20101109_3139.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KEMPTON
COMMISSIONER SMITH
CO MMISSI 0 NER RED FO RD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:TERRI CARLOCK
DATE:NOVEMBER 5, 2010
RE:MIDV ALE TELEPHONE EXCHANGE, INC.S REQUEST TO
BORROW UP TO $1,359,720; CASE NO. MID-I0-
On October 19 2010, Midvale Telephone Exchange , Incorporated ("Midvale ) filed an
Application requesting authority to borrow up to $1 359 720 from Rural Utilities Service
RUS") Broadband Initiatives Program. The request consists of three separate loan/grant
components. The required fees have been paid.
The proposed loan proceeds will be used to finance the construction of fiber to the home
broadband infrastructure in Stanley, Idaho; Henderson Valley, Arizona; and Young, Arizona.
The total cost of each project will be financed by the requested three RUS loans (30% of the
cost) and ARRA grants (70% of the cost). The long-term loans will be for 23-years. Plant in the
respective states will be used as collateral for the loans. Grant accounting will be utilized for the
grant amounts with the net impact being that no return or depreciation on grant amounts will be
included in Idaho rates.
The total project costs and requested loan authority are shown by exchange.
Loan Grant T ota! Cost
Stanley, Idaho $380 751 $ 888,420 269 171
Henderson Valley, Arizona 644 045 502 769 146 814
Young, Arizona 334,924 781,488 1,1 16,412
Total 359 720 172 677 532 397
DECISION MEMORANDUM NOVEMBER 5, 2010
The following table shows the use of loan and grant proceeds in the Stanley, Idaho
exchange:
Loan Grant
Network & Access Equipment $74 550 $173 950
Outside Plant (cables etc)241 596 563 724
Professional Services 469 108,429
Other (ARRA Application costs)42,3 17
Total $380 751 $888 420
Staff recommends approval ofthe loan request. To monitor any loan covenant
requirements, Staff also recommends adopting the following reporting requirements:1) Provide copies ofthe RUS final loan approvals including documentation for
advances.
Provide a copy of any executed collateral documentation.
Provide copies of all annual certification, covenant reports, and letters regarding
these determinations.
The "Report of Securities Issued"
CO MMISSI ON D ECISI
Should the Application be approved with Staff s recommended reporting requirements?
j~ ~,)tL) eft
Terri Carlock
i:udmemos/midtlO.2. tc RUS loans
DECISION MEMORANDUM NOVEMBER 5 , 2010