HomeMy WebLinkAbout8 Transfer Water Capital Funds Agenda Item #
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To: Board of Directors
From: Peter Holzmeister
Date: June 16, 2003
Subject: Transfer of water capital funds
Why this matter is before the Board — This matter recommends that funds be
transferred from water restricted funds to the water general fund. Transfers from
restricted funds to the general fund can be transferred only by the Board.
History—We have been discussing the cash position of the water utility in relation to the
need to fund various capital construction projects. At a recent meeting, Ed Taylor
described a list of capital projects that the District needs to consider constructing. I then
described the cash available for construction of water projects. I described the fact that
when we issue contracts for construction of water capital projects without specifying the
source of funds, it often happens that the Water General Fund becomes the de facto
payer of the bills. When the Water General Fund is short of cash, the Electric General
Fund has become the default payer of those bills.
We ran into a cash problem last year because the Electric General Fund was drawn
down paying the costs of water capital projects. The Electric General Fund needed its
cash to deal with purchase power issues. I suggest we never allow water costs to rely
on a cash balance in the Electric General Fund.
We recently sold land and realized revenues of 3.7 million dollars. The Board
established a Surplus Land Trust Fund to temporarily finance capital projects. The idea
is to use the Trust Fund as a way to build a project and then arrange permanent
financing.
At the last Board meeting I described four water projects whose bills were paid by the
Water General Fund and defaulted to the Electric General Fund. The attached table
entitled District Cash position will remind you of that presentation. It shows the Water
General Fund being overdrawn by $77,570. It also shows that expenses related to
Donner Lake Water System Project, Glenshire Water System Project, and The Bridge
Street Tank Project totaling in the aggregate $528,249 were charged to the Water
General Fund.
New Information — Transfers can be made from restricted funds to solve this problem
as follows:
Donner Lake Water System: $296,035 can be transferred from the Surplus Land Trust
Fund to the Water General Fund. When the SRF funds are approved the Surplus Land
Trust Fund can be reimbursed
Glenshire Water System Project: $94,856 can be transferred from the Surplus land Trust
Fund to the Water General Fund. When the surplus Glenshire land is sold and a final
accounting of the Glenshire costs is complete, the Surplus Land Trust Fund can be
reimbursed.
Bridge Street Tank Project: $137,358 can be transferred from the Water Facilities Fees
Fund to the Water General Fund.
These three transactions will restore a balance of $450,679 to the Water General Fund,
and will repay $77,570 to the Electric General Fund. It will also place the financing of
water capital into proper funds.
Recommendation — I recommend that the Board:
1. Transfer $296,035 from the Surplus Land Trust Fund to the Water General Fund to
pay for costs associated with the Donner Lake Water System Project. When permanent
financing for the Donner Lake Water System is secured the Surplus Land Trust Fund will
be reimbursed
2. Transfer $94,856 from the Surplus land Trust Fund to the Water General Fund to pay
for costs associated with the Glenshire Water System Project. When the surplus
Glenshire land is sold and permanent financing for the Glenshire Water System is
secured, the Surplus Land Trust Fund will be reimbursed.
3. Transfer $137,358 from the Water Facilities Fees Fund to the Water General Fund to
pay the costs associated with the Bridge Street Tank Project.
i
t
DISTRICT CASH POSITION
Cash
Electric General Fund 2,910,361
Water General Fund (77,570)
Electric Restricted Funds
Facilities Fees 460,726
Building Fund 267,407
Rate Reserve Fund 429,926
Subtotal 1 ,158,059
Water Restricted Funds
Facilities Fees 209,124
Surplus Land Trust Fund 3,773,707
Subtotal 3,982,831
Water General Fund (77,570)
Donner Lake Project 296,035 Land Trust Fund
To SRF
Glenshire Water System Project 94,856 Land Trust Fund
To sale of Land
Bridge Street Tank 137,358 Facilities Fees
Subtotal 528,249