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HomeMy WebLinkAbout8 Martis Valley Well and Pipelines Memorandum To: Board of Directors From: Ed Taylor, Water Superintendent Date: 4-2-01 Consideration of a funding plan for the construction of the Mardis Valley Well and Pipelines BACKGROUND - The Board of Directors approved the Martis Valley Well #1. The well drilling is complete. The construction of a Pump Station and Pipeline for the project is about to start. I previously presented to the Board an estimated construction cost for the project, which was $1,900,000. Now that we have opened the bids for the construction of this project, we can provide a better estimate of the cost. The new estimate of construction cost is$1,500,000. The Board approved paying for the project out of facility fees, however there are not enough funds in the water facility fees to pay for the entire project. This is true even at the new estimated costs. Mary, Peter and I meet to discuss the funding of the balance of this project. During this meeting, we discussed that there were other capital projects identified for the 2001 construction season. These are the projects identified for construction in the Water Master Plan during the summer of 2001. These additional projects are needed as a result of development that will be going forward this summer. Mary contacted Municipal Services Group for a quote for construction loan to fund the completion of the Martis Valley Well Project. She also ask for additional quotations for the funding of the complete project and other projects. The quotations are attached in Mary's report. If the District funded the Martis Valley Well Project with a 10-year construction loan from Municipal Services Group, then the current facility fees would cover the cost of the projects identified for construction during the summer of 2001.The details of the quotation for a construction loan are in the attached information. RECOMMENDATION That the Board fund the Martis Valley Well#1 Project with a construction loan for$1,500,000 with Municipal Services Group. Attachments 0 Page 1 TRUCKEE NER Pubhc Utility� t District� Staff Report To: Board of Directors From: Mary Chapman Date: March 29, 2001 Consideration of a funding plan for construction of the Mattis Valley well and pipeline and other District capital improvement projects for the water department. Ed Taylor has previously presented to the Board an estimated construction payment schedule for the Mattis Valley Well#1 and pipeline. The Board approved paying forte project out of facilities fees, however, there are not enough funds in water facildies fees to pay for the entire project(well and pipeline). Now that Ed has opened the bids associated with the project, he has a better estimate of the costs to complete the project and has provided the Board with an update of the construction costs. Peter asked that i contact Municipal Services Group to find out if they would be able to finance the balance of the project. They said that they could and they could also include the portion that we have already paid. When Ed, Peter and 1 met to discuss the funding of the balance of the project, we discussed other water capital projects that will need to be done this summer as a result of developments that will be going forward. I defer to Ed's presentation for any further discussion on this issue. While 1 was asking for a quote from Municipal Services Group for the completion of the pipeline, I asked them to provide some additional quotes for discussion purposes. The attached quotes are for 10 year terms and are for the amounts of$650,000, $1,000,000, $1,500,000 and$2,000,000. RECOMMENDATION. To direct staff to pursue a financing agreement with Municipal Services Group for a defined amount of principal as determined by the Board. 0 Page 1 \!' Municipal FACSIMILE Services Group, Inc. 5125 S. Kipling Parkway ♦ Suite 300 A Littleton, Colorado 80127 ♦ (303)933-9993 ♦ FAX (303) 933-9991 Cg T) =A TY AGRfiEME 1�'r The recipicnt(s)of this package agree that the receipt of the information contained herein is for the exclusive use of the Recipient(s)and Municipal Services Group, Inc. ("MSG") (the "Parties'j. The documents contained herein are confidential, privileged, and ndisclosable. Therefore.other than that for which e Recipient(s)art prohibited from photocopying,distributing,or otherwise disseminating this information for any Purpose is intended by the Patties,without obtaining the prior written consent of MSG. TO: Mary Chapman @ Truckee Donner Public Utility District @ 530/687-5066 FROM: Mike Hill DATE: 03/28/01 4:38 PM RE: Financing Proposal for Water Well and Transmission Line MESSAGE: Dear Mary: Please find attached the lease purchase financing proposal for the Water Well and Transmission Line Project. please give me a call with any questions, comments or changes that you would like to see at 800/549-8911, ext. 225. Thank you. st re ar , Mike Hill �•f< - ''.R,yy .' <� � .. ',.