20041022Decision Memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
WORKING FILE
FROM:ALDEN HOLM
TERRI CARLOCK
MICHAEL FUSS
DATE:OCTOBER 22, 2004
SUBJECT:FALLS WATER COMPANY'S APPLICATION TO BORROW $250,000;
CASE NO. FLS-04-
RECOMMEND:APPROVAL WITH CONDITIONS
On October 8, 2004 Falls Water Company (Falls Water, Company) requested authority to
borrow $250 000 through the State Drinking Water Revolving Loan Account administered by
the Idaho Department of Environmental Quality (DEQ). The annual interest rate for the loan is
25%. Repayment of the loan is to be made through biannual installments over twenty (20)
years. According to the Company, the DEQ will provide the funding necessary to complete the
project, including short-term construction financing, and Falls Water will sign a promissory note
at the completion of the project. The loan requires a reserve account equal to one (1) year
repayment of principle and interest due on the agreement. The reserve must be established
within five (5) years with a minimum 20 percent annual deposit.
On October 20 2004, the Company amended its request to seek an additional $39 000 for
a total of $289 000. The Company states that it has received the construction bids for the project
and they were higher than originally anticipated.
DECISION MEMORANDUM OCTOBER 22, 2004
The updated projection for the loan proceeds are allocated as follows:
1. Administrative Fees
2. Engineering Fees
3. Construction Costs
4. Contingency Costs
5. Total Loan Proceeds
$ 17 500.
575.
230 000.
10,925.
$289 000.
Falls Water states that the loan is needed to make two upgrades to its distribution system
that will bring it into compliance with DEQ water pressure requirements. The first upgrade will
provide 2300 feet of 12" water line on Lincoln Road. This line will provide an additional trunk
line under the railroad tracks that divide the water system s east and west zones. It will provide
additional supply to an area that is currently without wells in the immediate vicinity. Area
subdivisions Crimson Valley and Caribou Meadows are currently experiencing water pressure
levels below the required 40 psi during peak demand periods. This water line will help to correct
the deficiency in pressure in these subdivisions.
The second project will involve installation of 900 feet of 8" water main under the
railroad crossing along John Adams Parkway in the Warm Springs and Centennial Ranch
subdivisions in the south end of the water system. The water pressure in the Centennial Ranch
area has been experiencing low water pressure levels during the last three years when under peak
demand periods.
The addition of the two lines will provide the water customers with better water volume
and looping for better reliability. Schiess and Associates, Falls Water s engineering firm, list
both projects as priority number one in the Company s draft water planning study.
Falls Water has met the Commission s requirements for public notice and paid the filing
fee of $50.
ST AFF RECOMMENDATIONS
Staff recommends the Commission approve the request to borrow $289 000 from the
State Drinking Water Revolving Loan Account with the same conditions DEQ places on the
Company. The proceeds will provide for vital system improvements that will benefit all
customers of the Falls Water system.
DECISION MEMORANDUM OCTOBER 22 , 2004
COMMISSION DECISION
Does the Commission approve the Company s request to borrow $289 000 from the State
Drinking Water Revolving Loan Account? Does the Commission require any other conditions
on Falls Water other than the account reserve required by DEQ?
fr~ l-h
Alden Holm
aho1m:decision memos/FLS- W -04-1 Decision Memo
DECISION MEMORANDUM OCTOBER 22 , 2004