ITEM:		ACTION ITEM
10.	Consider Expenditure of Funds for PREPAYMENT OF A PORTION OF MECHANICS BANK LOAN
Meeting Date:			August 16, 2021	Budgeted:	$500,000
From:			David J. Stoldt,	Program/
			General Manager	Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:	$500,000
General Counsel Approval: N/A
Committee Recommendation: None
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

SUMMARY: At its October 19, 2020 meeting the District Board approved a policy for the use of surplus annual User Fee revenues, if any. The policy stated that if collections in a fiscal year exceed the budgeted amount the surplus would be applied in the following manner: (1) First to prepay the principal balance of the Mechanics Bank loan which was used to fund the Aquifer Storage & Recovery water supply project; (2) repay internal District borrowing from reserves used for water supply projects for which the District’s Water Supply Charge was insufficient; and (3) to accumulate funds to offset or sunset the Water Supply Charge.

The Board adopted a mid-year budget March 15, 2021 which anticipated $5,000,000 in User Fee receipts. As of the close of the fiscal year on June 30, 2021 User Fee revenues received were $5,777,158.

The surplus of $777,158 is recommended to be allocated to the $500,000 loan prepayment and an allocation of $277,158 to District general reserves for repayment of internal borrowing.

Such payment will reduce the outstanding loan balance from $3,271,639 to $2,771,639. There is a balloon payment and/or refinancing due June 30, 2023.

RECOMMENDATION: The General Manager recommends that the Board authorize its CFO to prepay the Mechanics Bank loan in the amount of $500,000.

EXHIBITS

None

U:\staff\Boardpacket\2021\20210816\Action Items\10\Item-10.docx