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STATE OF IDAHO DIVISION OF ENVIRONMENTAL QUALITY LOAN OFFER, ACCEPTANCE AND CONTRACT FOR WASTEWATER TREATMENT FACILITY DESIGN AND CONSTRUCTION SECTION I. INTRODUCTION The State of Idaho (State) is authorized by the Water Pollution Abatement Act (Act), Title 39, Chapter 36 of the Idaho Code, to make loans from the Wastewater Treatment Facility Loan Account (Account) to assist municipalities in the construction of wastewater treatment facilities. The Idaho Board of Health and Welfare, through the Division of Environmental Quality (Division), is authorized to administer the Act. The Division has determined that the City of Moscow has established eligibility for a loan under the terms of the Act and the Rules for Administration of Wastewater Treatment Facility Loans, Title 1, Chapter 12 (Rules). A completed application for a Wastewater Treatment Facility Design and Construction Loan has been submitted to the Division by the Applicant. The Division hereby offers a loan to the Applicant according to the terms and conditions contained in this document and the Rules. SECTION II. DESCRIPTION OF PROJECT This loan offer is for design and construction of the following project: A. Loan Project Number: 1898-03 B. Project Description: Design and construction of activated sludge aeration basins with biological phosphorus removal clarifiers, re-aeration and sludge processing. C. Terms: $10,000,000 at 4.0% interest, to be repaid in biannual installments over 20 years. 1 ---PAGE BREAK--- Loan No. 1898-03 D. Estimated Project Budget Loan Other Total 1. Administrative $70,000 $25,000 $95,000 2. Engineering Fees 1,000,000 300,000 1,300,000 3. Construction 8,930,000 2,675,000 11,605,000 4. Total $10,000,000 $3,000,000 $13,000,000 SECTION Ill. GENERAL CONDITIONS This offer may only be accepted by signature by an authorized representative of the Applicant. Upon acceptance by the Applicant, this offer shall become a loan contract and the Applicant shall become a Borrower. The effective date of this loan contract shall be the date of acceptance by the Borrower after this Joan contract has been duly authorized by ordinance of the Borrower. By accepting this offer, the Borrower agrees to all terms and conditions set forth in this document and the Rules: The Borrower agrees: A. To not transfer, assign or pledge any beneficial interest in this contract to any other person or entity without the prior written consent of the Administrator of the Division of Environmental Quality (Administrator). To not enter into sale, lease or transfer of any of the property related to the project. To not make any additional material encumbrances to the project without the prior written consent of the Administrator. To not incur any liabilities that would materially affect the funds pledged to repay this loan without the prior written consent of the Administrator. To not delegate legal responsibility for complying with the terms, conditions, and obligations of this contract without the prior written consent of the Administrator. Notwithstanding any other provision of this paragraph, the Borrower may sell or otherwise dispose of any of the works, plant, properties and facilities of the project or any real or personal property comprising a part of the same which shall have become unserviceable, inadequate, obsolete or unfit to be used in the operation of the project, or no longer necessary, material or useful in such operation, without the prior written consent of the Administrator. B. To enter into such contractual arrangements with third parties as it deems advisable to assist it in meeting its responsibilities under this contract. C. To fulfill all declarations, assurances, representations and statements in the application and all other documents, amendments and communications filed with the Division by the Applicant in support of the request for this Joan. 2 ---PAGE BREAK--- Loan No. 1898-03 D. To comply with applicable State and Federal employment requirements including, but not limited to, Equal Employment Opportunity and Civil Rights requirements. E. To make efforts to award subagreements to Minority and Women-owned businesses (MBEIWBE}. The fair share goals, 1% and 1% respectively, will be in bid solicitations and documentation of efforts to obtain MBEIWBE participation will be required of any contractor who fails to attain the goals. Quarterly reports of MBEIWBE utilization will be prepared on forms supplied by the Division. F. To provide evidence of ownership in the form of fee simple title or long-term lease and right of access or easements for real property on which the project is to be constructed. Clear title to all real property necessary for the successful operation of the facilities shall be guaranteed by the Borrower for the useful life of the project. G. To take affirmative action to ensure that the project shall