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Home My WebLink About41-Mayor's Office ,.. ..;ITY OF SAN BERNARDINO - REQUEST "\lR COUNCIL ACTION ~m: Mayor W.R. Holcomb: ': :'D. - ~.:;~ :c. 0;:: Subject: PAYMENl' OF CXlSTS roR WM'ER SYSTEM Dl DEUWlN HEIGHTS Dept: Office of the Mayor '-i'_'""C ; :-.-, .', u h,"f;' i 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. /.~ re Phone: 5133 Ward: 6 . Supporting data attached: FUNDING REQUIREMENTS: Amount: $399,168 Source: (Acct. No.) N/A (Acct. DescriPtion) N/A Finance: ou nc iI Notes: 75-0262 Agenda Item No. ,-/-1 CITY OF SAN BERN'"i4RDINO - REQUEST P\lR COUNCIL ACTION STAFF REPORT In 1984, the Common Council requested the Municipal Water Board to acquire the private water system which was serving the Dellnann Heights area. 'lhe reason for the Council's request was poor quality of water service and the seriously deteriorated condition of the water mains and related system infrastnlcture. At the time the request was made, the city info:onal1y agreed with the Water Deparbnent to pay the acquisition cost out of future Connnunity Developrrent. Block Grant (CDB:;) furrls. 'Ihe water system was acquired through eminent dcnnain in which the East Valley Water District also participated by corrlemning the Southern California Water system in the Highland area. 'Ihe corrlemnation suit has been conq:>leted and the acquisition cost for the entire system is $5,465,000. 'Ihe City's share of this cost is $399,268. 'Ibis an'OUI'lt 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 cannot appropriate Com- nnmity Development furrls not yet authorized and 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:; financial assistance. As such, it would be appropriate for the City 1ldmi.nistrator to consult with the Redevelopment Agency Execu- tive Director and the Directors of Finance and Connnunity Development in order to identi~appropriate furrling source. I recamrnend adopti f the form notion. WRH/lab/3873 April 20, 1990 75-0264 . , ., WATER DEPARTM~ .'-IT CITY HALL 300 N. "0" SI1tEET 92401 . PO. BOX 710 92402 SAN BERNARDINO, CALIFORNIA (714) 384-5141 lOUD Of W\lU COMMISSIONEItS I'II:SlDfIlo'l MMCARfT H_ CHANOUR c:o.u..l55t()OjllS ROIERT"VENS EMIUA GAlC'''' JAMES H. UlATA HAROlD W. WIlliS a-" ..... ~....' ..' ."''''. ....... ~ 2' ~ .. . t- "l" 11"tR fji. HEUfIT I. WESSEL QNflAl. MANAaI K>>SE,," f. S1tJSKAl o.~f"CU'lfE'lN(;. ~MAlN1lNAHCt ,UNAI!) C. KElSEY 0l1UCioa. ADMINI5TW1ON . "NANa [)Uf.N( I. NORlON o.IEC1Oll,W"nl bClAMAJlQN 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 Joi nt Powers Agreement for the purpose of aCQui ri ng Southern California Water Company's Highland and De1mann 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 80X East Valley and 20X Water Department. As of December 31, 1989, $171,007.52 has been expended for these services. The final 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 87X East Valley and 13X Water Department. This allocation is based upon the proportionate value . . Skip Wilson January 9, 1990 Page 2 of the Highland and Delmann 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 - Delmann 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 I. 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 7.2% 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 . ~ I N 0 MUNICIPAL WATER DEPARTMENT INTEROFFICE MEMORANDUM TO: Neil Thomsen, AccountIng Supervisor FROM: Bernard C. Kersey, Director, Administration & Finance SUBJECT: ACQUISITION OF SOUTHERN CALIFORNIA WATER COMPANY'S DELKAHN 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 acquisitIon of the Delmann Heights System of Southern California Water Company's San Bernardino service area. A full accountIng 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 $374,168.00. The balance will be paid in SIxty (60) equal monthly installments 0: $7,497.56. Flease Issue a check on the accounts payable regIster of March 2~. 1990. In the amount of $32,497.56 to East Valley Water DIstrIct. Thereafter, a check In the amount of $7,497.56 is to be Issued to East Valley Water DistrIct by the first of each subsequent month until paId. If there are any questions, please advIse. ~C~<7 Director, Administration & Finance BCK:mka Attachment . (r- East V~r;y Water Di~trict l'IlOM1SSOJl! lOTI . 374.168.00 Karch 15, 1990 San Bernardino Municipal Vater Departaent after date a~d for value received pramises to pay to the East Valley Water District, the sua of Three Hundred Seventy-Four Thousand One Hundred SistY-E1gbt and 00/100 (. 374,168.00 ), i~ lawful aouey of the U~1ted Statee. with l~terest thereon fro. date until paid at the rate of~ percent (%) per annua, payable as follava: Suty IIOnthly payaenta of .7,497.56 each, cOllmenclD& on tbe 1st day of April 1990 aDd due on or before the lat day of each subsequent .outb UDtil paid. - 6bould default b. ..de ill pa,..nt of any instalIAent when due. the whole sua of pr1.D.clpal and interest Iba11 becOlU imaediate1y due aad payable at tbe option of the holder of tbia note. Should luit be cm.enced or 811 attomey employed to enforce peyment of tbis IlOte. The San Bernardino lIIm1cipal Vater OeparUlellt agree. to p.y Pd1 additional sua aa tbe court !Illy adJudle rea.eon- able.. attorney's rees in said euit. Karlaret B. Chandler. hesld.at Benard c. r:eruy. Secretary ,