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Committee clears path to pursue interim financing while pursuing SRF for Madden Creek and Tahoe Cedars projects
Summary
Staff and financing advisor Ken Deacker told the committee SRF remains the least expensive option (~2.2% for up to $50M) but SRF timing and USDA/WIFIA uncertainty make interim financing (drawdown notes or 2-year public notes) necessary to keep Madden Creek and Tahoe Cedars projects moving; committee asked staff to amend the memo and seek board/PFA authorization.
District staff presented a financing overview for water-system reconstruction projects and asked the committee to authorize proceeding with interim financing while long-term funding is secured. Staff said they are pursuing SRF, USDA and WIFIA, and that timing uncertainty—particularly on environmental clearance and federal processing—makes short-term financing necessary to ensure they can execute construction contracts with Granite when the season allows. The staff memo will be amended and returned to the board and to the PFA for formal approvals.
Ken Deacker, external financing advisor, summarized trade-offs: "SRF is your least expensive and that rate is currently about 2.2%." He described drawdown commercial-bank products (interest-only on draws, no fee for undrawn balances) that could be arranged in roughly 60–90 days, or public 2-year notes requiring an offering memorandum and a rating process taking up to 120 days. Deacker said if USDA or other subsidized options fall away, financing Madden Creek with long-term municipal bonds (estimated 4.0–4.5%) is a viable alternative; interim financing would be structured so reimbursements from SRF can repay short-term notes once SRF loan agreements are finalized.