be completed and operated in conformance with federal and state laws relating to occupational health and safety. H. That if prior to completion of this contract the project is damaged or destroyed, there will be no reduction in the amounts payable by the Borrower to the Division. I. That in the event there is any default in the payment of either the principal amount or the interest due under this contract, or any breach by the Borrower of any of the terms or conditions of this contract, the entire principal amount and whatever interest is due to the date of payment may be declared due and immediately payable. The amount of such default shall bear the same interest rate as applies to the principal of this loan from the date of default until the date of payment by the Borrower. All costs incurred by the Division due to such default. including court costs and attorney's fees, shall be repaid by the Borrower to the Division. J. That any waiver by the Division at any time of the rights or duties under this contract shall not be deemed a waiver of any subsequent or additional rights or duties under this contract. K. That the use by the Division of any remedy specified in this contract for its enforcement is not exclusive and shall not deprive the Division of the right to seek any other appropriate legal or equitable remedy. L. That this agreement is binding upon the Borrower and the Division, and any person, office or entity succeeding the Borrower or the Division. 3 ---PAGE BREAK--- M. To comply with all applicable federal, state and local laws. SECTION IV. PROJECT MANAGEMENT The Borrower agrees to: Loan No. 1898-03 A. Require the prime engineering firm(s) and their principals retained for engineering seNices to carry professional liability indemnification to protect the public from the engineer's negligent acts and errors of omission of a professional nature. The total aggregate of the engineer's professional liability indemnification shall be one hundred thousand dollars ($100,000) or twice the amount of the engineer's fee, whichever is greater. Professional liability indemnification must cover all seNices rendered for all phases of the project, whether or not those seNices are state funded, until the certification of project performance is accepted by the Division. B. Comply with the Public Contracts Bond Act, Title 54, Chapter 19, Idaho Code, including requiring the prime construction contractor retained for construction to carry performance and payment bonds equal to one hundred percent (100%) of the contract price. The bond will be released when the constructed facility is accepted by the Borrower. C. Assure that contracts related to the project which provide for arbitration allow appeal of any resulting arbitration decision to a district court or allow the arbitration to be non-binding on both parties if either party desires not to use arbitration as a method of dispute settlement. D. Jointly with an engineering consultant provide assurances that the physical and operational integrity of the works, when constructed, will achieve the level of treatment provided for in the design specifications. E. Provide for the accumulation of funds through charges made for seNices, through revenue bonds, or otherwise, for the purposes of establishing a fund dedicated solely to the repayment of principal and interest on this loan, capital replacement and future improvement, betterment, and extension of such works occasioned by increased wastewater loadings on the works. F. Provide a plan and program for an equitable user charge system for payment of operation and maintenance of constructed facilities. Make available on an equitable basis the seNices of the project to the residents and commercial and industrial establishments of the area it was designed to seNe. The user charge system shall be approved by the Division and enacted by the Borrower prior to receiving final payment. 4 ---PAGE BREAK--- Loan No. 1898-03 G. Review and update the user charge system at least biennially during the life of this agreement to assure that all costs including debt retirement, operation and maintenance are offset by sufficient revenues. H. Develop and adopt a sewer use ordinance approved by the Division prior to receiving final payment of State loan funds. I. Provide an operation and maintenance manual for the project approved by the Division prior to receiving final payment of State loan funds. J. Provide adequate staffing and qualified operation and maintenance personnel as specified in the operation and maintenance manual approved by the Division. K. Assure that the operator in charge of the treatment facility has a level of competency commensurate with the nature of the collection and treatment facility. He(She) must be a graduate of an approved wastewater operators training program or be certified as a Wastewater Treatment Works Operator in a class equal to or greater than that of the facility. L. Assure that treatment facility personnel shall participate in operator training programs approved by the Division and designed to assure competence in the operation and maintenance of the facility. M. Commence satisfactory operation and maintenance of the sewage treatment facility on completion of the project in accordance with applicable provisions, rules of the Division and any other applicable law, rule or regulation and not discontinue operation or dispose of the treatment facility without the written approval of the Division. N. Provide for continuing acceptance and treatment of local septage waste, if such facilities were constructed under this loan contract. 