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Home My WebLink About62-Mayor's Office ,. .;ITY OF SAN BERI\.ARDINO - REQUEST .-OR COUNCIL ACTION From: Mayor W.R. Holcomb~ E S'D. - .'c.G;" H. OF Subject: Dept: Office of the Mayor PAYMENT OF CXlSTS FOR WATER SYSTEM :IN DEIMl\NN HEIGIn'S ;~~:} :,;-:-~ 2-. -... Date: April 20, 1990 Synopsis of Previous Council action: None. Recommended motion: That the City Administrator be directed to identify appropriate funding sources for payment of the City's share of incorporating the Delmann Heights Water service facilities into the City's water system. /"~ Phone: 5133 Supporting data attached: Ward: 6 _ FUNDING REOUIREMENTS: Amount: $399,168 Source: (Acct. No.) NfA (Acct. DescriPtion) NfA Finance : Council Notes: I'A!J J CITY OF SAN BERkr4RDINO - REQUEST ""R COUNCIL ACTION STAFF REPORT In 1984, the Common Council requested the Mmicipal Water Board to acquire the private water system which was serving the Del.mann Heights area. 'lhe reason for the Council's request was poor quality of water service am the seriously deteriorated corxlition of the water mains am related system infrastJ:ucture. At the time the request was made, the City informally agreed with the Water Department to pay the acquisition cost out of future Cammunity Development Block Grant (CDB:i) furrls. '!he water system was acquired through eminent damain in which the Fast Valley Water District also participated by corrlernning the Southern California Water System in the Highlam area. '!he corrlemnation suit has been completed am the acquisition cost for the entire system is $5,465,000. '!he City's share of this cost is $399,268. '!his am:>unt can be retired over a period of five (5) years at an interest rate of 7.5%. I have recently been advised that the City carmot appropriate Com- nnmity Development furrls not yet authorized am for which no grant agreement exists. It is appropriate, however, to allocate furrls annually for this purpose if the project is, in fact, eligible for CDB:i financial assistance. As such, it would be appropriate for the City 1Idmi.nistrator to consult with the Redevelcpnent Agercy Execu- tive Director am the Directors of Finance am Cammunity Development in order to identify .appropriate furrling source. WRH,Ilab/3873 llpril 20, 1990 75-0264 !" WATER DEPARTM-NT CITY HAll 300 N. "D" STRfET 92401 . P.O. BOX no 924C12 SAN BERNARDINO, CALIFORNIA (714) 384-5141 ItO\RO Of WoQU COMMISSIONERS PuStOfNT MARGARET H_ CHANOUR COMMISSIC)/olEti 100EI1 liVENS EMllIAGMCIA JAMES H. UlATA HAaOLD w. WILLIS ~ a." """" ~ .. "'.,. A.. ~ f. ! - - . . ... <fl". ....7't.Il"t. HEWIT I. WISSEL aNElAl.MNoI.lGII JOSEPH F. 5ttJSIW. OIIfC101.ENClNUIIN(;.. COHSTaCIl()N.MAlNT'fNANCt BERNARD C. KElSEY OllfC1\X.ADMINI!m,Af1()fll &FlNANQ OLIo\NE I. NOI1ON 0IIEC1OI:.W"TEIt IIcl.AMATlON January 9, 1990 Skip Wilson, Treasurer East Valley Water District P.O. Box 3427 San Bernardino, California 92413 RE: FINANCING & ACQUISITION OF SOUTHERN CALIFORNIA WATER COMPANY HIGHLAND-DELMANN HEIGHTS WATER QUALITY SUPPLY AUTHORITY Dear Skip; The City of San Bernardino, the Board of Water Commissioners of the City of San Bernardino, and East Valley Water District entered into a Joint Powers Agreement for the purpose of acquiring Southern California Water Company's Highland and Delmann Water Systems. The negotiated purchase price of the water systems are as follows: Acquisition of Water Systems Reimburse So. Cal. Water for property taxes Total Cost $5,400,000 65.000 $5,465,000 Additionally, East Valley and the Water Department have paid all expenses for attorneys, engineers, appraisers, and expert witnesses since the inception of the transaction based upon a split of 80~ East Valley and 20~ Water Department. As of December 31, 1989, $171,007.52 has been expended for these servi ces. The fi na 1 allocation of costs was to be determined when the condemnation was finally settled. We have been meeting during the month of December to finalize the allocation of costs and the basis of allocation, and have determined the final allocation to be 87~ East Valley and 13~ Water Department. This allocation is based upon the proportionate value Skip Wilson January 9, 1990 Page 2 of the Highland and De1mann Systems set forth on pages IV-26-28 of Krieger & Stewart's report entitled "Valuation of