Title
RESOLUTION APPROVING AMENDED AND RESTATED WATER RESOURCES AGREEMENT for phase 4a erus
Body
The city has the opportunity to purchase more 4A water from SACWSD. SACWSD is using funds from 4A water sales to raise more money for the purchase of augmentation water. SACWSD wants to buy augmentation water now because a large block of water is available.
The city is in the process of purchasing additional 4A ERUs based on previous authorization from city council and proposes to raise significant additional funds as discussed below. The city will have purchased approximately 577 ERUs in 2016 & 2017 but will need another 1,723 ERUs in the future for additional facilities and parks. The City receives approximately $500,000 in annual revenue in the Water Acquisition Fee Fund. It is possible to use that to fund over $6.5 million in a lease-purchase transaction. That would enable the purchase of a significant number of ERUs at the current discounted rate of $6,850 per ERU (minus the connection fee). It is desirable to purchase the ERUs without the connection fee since the price of water rights is escalating faster than the connection fees charged by SACWSD.
The only option offered by a financial institution is to use COPs to secure the funding for such a large water purchase, using the revenue in the Water Acquisition Fee Fund to repay the COPs. The city owned facility proposed to provide the equity to secure COPs is the Municipal Service Center since it is the closest in value to the amount being financed ($6.8 million and $6.5 million respectively). The other advantage of a lease-purchase deal is that the interest rate is proposed to be 1.91% for the first 5 years.
Staff Responsible (Department Head): Roger Tinklenberg
Staff Member Presenting: Roger Tinklenberg
Financial Impact: $6.5 million financing over 20 years
Funding Source: Water Acquisition Fee Fund
Staff Recommendation: Approve Resolution
Suggested Motion: I move to approve Resolution 2017-63. ...
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