0. Maintain project accounts in accordance with "generally accepted government accounting standards." These standards are usually defined, but not limited to, those contained in the U.S. General Accounting Office (GAO) publication "Standards for Audit of Governmental Organizations, Programs, Activities and Functions" (2/27/81 P. Certify whether or not the project is performing in accordance with the design performance standards after the project has been in operation for one year. If the project cannot meet these standards, the Borrower must submit a corrective action report and a schedule for bringing the project into compliance. 5 ---PAGE BREAK--- Loan No. 1898-03 SECTION V. SPECIAL CONDITIONS A. The Borrower shall complete the project in accordance with the following schedule: Number of months from Loan Acceptance 0 0 0 3 14 14 18 18 18 18 17 30 Task 10% Design Review 50% Design Review 90% Design Review Final Plans, Specifications and Bid Documents Bid Summary 5/25/00 Award Construction Contract 6/5/00 Project Management Conference. 6/15/00 Plan of Operation Amendment 8/15/oo Draft Operation & Maintenance Manual 712001 Staffing Plan 7/2001 Construction Completion 12/2 oo 1 User Charge System Enacted 1212001 Sewer Use Ordinance Enacted 1212001 Final Operation &Maintenance Manual 1212001 Final Inspection 1212001 Initiate Operation 1112001 Final Payment 112002 Certify Performance (1 yr from completion) 1212002 B. The above schedule may be changed by amending the plan of operation; all amendments to the plan of operation must be approved by the state project engineer, prior to becoming effective. SECTION VI. SECURITY REQUIREMENTS The Borrower agrees: A. This loan will be evidenced and secured by a revenue bond in the amount of $10,000,000 (ten million dollars) that will be issued upon completion of construction. A copy of the revenue bond will be attached to this contract and incorporated by reference. B. To establish a reserve account that within 5 years will contain an amount equal to 1 year's repayment of principal and interest due on this contract. A minimum of 20 percent of the total reserve will be deposited annually during 6 ---PAGE BREAK--- Loan No. 1898-03 the 5 year period. In the event Borrower fails to make any repayment due on this contract, Borrower shall immediately use the funds in the reserve account to pay the past due principal and interest on this contract. Borrower will inform the Division in writing when funds from the reserve account are used. Within 30 days of using the funds in the reserve account, Borrower will replenish the reserve account in an amount equal to the amount borrowed from the reserve account. The reserve account may be used by the Borrower solely for the purpose of securing repayments on this contract. SECTION VII. LOAN DISBURSEMENTS The Borrower agrees: A. This loan shall be used solely to aid in the financing of the Borrower's project. B. Requests for actual disbursement of loan funds will be made by the Borrower using forms provided by the Division. Upon approval of the disbursement request by the Division loans funds shall be released to the Borrower. C. A project review by the Division will determine final eligible costs for the project. D. If the actual eligible cost of the project is determined by the Division to be lower than the estimated eligible cost, the loan amount will be reduced accordingly. E. Payment of the final five percent of this loan shall be withheld until the following requirements are met: 1. The Borrower's engineer certifies that the project has been constructed according to plans and specifications previously approved by the Division and that the project is fully operational; and 2. The Division has inspected the project and verifies the engineer's certification; and 3. The Division has determined that all terms and conditions of this agreement have been met; and 4. A final loan repayment schedule has been completed; and 5. All security requirements of Section VI have been satisfied. 