ITEM:		ACTION ITEMS
18.	STATUS UPDATE ON PROCESS TO SECURE A $2 MILLION LINE OF CREDIT TO FUND DEVELOPMENT OF WATER SUPPLY PROJECTS
Meeting Date:			July 21, 2008	Budgeted:	No
From:			Darby Fuerst,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Rick Dickhaut	Cost Estimate:	N/A
General Counsel Approval: Yes
Committee Recommendation: Yes
CEQA Compliance: N/A

SUMMARY: In response to a request from Director Brower and concurrence by the Administrative Committee and the Board of Directors that the District secure a $2 million line of credit, District staff has been working with several area banks to secure proposals for the line of credit. Since the Board has not formally selected a specific project that the funds will be used for and a permanent project funding mechanism is also pending identification of the actual project, preliminary discussions have entailed more meetings and conference calls than anticipated and the process has taken longer than expected. Despite these issues, Bank of America, First National Bank of Central California, and Rabobank have reviewed the last three years of the District’s audited financial statements and expressed interest in furnishing a line of credit to the District. Two of the banks have submitted proposed terms and conditions for discussion purposes and the third has indicated it will do so shortly. However, each bank has indicated that further discussions and additional information would be required before determining whether an actual loan commitment could be issued. After proposed terms and conditions have been received from all three banks, District staff will evaluate all information received, have additional discussions with each bank and provide a formal recommendation regarding establishing the line of credit to the Board of Directors at its August 18, 2008 meeting.

RECOMMENDATION: This is a status update only and no Board action is required at this time.

BACKGROUND: Director Brower has requested that the Board direct staff to secure a $2 million line of credit to fund potential startup costs associated with the MPWMD 95-10 Project (desalination project in the Sand City area) if it is deemed feasible by the constraints analysis currently under way. The amount borrowed via the line of credit would be repaid from either an increased user fee, a portion of debt issuance proceeds for the project, other revenue increases or a combination of these sources. The Administrative Committee reviewed this item at its May 13, 2008 meeting and recommended approval for staff to proceed. The Committee further recommended that when more information is available, staff should bring this matter back to the Board for final approval at a future meeting. At its May 19, 2008 meeting, the Board of Directors concurred with the Committee’s recommendation.

EXHIBITS: None

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