The loan would be split into two parts: one for design and one for construction. The total amount of the loan will be $5,292,350 with principal forgiveness up to $2,000,000. The loan would be a 20-year term with an interest rate of 2.23% and no prepayment penalty. The design portion of the loan would be $1,110,000 with $555,000 forgivable and the construction portion of the loan would be $4,182,350 with $1,445,000 forgivable. The loan would be reopened to add the construction portion at a later date and staff will return to City Council at that time for additional authorization.
Finance and Public Works Financial Management staff are confident in the ability of the Utility to repay this additional debt along with current obligations. The terms of the loan are extremely favorable coupled with the principal forgiveness and option for prepayments without penalty.
BACKGROUND:
This loan was first introduced to the Finance Committee at their March 17, 2025, meeting. Staff since that time have met with DEQ staff to discuss loan terms and provide a list of adjustments based on Legal Department and outside Bond Counsel advice. The agreement, including Council approval, needs to occur by June 30, 2025.
Kelli Blechschmidt
Management Analyst II
Attachments:
1. Resolution 2025-07
2. Financing Contract for Loan from Clean Water State Revolving Fund