Prada digs into consent agenda

By From page A1 | January 22, 2014

Two items were pulled from the consent agenda Jan. 13 by El Dorado Irrigation District Director Greg Prada.

One was approved and one was carried over to the next meeting.

The item that eventually passed unanimously was a grant application to the U.S. Bureau of Reclamation for a $1 million Water and Energy Efficiency grant that would be used to pipe the Main Ditch. If the district is awarded the grant and decides to accept it, EID would have to match it with $1 million of its own money.

The Main Ditch transfers Forebay water to Reservoir 1 Water Treatment Plant. Installing a 36- or 42-inch diameter pipe for the three-mile length of the ditch would save 1,000-1,300 acre-feet of water the unlined dirt ditch loses annually. It also would reduce treatment costs by eliminating dirt and debris picked up from the open ditch.

The entire project is estimated to cost $3.4 million by the time it is completed in 2018, according to the 2014-2018 Capital Improvement Plan approved by the EID board Oct. 15, 2013. The CIP is only a plan and each individual project must be presented to the board for approval when it is ready for competitive bidding.

The grant application, however, pegs the total cost at $5.1 million that would be completed in three years instead of five. The El Dorado County Water Agency had already approved $40,000 on a 50-50 basis for EID to hire an environmental consultant. Then in 2013 the Water Agency gave EID $195,000 to do a land survey and initial design. That work is in progress by on-call consultants and will be used in developing the final design.

Prada criticized the grant application, saying, “We’re essentially shrugging our shoulders at $3.1 million. I don’t think we should approve a $3.1 million project in the consent calendar,” Prada said. “I realize we’ve got 10 days to tap into $1 million. It’s a $5.1 million project. The ratepayers don’t want this under the radar.”

“I agree … but we’re under a mandate (to save 20 percent by 2020). This represents 10 percent of the water — 1,300 acre-feet lost because of the ditch. It’s really important. We have a state mandate,” said Director Bill George.

Brian Mueller, director of engineering, said the item was just to apply for the grant, not to approve the project and not to approve funding.

“Could we decline the grant in the future?” asked Board President Alan Day. “If we get  the grant will it come back to the board?”

District Counsel Tom Cumpston responded, “Yes.”

“If we get the grant and the $1 million match, we will have three years to fund the other $3 million,” said Director Dale Coco.

General Manager Jim Abercrombie suggested a series of workshops on capital improvement projects for the benefit of the new board members and the public. He also noted state law requires the district save 20 percent of its water by 2020. “Do we force our ratepayers to conserve or do it by projects?” he asked.

The second consent agenda item that was put over to the next meeting was an outline of procedures for providing accurate information to those who will be buying bonds from EID. Truthful and complete statements of financial condition without any omissions are required by the Securities and Exchange Commission.

EID is preparing to refinance $130 million of its debt. The refinancing will not extend the maturity date, but will reduce the coupon rate, saving the district $400,000 for the balance of 2014 and save $1 million in interest payments every year thereafter.

“We should have an audit committee,” Prada said.

“Are there any questions about this that staff can help answer?” asked Abercrombie.

“I don’t know. I need time to think about it,” Prada responded.

“It was written by bond counsel, modified by me and (Director of Finance) Mark Price,” Cumpston said.

The document notes that bond counsel also conducted staff training on the procedures, which include preparation of preliminary official statement and then a final official statement, which includes not only the particulars of the bond issue, but “other matters particular to the financing, a section which provides information about the district, including its financial condition as well as the district’s audited financial report, form of the proposed legal opinion and form of continuing disclosure undertaking.”

“It’s critical that this refinancing go through,” Coco said. “If we do not have this resolution to go through the refinancing (could be jeopardized).”

“I agree with Director Prada. I don’t understand it,” said Day.

“It’s going to be difficult for the rating agencies to understand why the board declined to sign the disclosure,” Cumpston said.

“Staff is going to be interviewed by Moody’s (rating service) in the next two weeks,” Abercrombie said.

“I think the debt refinancing is critical. I support it 100 percent. If we fail to refinance, it will fall on the ratepayers,” Coco said.

“Any change in bond ratings can cost millions,” said Director George Osborne. “We have done years of work to get an A+ rating.

“The sky will not fall … There is no harm in slowing things down a little,” Day said.

A motion to continue the “Disclosure Procedures” document to the Jan. 27 meeting passed 3-2, with Prada, Day and Coco voting yes and George and Osborne voting no.

Coco announced that he would not be at the Jan. 27 meeting.

Michael Raffety

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