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Clinton advances RWRF renewable gas planning, schedules financing vote
Summary
The Clinton City Council authorized engineering design work for a renewable gas project at the city wastewater plant and set a date to consider issuing short-term general obligation notes to refund a State Revolving Fund loan, councilors said.
The Clinton City Council on Feb. 11 approved hiring HDR Engineering Inc. to begin design work for a renewable-gas project at the city's regional wastewater resource facility (RWRF) and set a future meeting to consider issuing general obligation capital loan notes to address a debt-ratio shortfall tied to State Revolving Fund (SRF) financing.
Council member Oberyn introduced the engineering authorization, saying, “I have a resolution authorizing the commencement of work by HDR Engineering Inc. on the Clinton RWRF Renewable Gas Project. Move that this resolution be adopted as presented.” City staff explained the contract authorization covers initial design and cost-estimating work that will define equipment needs and allow the city to seek SRF loan terms.
Why it matters: Councilors said design information is necessary before the city can finalize a contract with ADM, a large industrial customer whose flows will affect plant operations, and to calculate loan principal and interest for an SRF application. Staff said the design work will be paid from the RWRF project budget and that the SRF loan would ultimately fund the equipment if the project proceeds.
City staff (identified in the meeting as Matt) described the approved authorization as two parts and said the part being funded now is part A, design work “to get a design with an estimated cost with, like, by line item of the equipment” so the city can present accurate figures to SRF lenders. Staff said the contract is “not to exceed $10,000” and that the cost will be reimbursed with SRF loan proceeds if the project moves forward.
During discussion councilors asked about schedule and operational timing. Staff said they expect to have the design estimate within roughly a month and warned that delays would prolong a period when the city may need to flare methane produced by ADM flows expected to arrive in October. Staff also said the city will evaluate federal tax credits and renewable identification numbers (RINs) as potential revenue streams when the detailed costs are available.
On a related financial item, the council adopted a resolution setting a date for a hearing on an authorization to issue not-to-exceed $2,000,500 in general obligation capital loan notes. City staff explained the step is intended to refund a portion of outstanding SRF debt and convert it to a short-term general obligation note to restore a required SRF debt-coverage covenant that had fallen below the federal/state-required threshold. Staff said the plan would produce a 1.12 debt ratio immediately and that projected industrial flows from ADM would raise the ratio substantially later in the year.
Councilors discussed payback terms. Staff said the plan calls for a three-year payoff schedule with an initial payment of about $591,000 this fiscal year and roughly $630,000 in subsequent years, noting those numbers are preliminary and subject to final interest rates. An Iowa Finance Authority representative was referenced as coordinating SRF and IFA terms.
What’s next: Staff will return with the HDR design deliverable and final loan terms for the council’s consideration at the date set for the financing vote. No final borrowing or construction work was approved on Feb. 11; the council approved design authorization and set the public meeting date to consider the loan.
