Utility Committee Agenda and Packet 2020 06 23

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City Council Utility Committee Meeting Minutes Tuesday, May 12, 2020 Page 4 of 8 Mr. Peterson said Northern is actively engaged with the CWCB, which at this point has indicated that funding is secure. Mr. Kowar stated at a high level we should lean toward the Group Financing so we don't have debt coverage driving us. Councilmember Lipton asked how the Group Financing debt is secured. Mr. Peterson stated that debt would be secure through Northern which acts as an intermediator for all the participants. Councilmember Lipton then asked if there is a default then does it go back to the participant. Mr. Peterson stated that's a great question and defaults are outlined in the Allotment Contract. Mr. Peterson continued with saying the current contract provisions contemplate loss of storage ownership. Volunteers to accept the defaulter's obligations would be sought first, with forced "step up" following. Councilmember Lipton requested additional follow up once this is more defined. Mayor Pro Tem Maloney asked about the timing of financing in the next several months as it sounds like we may need special meetings and documents to get up to speed on the obligations the City could potentially be making. Mr. Peterson stated that is correct, right now we are looking at the Allotment Contract finalized in next couple of months with a possible July or August approval at Council. Once the Allotment Contract is finalized, financing will be shortly after. Mayor Pro Tem Maloney asked if construction has actually started at Chimney Hollow. Mr. Peterson said right now they are doing exploratory, site mobilizing, procuring of long lead items and moving power lines but the actual building has not started. Mayor Pro Tem Maloney requested another tour during the construction portion. Councilmember Lipton asked who is advising the City on this issue. Mr. Watson said that we have been in touch with Jim Manire which is the City's financial advisor. Councilmember Lipton thought it would be helpful to have Mr. Manire sit in on the call next time we discuss this. Mr. Watson agreed. Councilmember Lipton wants to explore possible impacts of the Group Financing to the City's credit rating. He continued saying it looks reasonable that we should be looking closely at the Group Financing but making sure there aren't any traps or unintended consequences. Mayor Pro Tem Maloney agreed and said when we as a Committee can become more educated and talk to various financial advisors I think that would be good because Council is looking to us in this role to do this. IX. Utility Carry Forward Requests Page 19 & 20 — Mr. Kowar went through the budget amendment worksheets and explained each line item. The Committee decided that they didn't need to discuss the green line items since those are mostly completed. Councilmember Lipton asked if there are projects with significant additional costs will there be proposed reduction in other projects to offset. Mr. Kowar said yes and discussed the options noted and referred to the rate sheets. Councilmember Lipton asked that if we approve these carry forwards are we are basically blessing the projects. Mr. Kowar said no, we are just blessing to continue with what is budgeted and to finish designs and complete engineering cost estimates. At that point the option will be to keep these projects going or cancel them. No project will move forward without the appropriate Council action with a budget amendment. Mayor Stolzmann said we should look at this closer as it may be hard to spend $1.5 million by the end of the year. Mr. Kowar, noted that some of these projects may