5.4. ERMUSR 02-20-2007 - Laserfiche WebLink

Home Browse Search

Brookings-Twin Cities Project. Elk River Municipal Utilities will be part of the MMTG group associated with CMMPA. At the November 21, 2006 Elk River Municipal Utilities special commission meeting, authorization was given for Elk River Municipal Utilities to proceed with MMTG/CMMPA initiative with a cap of $2,000,000. Enclosed is the following information for your review. 1) Executive summary of December 2004 CapX 2020 Interim Report. 2) Proposed Brookings-Twin Cities Project Development Agreement. All participants sign very similar agreements. 3) Projected financial analysis reflecting a levelized annual margin of 5.3%. 4) Resolution approving the development agreement between CMMPA and Brookings-Twin Cities Project. The preliminary investments payments are as follows: Deposit - .009% $2,000,000 18,000 by December 2006 Project Development Costs $32,000 in February or March 2007 Certificate of Needs & future $300,000 total-paid in monthly contract development costs. installments over a 36 month time frame Construction $2,000,000-$350,000 $1,650,000 2011 time frame The term of the attached project. development agreement is in the three to five year time frame. This agreement establishes the ground rules to develop the final ownership agreement, operating and maintenance agreement including cost reimbursement. The agreement allows the project to move forward with certificate of need and transmission line routing procedure. This agreement also allows the following off ramps to CMMPA. a) Fail to receive regulatory approval. b) Major scope change created by certificate of need (CON). c) Major increase in development budget. d) Choose to exit at anytime prior to ownership signing. This agreement is rather lengthy because some participants will be bonding for these funds initially. Elk River will not bond until construction starts in three to five years. The pro's and con's of this venture are as follows: Pro's 1) Municipal Utilities have long asked for the ability to buy into the transmission system. 2) Viable strategy to keep rates lower, own vs. rent. 3) Have input & influence as transmission issues develop. 4) Rate of return of 5% - 6% is equivalent to our existing 5% - 6% margin. Financial analysis is very conservative.