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<br />Brookings- Twin Cities Project. Elk River Municipal Utilities will be part of the MMTG <br />group associated with CMMP A. <br /> <br />At the November 21,2006 Elk River Municipal Utilities special commission meeting, <br />authorization was given for Elk River Municipal Utilities to proceed with <br />MMTG/CMMP A initiative with a cap of $2,000,000. <br /> <br />Enclosed is the following information for your review. <br />1) Executive summary of December 2004 CapX 2020 Interim Report. <br />2) Proposed Brookings- Twin Cities Project Development Agreement. All <br />participants sign very similar agreements. <br />3) Projected financial analysis reflecting a levelized annual margin of 5.3%. <br />4) Resolution approving the development agreement between CMMPA and <br />Brookings- Twin Cities Project. <br /> <br />The preliminary investments payments are as follows: <br />Deposit -.009% $2,000,000 18,000 by December 2006 <br />Project Development Costs $32,000 in February or March 2007 <br />Certificate of Needs & future $300,000 total-paid in monthly <br />contract development costs. installments over a 36 month time frame <br />Construction $2,000,000-$350,000 $1,650,0002011 time frame <br /> <br />The term of the attached project development agreement is in the three to five year time <br />frame. This agreement establishes the ground rules to develop the final ownership <br />agreement, operating and maintenance agreement including cost reimbursement. The <br />agreement allows the project to move forward with certificate of need and transmission <br />line routing procedure. This agreement also allows the following offramps to CMMPA.. <br />a) Fail to receive regulatory approval. <br />b) Major scope change created by certificate of need (CON). <br />c) Major increase in development budget. <br />d) Choose to exit at anytime prior to ownership signing. <br /> <br />This agreement is rather lengthy because some participants will be bonding for these <br />funds initially. Elk River will not bond until construction starts in three to five years. <br /> <br />The pro's and con's of this venture are as follows: <br /> <br />Pro's <br /> <br />1) Municipal Utilities have long asked for the ability to buy into the transmission <br />system. <br />2) Viable strategy to keep rates lower, own vs. rent. <br />3) Have input & influence as transmission issues develop. <br />4) Rate of return of 5% - 6% is equivalent to our existing 5% - 6% margin. <br />Financial analysis is very conservative. <br />