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ITEM: |
ACTION ITEM |
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2. |
CONSIDER APPROVAL OF
EXPENDITURE OF FUNDS TO PAY-OFF THE REMAINING BALANCE OF THE MECHANICS BANK
LOAN |
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Meeting
Date: |
May 25, 2023 |
Budgeted: |
Yes |
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From: |
David J.
Stoldt, |
Program/ |
Debt Service |
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General
Manager |
Line Item
No.: |
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Prepared
By: |
Suresh
Prasad |
Cost Estimate: |
$2,140,000 |
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General Counsel Review: N/A |
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Committee Recommendation: N/A |
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CEQA Compliance: This action does not constitute a project
as defined by the California Environmental Quality Act Guidelines Section
15378. |
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SUMMARY: On April 1, 2013, the MPWMD Board authorized an Installment Purchase Agreement with Mechanics Bank (formerly Rabobank) in the amount of $4,000,000. The loan terms were as follows:
Term: 10 years (amortized over 30 years)
Interest Rate: 3.60%
Balloon Payment Maturity Date: 06/30/2023
The loan was secured with Water Supply Charge revenue. Now with the uncertainty of the Water Supply Charge due to pending litigation, and the unfavorable interest rate market, it is prudent to pay-off the balloon payment of the loan due on June 30, 2023. Staff did solicit proposal to refinance the loan and the terms for the refinance were as follows:
Term: 10 years (amortized over 25 years)
Interest Rate: 6.50%
Balloon Payment at the end of 10 years
Based on the current information relative to refinancing, it is best
that the District pay-off the remaining loan balance
with Mechanics Bank. During mid-year
budget process, a loan pay-off amount of $2,150,000 was included in the budget.
RECOMMENDATION: District staff recommends that the Board authorize the pay-off of Mechanics Bank loan in the amount of $2,140,000.
2-A Mechanics Bank Pay-Off Statement
U:\staff\Boardpacket\2023\20230525\02\Item-2.docx