°,.x 'L y9"ai `Y"2'C'�.S`v�" a 111 ,: nnancing Ile Rttu�e p',amsrica' Mun '4�"�it � � WJ.W�16�OniIgCG� :a MMIj March 28,2001 Mary Chapman Manager of Administrative Services Truckee Donner Public Utility District 11570 Donner Pass Road Truckee,CA 96160 Dear Mary: Municipal Services Group, Inc. ("MSG")is pleased to provide the following proposal for lease Purchase financing for the Truckee Donner Public Utility District(the"District"). EXECUTIVE SUMMARY The tax-exempt installment purchase agreement provides a quick, easy and cost effective method to facilitate essential acquisitions, while spreading the cost over the useful life of the property. Qualified public entities such as municipalities, school boards, and utilities have found this method of purchasing capital equipment and projects to be an invaluable cash flow management too]. COST EFFECTIVE The use of installment purchase agreements is cost effective because it allows for: • Cash flow improvement for the District • The use of cash to meet more pressing requirements • Payment as the Equipment is utilized over its useful life OBJECTIVE Our objective in providing you with this financing includes: s Recommending a Cost Effective Structure • Preparing Tax-exempt Documentation • Providing funds for the Acquisition • Offering Administration throughout the Term of the Agreement &M5SbU, s • SUft Sao • Ufdv9 n,cara&aao 6az7 . mN W3.MWW aua uaaassz �, z SCOPE The scope of our proposal.includes: • performing a timely credit analysis • Terms&payment modes to meet individual needs • Immediate financing with approved credit • Equity is established with each payment • No Residual at end of the term INSTALLMENT STRUCTURE The agreement structure used by our company: • Facilitates legal documentation approval by recognized Bond Counsel • Complies with the laws of the State of California • Allows for assignment privileges CREDIT REVIEW Financial qualification assessment will require the following information to perform a credit review: • preceding three years' ' nual audited financial statements • Preliminary,to date fin- cial statement,if available • Budget summary for th current fiscal year • Demographic highlight, YOUR RATE STRUCTURE The rate structure prepared is predicated on the following: • The District's not being rated • source of repayment: General Fund • Annual in arrears payments • Fixed interest rate for the term • MSG shall invoice for all payments throughout the term of the lease 3 ACQUISITION ACCOUNT posit sufficient funds into an acquisition account upon commencement of the MSG will de agreement to posii[a[e this purchase. The portfolio allocation provides fully collateralized and facliquid funds for vendor settlement, and the quoted interest rate reflects an integration of escrow earnings into the payment stream. The account is established and maintained for the District, with disbursements made at the District's discretion. NOTE: No fees are assessed for establishing,managing, or disbursing funds The acquisition account is structured as follows: 1. The disbursements are flexible and,can be structured pursuant to the projected disbursement schedule. 2. Upon commencement,a portfolio allocation shall provide for the deposit of sufficient funds with MSG's qualified trustee bank 3, Funds shall be invested in "qualified investment instruments" such as obligations guaranteed by the Federal government. RATE QUALITIES These rates are based on current market conditions and are subject to the following: • Credit approval of the District's previous three years'annual audited financial statements • Proper execution of mutually acceptable documentation • Opinion of District's Counsel, which shall agree that the agreernent is legal, valid and binding and qualified as a tax-exempt obligation under the Tax Reform,Act of 1986, • This transaction is NON Bank Qualified. • Are valid through April 30. 