7 ---PAGE BREAK--- Loan No. 1898-03 F. This offer is subject to the existence of the offered sum of money in the Account at the time of payment. Should the offered sum of money not be available in the Account at the time of payment, the Division hereby agrees to pay the Applicant the offered sum of money on the basis of the Applicant's priority position immediately upon the accrual of said sum in the Account. SECTION VIII. REPAYMENT TERMS AND SCHEDULE The Borrower agrees: A. This loan shall be repaid in the manner set forth in the revenue bond attached to this contract and incorporated by reference. B. To pay biannual payments of principal and interest and to fully amortize this loan not later than twenty (20) years from project completion. Interest will begin accruing with the first disbursement of funds. At the end of construction accrued interest will be either paid to the Division or incorporated into the final loan amount if the approved amount has not been exceeded. C. This loan contract shall remain in full force and effect for the actual service life of the project. At a minimum, this loan contract shall remain in full force and effect until all loan proceeds, including principal and interest, have been paid in full or the contract is otherwise suspended or terminated by the Division. SECTION IX. PROHIBITIONS The Borrower agrees: Expansion of collection systems in excess of reserve capacity of the treatment works will be prohibited unless concurrent designated construction provisions for adequate treatment are provided by the Borrower. SECTION X. SUSPENSION OR TERMINATION OF LOAN CONTRACT A. The Administrator may suspend or terminate this loan contract prior to final disbursement for failure by the Borrower or its agents, including engineering firm(s), contractor(s) or subcontractor(s), to perform. This loan contract may be suspended or terminated for good cause including, but not limited to, the following: 8 ---PAGE BREAK--- Loan No. 1898-03 1. Commission by an employee or agent of the Borrower, of any of the following acts in a manner which materially affects the Borrower's obligations under this contract :fraud, embezzlement, theft, forgery, bribery, misrepresentation, conversion, malpractice, misconduct, malfeasance, misfeasance, falsification or unlawful destruction of records, receipt of stolen property or any crime for which the maximum sentence includes the possibility of one ( 1) or more years' imprisonment. 2. Violation(s) of any term of this loan contract; or 3. Any willful or serious failure to perform within the scope of the project, plan of operation and project schedule, terms of architectural/engineering subagreements, or contracts for construction; or 4. Utilizing a contractor or subcontractor who has been debarred for good cause by any federal or state agency from working on public work projects funded by that agency. B. The Administrator will notify the Borrower in writing and by certified mail of the intent to suspend or terminate this loan contract. The notice of intent shall state: 1. Specific acts or omissions which form the basis for suspension or termination; and 2. Availability of a hearing, conducted by the Administrator, or his designee as hearing officer, said hearing being conducted in an informal manner at a time and in a place specified by the Administrator. C. Upon the proof of the existence of cause(s) for suspension or termination by substantial evidence or by proof of judgement or conviction of offense(s), the Administrator shall make a written determination, sending the determination to the Borrower by certified mail within seven days of the hearing. D. Upon written request by the Borrower with evidence that the cause(s) for suspension no longer exists, the Administrator may, if funds are available, reinstate the loan contract. If a suspended loan contract is not reinstated, the loan will be amortized and a repayment schedule prepared in accordance with the provisions of this loan contract. E. No terminated loan shall be reinstated. Terminated loans will be amortized and a repayment schedule prepared in accordance with the provisions of this loan contract. 9 ---PAGE BREAK--- Loan No. 1898-03 SECTION XI. ACCESS AND INDEMNIFICATION The Borrower agrees to: A. Provide the Division, or its authorized agents, access to all files, records, accountings and books relating to the management and accountability of this loan. B. Indemnify and save harmless the State of Idaho, its agents and its employees from any and all claims, actions, damages, liabilities and expenses directly or indirectly connected to the Borrower or its agents, employees, contractors, or assignees' actions related to the location, design, construction, operation, maintenance, repair, failure or deactivation of the project or any part of the project. SECTION XII. OFFER The offer set forth herein must be accepted, if at all, on or before June 28, 2000. Administrator Division of Environmental Quality SECTION XIII. ACCEPTANCE The City of Moscow, by and through its undersigned representative, accepts the