06-29-2009 CCM SP JT - Laserfiche WebLink

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Special City Council and ERMU Commission ~une 29, 200 Page 2 financing the $2.~ million internally and would have tl~e opportunity to roll the loan. into the ~9f} friillion loan when the plant opened. The $2.6 million loan with interest would be about X3.2 million, Councilmember Westgaard stated there is floe risk of owing $3.2 million if the financial close does not happen and floe city would be in a worse position because it would still need to Find a power supplier and owe back the X3.2 million. Councilmember Zerwas stated another risk with Scenario #2 is that Elk River Municipal Utilities would fold because he doesn't see how they could pay back the X3.2 million loss. Utilities staff disagreed. Mr, Zerhinger stated an additional penny per ldlowatt hour could be charged to customers. Mr. Adams stated they recently bonded a $3 million loan without any issues. Councilmember Zetwas questioned what the collateral would be for this loan. Ms. Johnson stated the city would need legal authority to issue the bonds. She stated t11is is not a typical capital project for bonding purposes; possibly a short operating debt could be obtained but more research would need to be completed to determine if such debt was allowed through special electric bonding authority bar statute. Mayor I~li.nzing stated all floe scenarios addressed potential changes and that Scenario #2 didn't address potential changes. She stated it should be noted that there will be changes that should be added to the risk list. Mr. Zehringer stated if the Big Stone Il project didn't move forward, and the loan had to be paid off; the Utilities would still be competiti~re in the market with its rates. Mayon I~linzing noted that with Scenario #4 the city would have options for negotiating rates. Councilmember Gumphrey questioned if the X1.8 million bond on the city hall building noted in the handout} is calculated from today's rate or from 201.8. Mr. Adams stated it is the portion that is awed currently. Ms, Slominsl~i stated it would be paid off in 2022. Ms. Johnson noted there is no bond on the City Fall building; only on the Utilities building. Mayor I~linzing asked if the Utilities Commission lead a recommendation for Council. Commissioner Dietz stated he has mixed feelings on whether to join floe Big Stone II project. He stated it sounds like a good deal but noted there are many unknowns. Ike stated the rate Big Stone I~ would charge in 10 years would be less than what the city is paying now..~~e stated he is encouraged that Connexus nay be more willing to negotiate with the Utilities. He stated he sees advantages to both sides. Councilmember Gumphrey stated he liked floe idea of negotiating with Connexus. He stated he load concerns with Qttertail bacl~ing out of the Big Stone II project.