2001. We are pleased that you have given us this financing opportunity and trust that this will meet your needs and objectives. Please call me directly with airy Questions or comments at 800I549- 8911, ext. 225. I look forward to speaking with you. Sincerely, unicipal Services Group MWhael Hill Territory Manager-West Coast 4 Municipal Services Group Lease/purchase Financing Truckee-Donner Public Utility District (A) (B) Term: 10 Years 10 Years Acquisition Cost: $ 650,000.00 $ 650,000.00 Capitalized Interest: $ _00 $ .00 Down Payment: $ -00 $ .00 Documentation Fee: $ _00 $ .00 Principal Balance: $ 650,000.00 $ 650,000.00 payment Mode: Annual in Arrears Annual in Arrears Factor: * .12991.3 .129486 Base Interest Rate: 5.73 % 5.47 % Treasury Note Index %: ** 119.8 8 ;% 48 $ 113.96 3,516.09 ( C ) Pa ment Amount: $ Total Amount: $ 844,434.80 $ 835,160.90 Less Amount Financed: $ 650,000.00 $ 650,000.00 Financing Cost: $ 194,434.80 $ 185,160.90 (A) Interest earned on Escrowed monies is integrated into the payment stream. Estimated level monthly disbursements for six months commencingMay 1, 2007. ($) Interest earned on Escrowed monies is accrued to the benefit of the District. As the assets are paid for in fall, the earned interest will then be paid directly to the District. (C) Initial Payment date is September 1, 2001. * Should the amount to be financed vary,simply multiply the new amount times the factor to determine the new payment amount as follows: X =New Payment Amount (New Amount Financed) (Factor from above) #* Provided all documents have been returned in a form acceptable to Lessor within thirty (30) days of the Dated Date(the "Period"), then the Base Interest Rate can remain in effect during the Period. In the event all documents have not been returned within the Period, in a form acceptable to Lessor, and/or if the U.S. Treasury Note Yield for a maturity comparable to the Agreement Term increases significantly, the Lessor reserves the right to adjust and determine a new Base Interest Rate (the "Adjusted Base Interest Rate"). The Adjusted Base Interest Rate shall be determined by multiplying the U.S. Treasury ehreceipt NOLC Yield for a maturity comparable to the Agreement Term(as of the business day immediately preceding Base Interest Rate of the documents by the Lessor)by the U.S.Treasury Note Index Percent, The Adjusted will be used to amortize the Principal Balance and will be fixed for the term of the agreement at closing. The Adjusted Base Interest Rate would apply assuming the transaction retains its original assumptions regarding purchase price,payment term and modes,and escrow funding. 5 Municipal Services Group Lease/Purchase Financing Truckee-Donner Public Utility District (D) (E) Term: 10 Years 10'Years Acquisition Cost: $ 1,000,000.00 $ 1,000,000.00 00 $ .00 Capitalized Cost- $ 00 $ .00 Down Payment: $ $ .00 Documentation Fee: $ 00 1,000,000.00 Principal Balance: $ 1,000,000.00 $ Payment Mode: Annual in Arrears Annual.128496rrms Factor: * .129913 Base Interest Rate: 5.73 % 5.47 % Treasury Note Index %: ** 119.38 % 113.96 % (]~)Pa ent Amount: $ 129,913-05 $ 128,486.30 284 Total Amount: $ 1,299,130.50 $ 1, , .00 Less Amount Financed: $ 1,000,000.00 $ 1,00000,00000.00 Financing Cost: $ 299,130.50 $ 284,863.00 (D) Interest earned on Escrowed monies is integrated into the payment stream. Estimated level monthly disbursements for six months commencing May 1, 2001. (E) Interest earned on Escrowed monies is accrued to the benefit of the District. As the assets are paid for in full, the earned interest will then be paid directly to the District (F) Initial Payment date is September 1,2001. Should the amount to be financed vary,simply multiply the new amount times the factor to determine the now payment amount as follows: X =New Payment Amount (New Amount Financed) (Factor from above) �* Provided all documents have been returned in a form acceptable to Lessor within thirty (30) days of the Dated Date(the "Period"), then the Base Interest Rate can remain in effect during the Period. In the event all documents have not been returned within the Period, in a form acceptable to Lessor, andlor if the U.S. Treasury Note Yield for a maturity comparable to the Agreement Term increases significantly, the Lessor reserves the right to adjust and determine a new Base Interest Rate (the "Adjusted Base interest Rate"). The Adjusted Base Interest Rate shall be determined by multiplying the U.S.Treasury Note Yield for a maturity comparable to the Agreement Term(as of the business day immediately preceding the receipt of the documents by the Lessor) by the U.S.Treasury Note Index Percent. The Adjusted Base Interest Rate will be used to amortize the Principal Balance and will be fixed for the term of the agreement at closing. The Adjusted Base Interest Rate would apply assuming the transaction retains its original assumptions regarding purchase price,payment term and modes,and escrow funding. 