Hayward approves $244 million WIFIA loan authorization for wastewater plant upgrades

The Hayward City Council on April 1 adopted a resolution authorizing the city manager to execute a Water Infrastructure Finance and Innovation Act (WIFIA) loan agreement with the U.S. Environmental Protection Agency for a maximum principal amount of $244,139,000 to finance part of the city's Water Resource Recovery Facility upgrades.

Public Works Director Alex Amiri told the council the upgrades are required by the California Regional Water Quality Control Board's nutrient-reduction mandate and that total project costs are estimated at $498 million. Amiri said the city has assembled a financing plan that combines the WIFIA loan (up to 49% of project cost), revenue bonds and grants.

Christian Stronger of NHA Advisors, the city's financial advisor, described the WIFIA loan as a fixed-rate, draw-schedule loan with a long final maturity (the draft term shown in briefing materials extended to 2063) and with features intended to spread the sewer-fund debt-service impact over time. Stronger said the loan is structured so early repayments are deferred while other near-term debt is outstanding; that staging reduces initial annual debt-service pressure and then ramps payments later when older debt matures.

Stronger said the WIFIA loan rate would be market-based (estimated in the briefing at roughly 4.5% to 4.6% at the time of staff briefing), and that the loan may permit a single interest-rate reset after closing if the city has not drawn funds and the project is less than 51% complete. He said the city plans to monitor market conditions after closing to determine whether a rate reset would be advantageous.

Councilmembers asked about risks if draws or reimbursements are delayed and about the city's options should WIFIA proceeds be unavailable. Staff said the financing plan also includes revenue bonds and other funding sources to fill any gaps and that the city would return to council for direction if federal draws or reimbursements were interrupted.

The council voted unanimously to approve the WIFIA-authorizing resolution. The motion was made by Councilmember Goldstein and seconded by Councilmember Andrews. The clerk recorded all council members voting yes.

Ending

Staff and council characterized the project as a multi-decade, generational infrastructure program driven by state nutrient-reduction mandates. Councilmembers thanked staff and consultants for the financing work and urged continued pursuit of state and federal funding where available.