Adopt resolution authorizing the first amendment to the Loan Agreement between the County of Yolo and the Madison Community Services District, and authorize the Chair to execute the first amendment to Loan Agreement No. 23-139 between the County of Yolo and the Madison Community Services District. (No general fund impact) (Haynes)

On June 27, 2023, the Board of Supervisors approved a loan agreement between Yolo County and the Madison Community Services District ("Madison CSD") to provide cash flow financing for the Madison Community Drinking Water Rehabilitation Project. Madison CSD obtained a $3.8 million grant from the California Department of Water Resources to fund the project, which involves replacement of existing leading water distribution system pipelines and rehabilitation to the existing well to ensure the community has reliable water supply during current and future droughts. Due to the grant funds being provided on a reimbursement basis, the Madison CSD approached the County about providing a loan or line of credit in order to properly manage the cash flow for the project. 

Under the terms of the loan agreement, the County provided a $500,000 line of credit with a simple interest rate of 5% per year and a maturity of December 31, 2024. The agreement also authorized the County Chief Financial Officer to approve an increase to the principal amount by an additional $250,000 if conditions warranted, for a total principal amount of $750,000. In October 2023, Madison CSD requested a draw of $200,000 from the line of credit, and that balance remains outstanding. Unfortunately, challenges with project design delayed the start of construction beyond the timeframe that was originally anticipated, and beyond the December 31, 2024, maturity date. However, the project continues to move forward with construction anticipated to be completed in late 2025 or early 2026. Due to the updated timeline, Madison CSD has requested that they be able to retain the $200,000 loan from the County in order to manage cash flow through the construction period as originally anticipated. As such, staff recommend amending the loan agreement to extend the maturity date to December 31, 2026. All other terms and conditions of the loan agreement would remain unchanged. 

The Department of Financial Services has worked with the Madison Community Services District and County Counsel's Office in bringing this loan amendment to the Board.