Southern California Water Company Highland and Delmann Water Systems (San Bernardino Valley District) for Highland - De1mann Heights Quality Water Authority", dated February, 1986. The basis of the appraisal is Depreciated Reproduction Cost Value. The Water Department is desirous of borrowing from East Valley Water District, a portion of our allocated costs, as we have previously discussed. East Valley issued Certificates of Participation for the acquisition of this water system, and has expressed that funds would be available to the Water Department. Based upon information presented above, below is a summary of the cost allocation and proposed terms and conditions of a loan. Cost Allocation (Exhibit "A") Total Purchase Price . . Expenses Total Cost as of 12-31-89 East Valley Allocation 87~ San Bernardino Water Dept. 13~ $5,465,000.00 171.007.52 $5,636,007.52 $4,903,326.54 $ 732,680.98 The San Bernardino Municipal Water Department has paid $352,813.19 through December 31, 1989 towards its share of the total cost of $732,680.98 leaving a balance to finance of $379,867.79. Financing: East Valley issued $5,940,000 Certificates of Participation for the acquisition of the water system (Exhibit"B"). The determination of cost allocation is as follows: Total Issue Less: Cost of Insurance Net Proceeds $5,940,000 286.465 $5,653,535 San Bernardino Water Department portion of net proceeds. . . 6.72~ $5,653,535 divided by $379,868 , . Skip Wilson January 9, 1990 Page 3 San Bernardino Water Department portion of total issue. . $399,168 Net Proceeds Cost of Issuance $379,868 19.300 $399,168 Proposed terms of the loan: Interest Rate Period Start Date Payments 7. 2ll> 5 years November 20, 1989 1st of Each Month Please advise if you agree with the information presented herein. Sincerely, r: tion & Finance BCK:tae pc: Herbert B. Wessel Neil Thomsen C I ~ Y 0 F SAN B ERN A DIN 0 MUNICIPAL WATER DEPARTMENT INTEROFFICE MEMORANDUM TO: Neil Thomsen, AccOuntlng Supervisor FROM: Bernard C. Kersey, Director, Administration & Finance SUBJECT: ACQUISITION OF SOUTHERN CALIFORNIA WATER COHPANY'S DELHANN SYSTEM DATE: March 22, 1990 COPIES: Joe Stejskal ---------------------------------------------------------------- ---------------------------------------------------------------- The Water Department entered into a promissory note with East Valley Water District for the remaining costs associated with the acquisitlon of the Delmann Heights System of Southern California Water Company's San Bernardino service area. A full accountlng of the total acquisition costs and allocation of these costs are attached. Under the terms of the promissory note, we are to make a down payment of $25,000.00 towards the unfunded balance of $399,168.00, leaving a balance of $ 37 4,168.00. The balance will be paid in Slxty (60) equal monthly installments 0: $7,497.56. Please lssue a check on the accounts payable reglster of March 27. 1990. In the amount 0: $32,497.56 to East Valley Water tlstrlct. Thereafter, a check ln the amount of $7,497.56 is to be lssued to East Valley Water District by the first of each subsequent month until pald. If there are any questions, please advise. ~(ld.'l fiernard C. Kersey Director, Administration & Finance BCK:mka Attachment . (r- East V~r;y Water District I'IlOM!SSOIlYIOTI . 374,168.00 tlArch 15, 1990 San Beroardino ~n1cipal Vater Departaent after date and for value received promi.e. to pay to the laat Valley Water Di.trict, the sua of Three Hundred Seventy-Four Thousand One Buadred Sixty-Eight and 00/100 ($ 374,168.00 ), in lawful Doney of the United Statea, with intereal thereoa fr~ date until paid at tbe rate of7.S percent (1) per annua, payable as followa: Sixty IIOnthly payml!ots of $7,497.56 each, cOllmencina on the 1st day of April 1990 aDd due on or before the lat day of eacb aubaequent .ootb UDtll paid. - Shoulcl default be ude in payaent of uzy lnstallaent vben clue. the whole _ of pr1Deipal and iDterest shan becOlU tJaediate1y due .... payable at tile option of the holder of thia note. Should suit be c_ocecl or all attoruy emplOyed to enforce payment of this DOte. The San Be~rdiDO 1I1m1cipal Vater Departaent agree. to pay aud1 Ndlt10nal sua aa lobe court IIlIy adJudle reaaoa- able .. atto~y'. feea ill .aid auit. Karlaret R. Chandler, Preddent Benard C. braey, Seeretary ,