HomeMy WebLinkAbout5 Interfund Loan Payoff Agenda Item # s 4)
rV -DONNER
TRUCKEE
ii
Public Utility Dis
Memorandum
To: Board of Directors
From: Mary Chapman
Date: March 16, 2001
Subject: Consideration of Interfund Loan Payoff
In reviewing the status of the District's cash flows, Peter and I discussed having the water
department payoff the electric department for the loan that the Board authorized in 1996 to fund
the replacement of the Donner Trails Pipeline. The money was borrowed from the electric
department building fund. Since we may need to draw on these funds to either fund the letter of
credit with Idaho Power or provide a fund to support cash flow activity during this construction
season, we thought it would be appropriate to transfer the loan from a loan against the Electric
Building Fund to a loan against the Reserve for Future Water Meters fund. We would
recommend that the transaction be done as of 12/31/00 and that the same repayment schedule
be maintained.
As of 12/31/00 the loan balance owed by the water department to the electric department was
$567,467.82. The 12/31/00 balance in the electric building fund was $753,983.20. Paying off
the electric department would give the building fund a balance of $1,321,451.02.
As of 12/31/00 the balance in the Reserve for Future Meters fund in the water department was
$1,026,523.80. After transferring the loan balance over to the water fund, the meter fund
balance would be $459,055.98.
RECOMMENDATION
To authorize staff to use the Reserve for Future Meters fund in the water department to pay off
its debt to the electric department in the amount of $567,467.82 as of 12/31/00. The same
repayment schedule will be used to repay the debt from the water department general fund to
the Reserve for Future Meters fund.
Agenda Item #TRMKIEE S�
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DONNER
Public Utility District
Memorandum
To: Board of Directors
From: Mary Chapman
Date: March 16, 2001
Subject: Letter of Credit and Line of Credit
As we discussed briefly at the last board meeting,Idaho Power is requiring that the District provide them with a$1.5
million letter of credit. They will also accept a consumer deposit in the amount of$1.5 million.
A letter of credit is either backed by a line of credit with the bank or it is secured. It can be secured by a cash
deposit with the bank or by putting up some other very liquid collateral. If the letter of credit is not secured, we
would essentially be applying for a$1.5 million loan. We would be charged a fee for the letter of credit and a fee
for the line of credit and we would pay interest on the debt if the letter of credit was ever exercised.
Originally, I was working with Bank of the West (the District's bank) to arrange for an unsecured letter of credit.
After reviewing our financial statements, they decided that they would only issue a letter of credit if it was fully
secured.
I then contacted US Bank. They had contacted me last year as they were interested in doing business with the
District. So, I thought that I would give them a try. They said they were interested and that they would pursue the
unsecured option. I have sent them our financial statements for the last four years and several other documents
including the transmission agreement with SPPC and the Idaho Power Contract with all of its amendments. While
they haven't made a commitment yet,our discussions have been very positive.
At this point,I view the options available to meet Idaho Power's credit requirement as follows:
I. To obtain an unsecured letter of credit from US Bank. The annual fee is $7,500. There will also be some
bank attorney fees to review the letter of credit form and conditions. We will also need to get Idaho Power
to approve the wording of the letter of credit. Steve Gross has provided us with a sample form. Steve will
need to negotiate any changes to the form.
2. To obtain a secured letter of credit from either US Bank or Bank of the West. If we choose this option, we
will have to put up a$1.5 million deposit with either bank. The fees will be greater and the interest rate we
will receive on the deposit will be less than we would receive from LAIF. I have contacted LAIF to see if
they issue letters of credit; they do not. The Board would have to decide how we would fund this deposit.
The deposit would only be insured for$100,000.
3. To deposit $1.5 million with Idaho Power in the form of a consumer deposit. They would pay us interest
on the deposit. The rate would be based on the LIBOR (London Interbank Offered Rates) rate published
daily in the Wall Street Journal. The current one month rate is 5.05625%. This is a lower rate than we are
receiving from LAIF but it is higher than a money market rate. We would need to enter into an agreement
with Idaho Power to define the conditions under which they could take the deposit. We would also want
assurance that their creditors would not have access to the deposit.
_...............
RECOMMENDATION
1. Authorize staff to continue to pursue an unsecured letter of credit with US Bank and to bring back the
appropriate documents for the Board to approve at the next meeting subject to Steve Gross's review;or
2. If US Bank does not want to provide the District with an unsecured letter of credit, staff should pursue
placing a cash consumer deposit with Idaho Power;staff should work with Steve Gross and Idaho Power to
draw up an agreement defining under what conditions Idaho Power would be able to take the deposit and
what assurances they will provide the District that the deposit will be protected from their creditors. Staff
should also be prepared to present funding options to the Board at the next meeting.
RUCKEE M
yek I
Fublic Utility District
Memo
To: Board of Directors
From: Bob Quinn, Electric Superintendent
Date: 14 March 2001
Subject: Connection Fees
This memo is to advise the Board of a need to correct our current electrical connection fees. Rising
labor, material, and overhead costs have placed us in the position of losing revenue when customers
request power. I am proposing one connection fee for both overhead and underground electrical
service. The difference in costs between the two is becoming minimal and one fee would be less
confusing to applicants and District staff.
Connection fees include shared costs of the installed transformer, labor and material costs to install
the individual service, administrative costs for setting up the account, and meter costs.
The following is an analysis of our current fees, the current calculated costs to provide service, and
the new proposed fee:
Current fee Calculated Costs Proposed fee
Overhead Service from
Overhead Transformer $685.00 $988.73 $1100.00
Underground Service from
Overhead Transformer $860.00 $1237.36 $1100.00
Underground Service from
Padmount Transformer $860.00 $1114.18 $1100.00
Recommendation: Schedule public hearing to increase electrical connection fees
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