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Montecito board establishes dedicated emergency reserve, directs line‑of‑credit option
Summary
The board approved a committed emergency reserve of $1,150,000 and directed staff to pursue a $1,000,000 line of credit to bridge cash‑flow while awaiting FEMA reimbursements for emergency CIP work.
The Montecito Sanitary District board voted March 25 to create a committed emergency reserve intended to provide cash for critical capital repairs following storms or other infrastructure emergencies. Staff recommended $1,150,000 in committed cash and an additional $1,000,000 line of credit to cover cash‑flow gaps while FEMA and Cal OES reimbursement processes are completed.
General Manager Weigel and staff framed the reserve as a planning and cash‑flow tool, not new ongoing spending; staff recommended the funds be held in interest‑bearing accounts and incorporated into the district's rate study. A finance committee representative (Director Newquist) reviewed payables and reconciliations and answered technical questions about where funds are held and investment returns.
Directors emphasized the timing risk between doing emergency work and receiving federal reimbursements; one director said FEMA reimbursement checks can arrive many months after work is completed and argued a committed reserve reduces last‑minute borrowing at high rates. After discussion a motion was made and seconded to adopt the recommended reserve levels and pursue a line of credit; the board took a roll‑call vote and the motion passed.
The vote creates a committed policy direction and asks staff to return with a formal resolution setting the reserve mechanics and permissible uses for the funds.