foregoing offer and agrees to dischar all obligations and to comply with all terms and conditions contained herein Marshall H. Comstock, Mayor 10 ---PAGE BREAK--- PLEASE NOTE: Questions concern inK compiŃ ,1 of this form should bedirected to Cecelia ContT"" " at(106)553-1899. United States Environm¢ntal Protection Agency FORM Approved EPA Washington, DC 20460 OMB No. 2090-0014 & Preaward Comfiliance Review Report for All Applicants Reques ing Federal Financial Assistance Expires 4-30-99 Note: Read instructions on reverse side before completing form. L A. Applicant (Name, City, State) B. Recipient (Name, City, State) C. EPA Project No. City of Moscow Moscow, Idaho City of Moscow Moscow, Idaho II. Brief description of proposed project, program or activity. New Wastewater Treatment Plant Construct ion Ill. Are any ciyil rights lawsuit£ or corns;ain¤ peQQing ainst applic¥nt and/or recipient? If yes, hst diose complamts and e d1spos1t1on o each complamt. DYes IV. Have ana civil rights compliance reviews of the applicant and/or reciP.ient been conducted by any Federal agency tiring die two years prior to this applicatiOn for activities wtiich would receive EPA ass1stance? If yes, list those compliance reviews and status of each review. V. Is any other FederaJ financi¦l assi.stance being applie9 for or is any other Federal financial assistance being alXJhed to any portwn of th1s proJect, program or act1v1ty? Yes i!(l No If yes, Jist the other Federal Agency(s) describe the associated work and the dollar amount of assistance. VI. If entire conununity under the applicant's jurisdiction is not served under the existing facilities/services, or will not be served under the proposed plan, give reasons why. Entire community will be VII. Population Characteristics I. A. Population of Entire Service Area B. Minority Population of Entire Service Area 2. A. Population Currently Being Served B. Minority Population Currently Being Served 3. A. Population to be Served by Project, Program or Activity B. Minority Population to be Served by Project, Program or Activity 4. A. Population to Remain Without Service B. Minority Population to Remain Without Service Vlll. Will all new facihties or alterations to existing facilities financed by these funds be designed and constructed to be readily accessible to and usable by handicapped persons? If no, explain how a regulatory exception (40CFR 7.70) applies. XIO Yes 0 No IX. Give the schedule for future projects, programs or a2ies (or for future plans), bft which services will be provided to all beneficiaries within applicants's juri · tion. If there is no schedu e, explain why. served lONo 0 Yes lO No Number of People 21 '000 1 470 ?1 nnn 1 ,470 21 '000 1 ,470 0 0 n/a X. I certify t'atements I have made o all attachments thereto are true, accurate and complete. I acknowledge that any kn gly false or misle _St?g stat cnt y be punishable by fine or imprisonment or both under applicable Jaw. A. 4,h 4rfo'V3 d Title of Authorized Official Mavor / the U.S. Environmental Protection Agency , 0 Approved 0 Disapproved Authorized EPA Official Date EPA Form 4700§4 (Rev. 1/90) PreVIOUS ed1tJons are obsolete. 0 ---PAGE BREAK--- STATE OF IDAHO DIVISION OF ENVIRONMENTAL QUALITY 1410 North Hiiton • Boise, Idaho 83706-1255 • (208) 373-0502 The Honorable Marshall Comstock Mayor, City of Moscow P. 0. 9203 Moscow, Idaho 83843 Dear Mayor Comstock: Dirk Kempthorne, Governor C. Stephen A!ired, Administrator : " At the last meeting it was concluded that there is a possibility that (}jlfP:V cØuld issue Revenue B use the proceeds to repay the DEQ loan now as opposed to in 20 years on alp!lll:s(;h\'dule maturity. We understand that such a deal could only be made if it was equitable for both parties. · · · To date DEQ has disbursed of the $!0,000,000·that ·,:fa+af . Interest has also been accruing on the funds as they were disbursed, (currently$···· The amou.ntl>f%ds disbursed plus accrued interest ) would have to be converted to one OCIU(lt'eÙptes (not exceedi!J.g:$ ) for amortization with annual payment requirements paid backt<:> !)2Q.atl\>llfi closing. · ' ' However, I hereby authorize the waiver of the aclll:"1 1nterest c-t.ae/0d:.";n.:1e'I)EQ loans that would be required to reimburse the City for its actual "Cost of lssu!m::e" on the Bonds, but(tijp 0xceed . Costs of Issuance on the Bonds is defined to include: the City's B<).nd debt sef"'ce annuaLrequirements less the annual DEQ loan requirements present valued to maturity at 4.t).%(currently estimated at$Ł· plus the City's excess interest costs that when combined with actual disbursements exceed $ (currently estimated at and to provide for a contingency of up to$_ " . The City of l'yl1w must agree:.:t iÚs)l* Revenue ;#l'·o"er evidence of debt in a timely manner and in an amount sufilci!'utlo reimburse ):)'EQ.!Jl2c.S.. ' upon the closing transaction for sale of the bond( s I wish to ex!rÛ