2002 AGN MAR 26 I19 - Laserfiche WebLink

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Item #19 CITY OF COLTON AGENDA REPORT For the City Council Meeting of March 26, 2002 TO: HONORABLE MAYOR AND CITY COUNCIL APPROVAL: DARYL PARRISH, CITY MANAGER FROM: THOMAS K. CLARKE, UTILITY DIRECTOk--Vk)t-- SUBJECT: Approval of $7.5 Million Interim Financing for the Colton Jets Project DATE: March 13, 2002 BACKGROUND: On February 5, 2002, the City Council authorized staff to issue the Request For Proposal (RFP) for the 50 megawatts Colton Jets project. The staff sent out the RFP to over fifteen companies/entities to solicit the bid proposals to engineer, procure, construct, and operate the project at the City's retained site (Beckett Properties) on Agua Mansa Road in Colton. The staff will bring the recommendation for bid award to the successful bidder for City Council approval in April 2002. DISCUSSION/ANALYSIS: There were about forty individuals representing various companies at the pre-bid meeting on February 19`" held at the project site. The City intends to secure the entire financing for the project by June 2002. The bidders want to know how the City would cover any potential financial obligations prior to the project -related revenue bond issue. In the absence of short-term financing or a letter of credit, there is the possibility that the bid - prices would come in higher. Staff informed the bidders that a recommendation will be made for City Council approval of a short-term financing mechanism. It is estimated that the amount the successful bidder will be out of pocket, prior to bond issuance, is $7.5 million (land acquisition and equipment deposits). ALTERNATIVES: The City could award the bid after securing the financing for the entire project in June 2002. This will delay the project schedule considerably and may result in higher bids. FISCAL IMPACT: The chosen financing mechanism will be part of the cost of issuing debt, and interest and costs associated will be capitalized and should not exceed $300,000 on a net