Lake Oswego council authorizes execution of WIFIA loan for new wastewater plant; vote 5-0

Lake Oswego's City Council on Aug. 5 unanimously approved a resolution authorizing the city to execute a WIFIA loan agreement with the U.S. Environmental Protection Agency for the new wastewater treatment facility in an amount not to exceed $123,480,000.

City Director of Special Projects Stefan Broadus, joined by Finance Director Sean Cross, presented the funding plan and timeline. Broadus said the WIFIA loan functions like a line of credit and that council authorization would permit the city to execute the loan agreement; draws would follow later when needed. "Authorizing this loan agreement does not commit to the debt in full or in part. We can pull from this loan when we need to," Broadus said.

Why it matters: staff told the council the WIFIA structure provides deferred principal payments and flexible draw timing that support rate stability. Broadus said the city has set an affordability threshold of a maximum 3.9% annual sewer utility rate increase, which equals about $3.50 per month on the current median monthly sewer bill of $89.72. Staff presented an alternative funding scenario that, without WIFIA and relying instead on municipal bonds, would require an immediate and much larger rate increase—roughly a 35% increase on current estimates, or about $31.40 per month on the median bill.

Details and next steps: Broadus outlined a multi-source funding plan including utility revenues, payments from the City of Portland, system development charges, municipal bonds and the WIFIA loan. He said the city submitted its application as the loan borrower after earlier project work with a private partner, and that the EPA provided a draft loan agreement in June. If authorized by council, Broadus said the city planned to execute the loan agreement later in August (staff gave Aug. 26 as the current target date), issue a request for proposals for construction work this fall, begin draws on the WIFIA loan in mid-2026 once early permits and early work were underway, issue supplemental municipal bonds in 2027, and complete construction in late 2028.

Broadus and Cross described other WIFIA benefits: a federal permitting liaison to help coordinate environmental and archaeological permitting; the option to defer principal payments for up to five years after substantial completion; and no prepayment/refinancing penalties. Cross summarized the loan's likely interest structure as an amount tied to the 30-year U.S. Treasury rate when draws begin, with the city able to elect the day to begin draws to lock in that rate.

Council discussion and motion: Councilors questioned how draw timing and construction delays affect repayment timing; staff said the repayment schedule is tied to the date of substantial completion and agreed contract provisions would discourage late construction. Councilor Gordon spoke in support of spreading the cost over time to keep utility rates stable. Councilor Windland moved adoption of Resolution 25-37 authorizing execution and delivery of the WIFIA loan agreement in an amount not to exceed $123,480,000; Councilor Burdick seconded. The motion passed 5-0.

What the action does and what it doesn't do: The council vote authorized execution of the loan agreement; staff emphasized execution does not obligate immediate draws and that the loan will be drawn over time as construction milestones are met. Staff said further council approvals will be required for the construction contract and for supplemental bonds.

Speakers and evidence: The presentation and discussion were led by Stefan Broadus, director of special projects, and Sean Cross, finance director. The council vote was recorded as unanimous (5-0).