Gonzales council approves resolution to seek $6 million SRF amendment for industrial wastewater facility

Gonzales City Council on the evening it considered construction bids for a new industrial wastewater treatment facility adopted Resolution No. 2025-08, directing staff to pursue a $6 million amendment to the State Water Resource Control Board’s (SRF) loan to close a funding gap revealed by the February 26 bid opening.

The resolution states the city’s “intention and expectation to reimburse expenditures incurred by the City in the planning, design, and construction of the industrial wastewater system prior to obligations approved by the State Water Resource Control Board.” Council voted in favor; the motion passed with the ayes recorded and no noes.

Council and staff said the low bid for the industrial wastewater treatment facility came in at $21,938,000, above the engineer’s estimate of $20,500,000. That increase, combined with preexisting shortfalls, produced a funding gap the city now estimates at roughly $6,000,000. The project is funded primarily by an SRF loan (approximately $28.9 million) and about $2.75 million in impact fees the city already holds.

City staff explained the SRF staff require a minimum debt-service coverage of 1.20 and that the city’s current coverage comfortably exceeds that threshold even with the requested amendment. The presentation said current coverage under the existing loan is approximately 1.6 and would rise to about 1.71 next year after a planned 20% sewer-rate increase; with the additional $6 million loan the coverage would be about 1.33 now and is projected to grow to 1.45 with the rate adjustment.

City Manager Michael Dobbins read the resolution and outlined the next steps: a letter from the city manager and updated financial submissions to SRF to justify the amendment, followed by a SRF review period of roughly four to six weeks and another two to three months to complete amendment contracts if the city is found eligible.

Staff also reported related project activity: the parallel industrial wastewater pipeline contract (the separate pipeline work) was awarded last September and is approximately 60% complete, with contractors reporting the pipeline work ahead of schedule and expected to finish in May. Project consultants MNS Engineers are reviewing the three lowest bids for conformance with bid documents and SRF compliance requirements, including disadvantaged-business outreach.

As additional context, staff announced the city received a $300,000 planning grant from the State Water Resource Control Board to begin planning and design work to change the treatment process at the existing domestic plant; MNS Engineers and Dudek are identified as design partners on that grant-funded work.

Public comment included a resident urging caution about borrowing and warning about possible future funding cuts at higher government levels; councilmembers asked whether staff would continue applying for grants to close the funding gap, and staff said they would. After discussion, a councilmember moved to adopt Resolution No. 2025-08; a second followed and the motion carried.

The council’s action does not itself obligate the SRF or change current sewer rates, staff said; the vote authorizes the city to pursue the SRF amendment and to submit the financial documentation required by SRF for approval.