20210219Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOSEPH TERRY
TERRI CARLOCK
DATE:FEBRUARY 19,2021
RE:MIDVALE TELEPHONE'S REQUESTFOR AUTHORITY TO BORROW
FROM THE RURAL UTILITIES SERVICE;CASE NO.MID-T-21-01
On February 3,2021,Midvale Telephone Exchange ("Midvale"or "Company")filed an
Application requesting authorityto execute a Loan and Grant Agreement and Promissory Note in
an amount not to exceed $10,982,238together.Staff has calculated the application fee to be
$625.That fee was received on February 18,2021.
The proposed loan and grant proceeds will pay for and partially reimburse general funds
to:(a)extend broadband internet to certain additional service areas within the State of Idaho
including Warm Lake,Warren,Stanley,and Midvale;(b)provide for router and switch upgrades
to handle broadband traffic growth;(c)deploy additional fiber optic and buried cable networks in
certain new Idaho service areas,including Warm Lake,Warren,Stanley,and Midvale;(d)extend
fiber-to-the-house and broadband ethernet transport facilities to provide larger pipes and
redundant paths;and (e)for related system improvements.
The interest rates on the loan are expected to be equal to the current cost of money to the
federal government for loans of a similar maturity.The term of the loan is 22 years.This year
the 20-year treasury bill rate has ranged from 1.46%to 1.83%and the 30-year treasury bill rate
has ranged between 1.66%and 2.01%.
DECISION MEMORANDUM -l -FEBRUARY 19,2021
STAFF DISCUSSION AND RECOMMENDATION
The proposed projects will improve service to existing customers and make it possible for
the Company to meet new service demands.The additional infrastructure will further serve the
goals of universal internet service.The interest rates proposed in the loan documents,are lower
than a company the size of Midvale could reasonably expect to receive from the open market.
Staff recommends approval of the loan and grant request.To monitor any loan
covenants,Staff also recommends adopting the followingreporting requirements:
1.Provide copies of the final loan approvals including documentation for advances.
2.Provide a copy of any executed collateral documentation.
3.Provide copies of all annual certification,covenant reports,and letters regarding the
determinations.
COMMISSION DECISION
Should the Application be approved with Staff recommended reporting requirements?
.seph Terry
Udmemos/MIDT2101 DM
DECISION MEMORANDUM -2 -FEBRUARY 19,2021