LAKE COUNTY, Calif. — With the city of Lakeport needing a way to address millions of dollars’ worth of water infrastructure projects, the City Council last week voted to pursue private financing to do the work.
The council unanimously approved the proposal to seek funding from a bank at its May 3 meeting.
Assistant City Manager and Finance Director Nick Walker presented the council with options to finance $5.845 million in proposed water system capital improvement projects.
That’s the amount an August 2021 rate study identified as needing to be completed over the next 10 years, Walker wrote in a written report for the meeting.
City Manager Kevin Ingram noted during the meeting that the projects — part of the capital improvement plan for the coming decade — aren’t the only ones that will need to be done, and that the city may have to explore additional funding options to complete more work in the future.
Walker told the council that staff developed a finance plan that achieves multiple goals.
The projects on the city’s capital improvement projects to-do list are as follows:
• Replace Scotts Creek well: $900,000.
• Main replacement on Second Street (Russell to Main), 2,500 feet: $1,250,000.
• Main replacement on Armstrong (Berry to Smith), 1,200 feet: $380,000.
• Main replacement on Lakeshore (Lange to Ashe), 800 feet: $425,000.
• Main replacement on Lakeport Boulevard, 1,700 feet: $870,000.
• Main replacement on N. High Street (Fifth to Clear Lake Avenue), 1,900 feet: $950,000.
• Main replacement on Fairway (Green to Hillcrest), 1,600 feet: $800,000.
• Replace clear well: $160,000.
• Ozone generators: $110,000.
Walker said the city is working to complete the entire list of projects sooner rather than later.
Leslie Bloom of NHA Advisors was on hand to help Walker go over the options.
NHA Advisors also has been assisting the city of Clearlake with a plan to seek financing through a bank to do millions of dollars of roadwork, leveraging its Measure V road sale revenues. The Clearlake City Council approved its plan in April.
Bloom described a volatile market for interest rates in the municipal market over the last few months. Since Jan. 1, tax-exempt rates have increased 1.54% to 1.98% across the entire yield curve.
However, from a historical perspective, “Rates are still very low,” Bloom said.
City staff recommended the financing plan that allows the city to complete all $5.845 million projects sooner than planned, as it hedges against inflationary pressure. The council also was urged to quickly take action to pursue private market placement due to upward trends in interest rates.
Based on the numbers presented at the meeting, the council was looking at loan terms ranging from 20 years, at 3.75%, up to 38 years, with a 2.6% interest rate.
The timeline presented to the council started with its members providing a direction at the meeting, followed by bank rate negotiation in early May and locking in interest rates with private placement later in the month. The council would then be on track to approve the financing documents at its June 7 meeting and to close the process in late June.
Councilman Michael Green moved to provide staff with direction to pursue private financing. Mayor Pro Tem Mireya Turner seconded and the council approved it 5-0.
Also on May 3, the council approved a memorandum of understanding presented by Police Chief Brad Rasmussen between the Lakeport Police Department and the Lakeport Unified School District for a school resource officer for fiscal years 2022-23 and 2023-24. The agreement costs the city $25,000 a year.
In other business, the council voted to make a determination that public convenience or necessity would be served by the issuance of a Type-42 Off Sales Beer and Wine Liquor sales license to Andre’s Jazz & Blues Lounge, located at 150 N. Main St.
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