Utility Committee Agenda and Packet 2021 05 11

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Scenarios Effective Interest Effective Interest Rate (Oct 2020) Rate Q2 2021) 20yr Group (5yr Interest Only) — PFM 2.3% 2.4% 20yr City — HTS 1 2.4% 2.5%* *PFM and HTS rates were the same for Oct, 2020 as they both pull from market conditions. Staff have not confirmed market rates directly with Hilltop. The difference in effective interest rates in associate with the CWCB loan. With a minor change in bond interest rates, the greater impacts to the funding scenarios are related to the escalation in construction costs for the delay and the settlement amount both resulting from the lawsuit. Delay impacts have increased the finance amount $18 million with an additional $15 million for the settlement that is currently not projected to be financed. Given the timing, the first bond payment for 2021 is significant smaller creating a shift of funds from 2021 to 2022. The below table shows the impact for each impact from the prior 2020 estimate for a total projected increase to Louisville of $2.2 million through the total bond period ending 2055. Louisville Payments 2021 2022 2023 2024 2025 2026 2027 Total All Payments 2020 Estimate $1.8M $575k $575k $575k $573k $1.2M $1.2M $23.3M Delay Increase -$400k $64k $64k $64k $66k $101.2k $101.3k $24.9M Settlement Increase $157.5k $157.5k $157.5k $472.5k Revised Estimate $1.4M $797k $797k $797k $639k $1.3M $1.3M $25.5M The revised estimate for Windy Gap has been included in the Initial 6-yr CIP Plan. The entirety of the Initial CIP Plan has been incorporated into the current utility rate model and is showing no need to modify the proposed 2% annual increases for the water utility. The CIP process is still in the early phases and further evaluations that are underway or planned to be conducted throughout 2021 will likely have additional projects needed and will require further analysis on rate impacts. Alternative Response Timing As mentioned in the Timeline, Northern is requesting that participants provide their final financing commitment within 1 month instead of the 3 months as outlined in the allotment contract. The driver for this request is related to the construction escalations. The change order from Barnard (contractor) to delay the start date 3 months from May 2021 to August 2021 was approximately $7.1 million and is based on a 1 month turn around on the Finance commitment. If any of the participants requires the full 3 months, this change order amount would need to be extended the additional two months and would have an assumed cost impact of $2 to $5 million to the project. Louisville's prorate portion of this estimate would $63,000 to $158,000. Further, it is possible, that the full cost impacts would be assigned to those participants that request any extra time beyond the 1 month. Therefore the City's risk could increase beyond the prorate share. The consensus at the May 4th Participants Meeting was to avoid additional delays and move as quickly as possible. 13