The City of Davis announced that that the State Water Resources Control Board (SWRCB) authorized a $95.5 Million State Revolving Fund (SRF) loan for Davis’ and UC Davis’ shares of the regional water project.
“Tens of millions in low interest financing are headed to Yolo County, thanks in large part to the efforts of local water suppliers seeking to minimize cost of service increases for their users,” said a city release.
The Woodland-Davis Clean Water Agency (WDCWA) and the City of Davis announced today that the State Water Resources Control Board (SWRCB) authorized a $95.5 Million State Revolving Fund (SRF) loan for Davis’ and UC Davis’ shares of the regional water project.
With a low 1.7 percent interest rate and 30-year term, the loan provides a savings of $36.5 million for the City of Davis when compared to conventional financing. Additionally, the City of Davis has a separately pending application for a $35 million SRF loan with similar terms to fund needed improvements to the city’s existing water distribution system.
With both loans, City of Davis ratepayers will save a total of $51.5 million in financing costs over the next 30 years, the city said.
“We are very pleased the SWRCB approved the loan for Davis’ share of the regional facilities,” said Dan Wolk, Davis Mayor and WDCWA Vice-Chair. “We’ve spent the past 18 months working on the complex application and terms, but it was well worth the intensive effort. We’re making good on our promise to minimize project costs and aggressively pursue outside funding and low-interest loans to reduce the impact on rates. These actions, along with UC Davis’ recent decision to join the project and share costs, will lower Davis’ costs and the pressure for future rate increases.”
The regional surface water project, also known as the Davis-Woodland Water Supply Project, is currently under construction. Slated for completion in late 2016, “the new facilities will address significant drinking water and wastewater quality problems in the communities of Woodland and Davis.”
The city release stated that, among its many benefits, it will:
- increase reliability and diversify water supplies in both communities and for UC Davis;
- facilitate compliance with current and future wastewater discharge requirements;
- improve treated wastewater effluent quality, thereby protecting and improving the condition of the Delta;
- protect groundwater from over pumping while still meeting the region’s agricultural needs;
- reduce fish mortality in the Sacramento River as a result of a new, state-of-the-art water;
- be a diversion facility that is being jointly built with RD2035; and
- provide thousands of construction-related jobs as well as long-term permanent employment for Water Treatment Plant operators and maintenance personnel.
“The water project is an exemplary model of a true regional partnership. With our project partners, we have been able to achieve very significant economies of scale in all facets of planning, design, construction and operations, ultimately reducing the long-term cost for water users,” said Bill Marble, Woodland Mayor Pro Tem and WDCWA Chair. “The importance of this partnership to ours and future generations cannot be overstated,” he added.
“Planning for the Davis-Woodland Project began in 1994 and has been a collaborative effort between Davis, Woodland, and UC Davis over the past 20 years,” said California Senator Lois Wolk. “The loan agreement with the State Water Resources Control Board is the next step toward completion of this project. This low interest loan will reduce the costs for ratepayers and ensure that their money is spent wisely. The project will provide high quality drinking water for residents, improve the ecosystem health of the Delta where the water ultimately ends up, and advances our statewide water policy goals.”
Earlier this year, the Agency received an SRF loan from the California Department of Public Health in the amount of $111million for the City of Woodland’s share of the regional water project. Woodland also received a separate $31.5 million SRF loan for local improvements to the Woodland water distribution system.
In total, SRF loans for both Woodland and Davis are projected to cover more than 98 percent of the regional water project costs. Both cities have now approved all rate increases necessary to proceed with their shares of the project. Officials from both cities emphasized the importance of developing regional partnerships and securing state and federal funding in their efforts to minimize increases to water rates.
“Water affordability is critical to the California economy, and also heavily impacts our State’s low and fixed-income residents,” said 4th District Assemblymember Mariko Yamada. “As communities face the rising costs of food, medicines, and education, I applaud today’s Board vote in support of a long-term, regional approach to keeping water rates down.”
–David M. Greenwald reporting
Hallelujah!
