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  Consent-General Government   # 18.       
Financial Services  
Meeting Date: 12/07/2021  
Brief Title:    Authorize Repayment of the 2019 North Davis Meadows Water Loan
From: Tom Haynes, Interim Chief Financial Officer
Staff Contact: Tom Haynes, Interim Chief Financial Officer, Department of Financial Services, x8162

Subject
Authorize repayment of the 2019 $275,000 loan that the County made to the North Davis Meadows County Service Area Water Fund using accumulated NDM CSA water fees. (No general fund impact) (Haynes)
Recommended Action
Authorize the County Interim Chief Financial Officer to repay principal and interest on the 2019 $275,000 loan that the County made to the North Davis Meadows County Service Area Water Fund using accumulated NDM CSA water fees. 
Strategic Plan Goal(s)
Sustainable Environment
Reason for Recommended Action/Background
In May 2019, the Board of Supervisors approved a loan from the County to the North Davis Meadows County Service Area (NDM CSA) in the amount of $275,000 to alleviate an operational deficit in the NDM CSA’s Water Fund, caused in part by ongoing litigation regarding the March 2018 water fee increase that was approved to repay a 30-year State Revolving Fund (SRF) loan which would have funded all upfront costs of the Water System Consolidation Project to connect the NDM CSA to the City of Davis's water system .
 
While litigation was pending, revenue from the 2018 water fee increase was placed in an impound account and was not available to pay for NDM CSA operational water costs.  In addition, the SRF application was not able to proceed, resulting in continued costs to provide water services using the existing wells and water supply system.  Now that the litigation has been resolved in the County’s favor, the impound has been released and the NDM CSA is resuming the SRF application to proceed with the Water Consolidation Project.  

At the May 25, 2021 meeting of the North Davis Meadows CSA Advisory Committee, the County Chief Financial Officer recommended that the NDM CSA pay off its outstanding loans. The community requested additional information on options for paying off the $275,000 water loan, the terms and status of the various loans provided by the County, and the fiscal condition of the CSA’s funds. In response to these requests, the Department of Financial Services provided a fiscal update report (Attachment A), which was presented to the Advisory Committee at the November 16, 2021 meeting.  
 
In addition, the Advisory Committee requested an opinion from County Counsel on whether repayment of the water loan using increased water service fees related to the Water Consolidation Project was legally permissible. County Counsel concluded that use of the increased water service fees to repay the $275,000 water loan is permissible as explained in the memo included as Attachment B.
 
While the water loan is not due to be repaid until June 27, 2022, County staff recommend that the loan be repaid immediately in order to free the NDM CSA from outstanding debt and enhance creditworthiness while pursuing the SRF financing for the Water Consolidation Project. If SRF funding can be obtained quickly, there is also the possibility of grant funding that would reduce the project’s total cost.  The NDM CSA Advisory Committee supported immediate repayment of the $275,000 water loan at the November 16th meeting and thus staff are asking the Board to authorize the Chief Financial Officer to execute this action and repay the loan using NDM CSA water service fees.
Collaborations (including Board advisory groups and external partner agencies)
Department of Financial Services
County Counsel
Department of Community Services
North Davis Meadows CSA Advisory Committee
North Davis Meadows CSA Finance Subcommittee
Competitive Bid Process
N/A

Fiscal Impact
Fiscal impact (see budgetary detail below)
Fiscal Impact (Expenditure)
Total cost of recommended action:    $   285,173
Amount budgeted for expenditure:    $   0
Additional expenditure authority needed:    $   0
One-time commitment     Yes
Source of Funds for this Expenditure
$285,173
Explanation (Expenditure and/or Revenue)
Further explanation as needed:
The total loan repayment is estimated to be $285,172.65, including $275,000 in principal and $10,172.65 in estimated accrued interest. The actual accrued interest may vary slightly based on actual Treasury earning for the quarter ending December 31, 2021. 
Attachments
Att. A. North Davis Meadows Fiscal Update
Att. B. County Counsel NDM Opinion Memo

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Form Review
Inbox Reviewed By Date
Chad Rinde Chad Rinde 11/29/2021 09:35 PM
Financial Services Shelby Milliren 11/30/2021 04:45 PM
County Counsel Hope Welton 11/30/2021 04:50 PM
Joanne Van Hoosear Joanne Van Hoosear 11/30/2021 10:06 PM
Form Started By: Tom Haynes Started On: 11/18/2021 01:08 PM
Final Approval Date: 12/01/2021

    

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