6 Municipal Services Group Lease/Purchase Financing Truckee-Donner Public Utility District (G) (H) Term. 10 Years 10 Years Acquisition Cost: $ 1,500,000.00 $ 1,500,000.00 00 $ .00 Capitalized Interest: $ .00 $ .00 Down Payment: $ 00 $ 00 Documentation Fee: $ 1,500,000.00 $ 1,500,000.00 Principal Balance: $ Annual in Arrears payment Mode: Annual in Arrears Factor: * .129913 .128267 5.73 % 5.43 % Base Interest Rate: 113.13 ck Treasu Note Index %: * 119.38 % (I)Pa mint Amount: $ 194,869.58 $ 192>401.01 Total Amount: $ 1,948,695.80 $ 1,924,010.10 1,500,000.00 $ 1,500,000.00 Less Amount Financed: $ 448,695.80 $ 424,010.10 Financin Cost: $ (G) Interest earned on Escrowed monies is integrated into the payment stream. Estimated level monthly disbursements for six months commencing May 1,2001. (H) Interest earned on Escrowed monies is accrued to the benefit of the District. As the assets are paid for in full,the earned interest will then be paid directly to the District. (I) Initial Payment date is September 1,2001. * Should the amount to be financed vary,simply multiply the new amount times the factor to determine the new payment amount as follows;, X =New Payment Amount (New Amount Financed) (Factor from above) ** Provided all documents have been returned in a form acceptable to Lessor within thirty(30) days of the Dated Date(the "Period"),then the Base Interest Rate can remain in effect during the Period. In the event all documents have not been returned within the Period, in a forth acceptable to Lessor,and/or if the II.S. Treasury Note Yield for a maturity comparable to the Agreement Term increases significantly, the rest Lessor reserves the right to adjust and determine a new Base interestn lRa a the U.S. d Base Treasury Not nto Yield to Rate"). The Adjusted Base Interest Rate shall be de[ermined by multiplying g preceding the receipt for a maturity comparable to the Agreement Term(as of the business day immediately p g P of the documents by the Lessor)by the U.S.Treasury Note Index Percent. The Adjusted Base Interest Rat will be used to amortize the Principal Balance and will be fixed for the term of the agreement at closing. The Adjusted Base Interest Rate would apply assuming the transaction retains its original assumptions regarding purchase price,payment term and modes,and escrow funding. . 7 Municipal Services Group Lease/purchase Financing Truckee-Donner Public Utility District W (K) Term: 10 ears 10 Years Acquisition Cost: !S _.:2,000,000..00 $ 2,000,000.00Capitalized Interest: .00 $ 00 Down Payment: 00 $ 00 Documentation Fee: 00 $ .00 Principal Balance: 2,000,000.00 $ 2,000,000.00 Payment Mode: Annual in Arrears Annual in Arrears Factor: 129913 .128267 Base Interest Rate: 5.73 °Io 5.43 % Treasury Note Index %: ** 119.38 % 113.13 17c (L) Payment Amount: $ 259,826.11 $ 256,634.67 Total Amount: $ 2,598,261.10 $ 2,565,346.70 Less Amount Financed: $ 2,000,000.00 $ 2,000,000.00 Financing Cost: $ 598,261,10 $ 565,346.70 (J) Interest earned on Escrowed monies is integrated into the payment stream. Estimated level monthly disbursements for six months commencing May 1, 2007- (K) Interest earned on Escrowed monies is accrued to the benefit of the District. As the assets are paid for in full, the earned interest will then be paid directly to the District. (L) Initial Payment date is September 1,2007. * Should the amount to be financed vary, simply multiply the new amount times the factor to determine the new payment amount as follows: X =New Payment Amount (New Amount Financed) (Factor from above) ** Provided all documents have been returned in a form acceptable to Lessor within thirty (30) days of the Dated Date(the "Period"), then the Base Interest Rate can rcmain in effect during the Period. In the event all documents have not been returned within the Period, in a form acceptable to Lessor, and/or if the U.S. Treasury Note Yield for a maturity comparable to the Agreement Term increases significantly, the e Lessor reserves the right to adjust and determine a new Base Interest Rate (the "Adjusted Base Interest Rate"). The Adjusted Base Interest Rate shall be determined by multiplying the U.S.Treasury Note Yield for a maturity comparable to the Agreement Term(as of the business day immediately preceding the receipt of the documents by the Lessor)by the U.S.Treasury Note Index Percent. The Adjusted Base Interest Rate will be used to amortize the Principal Balance and will be fixed for the term of the agreement at closing. The Adjusted Base Interest Rate would apply assuming the transaction retains its original assumptions regarding purchase price,payment term and modes,and escrow funding.