Very good news for all Davis and Woodland ratepayers.
So does this mean our rates won’t go up as much? Somehow I doubt it.
BP, I strongly suggest that you attend the Utility Rate Advisory Committee (URAC) meetings in the coming months. That is where the rubber will hit the road on what the rates are going forward. You can get information about the URAC at http://city-council.cityofdavis.org/on-going-committees/utility-rate-advisory-committee They meet the Second Thursday of the month at 6:30 p.m. at the Davis Senior Center Valente Room, 646 A Street (corner of A & 7th Sts.). That makes their next meeting on November 13, 2014. Right now water rates are not on the Agenda of that meeting. Given this new information, I would be surprised if a water rates agenda item weren’t added.
What do all the naysayers have to say now who had cried that waiting was going to end up costing us dearly in higher interest rates?
Interest rate risk was the issue. Nobody can predict rates. If you know someone that can, please hook me up with him/her because I want hear what he/she knows so I can make millions. This is good news, but it could have easily been bad news… especially if we had a strong business-minded fiscal conservative in the White House implementing economic policy that helped grow the economy instead of destroying it. A growing economy would necessitate higher rates.
Agreed, but that still doesn’t take away from those that said that we would definately be paying higher interest rates. Thay were, well, just wrong.
Barack, let’s look back at those prognostications of higher interest costs. They were made by people on both sides of the issue. Sue Greenwald stated many times that Davis would not get the lower interest rates from the SRF. During the discussions prior to the Measure P vote, I very clearly stated that there was an actuarial risk that we would have to pay higher interest rates. The City’s spokespeople clearly beat the drum of the risk of higher interest rates.
The good news is that we were all wrong.
“The city likely has lost its low-interest state loan possibility because the City Council made a poor choice by opting for a no-bid contract with a multinational company and the associated privatization of the operations. State law prohibits giving low-interest state loans to projects with privatized operations.” – Sue Greenwald http://www.davisenterprise.com/forum/opinion-columns/measure-p-is-cost-free/
“The reductions are exaggerated; some, like the low-interest state loans, are not likely to materialize because the City Council chose to privatize the operations…” – Sue Greenwald and Mark Siegler http://www.davisenterprise.com/forum/opinion-columns/yes-on-p-davis-water-rates-need-a-do-over/
Eskimo Pie, you have done half of the “reference links” job. Can you post the links to the similar “higher interest rates if …” quotes from the Measure P campaign.
Bottom-line, both sides of this issue played the “higher interest rates” card durng the long community dialogue.
At the risk of irritating Barack Palin and recalling the spectre of the Lovenburg/Allen OpEd, perhaps it is time to celebrate the final outcome and move on to other more pressing issues.
and david cited other sources saying the same thing. i think it’s safe to say it was a fluid situation and there was never any assurance that we could get the low interest loans.
So how much lower will my new rates be? Do we need to do another rate analysis?
No, we do not need a new rate analysis. The Bartle Wells Rate Analysis was designed so that changes in interest costs could be plugged into the existing model and show what the new Revenue Requirement is for each of the years of the Rates.
The URAC process will determine what your new rates will be.
I don’t read this announcement to mean that the delay caused by the lawsuit etc is responsible for lower rates. Rather, the initial costs were based on “conventional financing” The savings are the result of borrowing from a different source, one which was presumably to be pursued regardless of the timing.
That is a very solid assessment Adam … one that I agree with 100%. In the end it appears that the lawsuit had no effect on the interest rates. Neither up, nor down.
Adam, you are exactly right!
Ultimately the lawsuit didn’t prevent us from getting the rates, but my sources tell me that the delay definitely could have kept us from getting the low interest rates. Apparently there is a finite amount of these loan monies available and we were fortunate that no big projects were pending that could have taken our place in line. I also understand that you can’t access these monies if you have pending litigation — which explains why the City gave in to Harrington’s blackmail.
It is great news that our rates may not be quite as sky high, and sad news that holding a project hostage can be financially rewarding.
Well said!