Laserfiche WebLink
<br /> <br /> Memorandum│ Department of Public Works <br /> <br />To: City Council <br />Date: May 12, 2020 <br />Re: Windy Gap Firming Project - Financing <br />2020 Update: <br />The purpose of this memo is to summarize the various options for financing of the Windy Gap <br />Firming Project/Chimney Hollow Reservoir (WGFP). Staff are currently recommending <br />participating in the group financing option. Following the financial discussion, three general <br />sections that have been previously presented have been included for background. <br /> <br />Finances: <br />Staff, with the assistances of consultants, are evaluating two financing options. Each option can <br />be further evaluated by varying potential interest rates, terms and the amount of any cash down <br />payment. The two financing options are 1) joining the group financing with the other WGFP <br />participants or 2) pursue individual financing. The following table shows the major benefits for <br />each option. <br /> <br /> <br />To further the comparison, staff developed five scenarios at an assumed high rate of 3.5% and a <br />low rate of 2.5% for an AA bonding rating. Each rate scenarios was then evaluated with either <br />full financing or with a cash down payment of $2.5 million in efforts to lower the total amount of <br />interest paid. The final 5th option, was an adjustment of the terms to 20 years that is currently <br />only available for individually financing options. Both the calculated approximate value of the <br />annual payment and total interest paid is provided in the table below. <br /> <br /> <br />GROUP FINANCING INDIVIDUAL FINANCINGAccess to low interest CWCB loan Better credit rating (AAA) - lower interest rateNo debt coverage Complete control of funding <br />AA <br />Rate <br />Approx. Annual <br />Payment <br />($ thousands) <br />Approx. Total <br />Interest Paid <br />($ millions) <br />AAA <br />Rate <br />Approx. Annual <br />Payment <br />($ thousands) <br />Approx. Total <br />Interest Paid <br />($ millions)#1: 30 yrs, no down 3.5% $959 $10.66 3.25% $955 $10.52 #2: 30 yrs, $2.5M down 3.5% $823 $9.08 3.25% $823 $9.07 #3: 30 yrs, no down 2.5% $858 $7.63 2.25% $837 $6.99 #4: 30 yrs, $2.5M down 2.5% $739 $6.55 2.25% $722 $6.03 #5: 20 yrs, no down 2% $1,108 $4.04 <br />SCENARIO <br />GROUP FINANCING INDIVIDUAL FINANCING <br />N/A <br />ASSUMPTIONS: <br />● Amount Financed: $18,120,000 <br />● Individual interest rate 0.25% lower than group (AAA rating to AA rating) <br />● CWCB Loan: $2.8 million at 2.08% <br />16