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Committee directed to recommend using fund balance for proposed solar project to avoid $1 million in interest
Summary
Finance staff recommended the district pay for a proposed solar installation from its fund balance rather than use a tax-exempt lease, saying leasing would add about $1 million in interest and lengthen payback from roughly 5½ years to about 9½ years.
A district staff member told the Finance and Resource Committee on Aug. 19 that paying up front from the district's fund balance would yield a higher return and avoid roughly $1 million in interest costs associated with a tax-exempt lease.
"About a million dollars in interest costs to lease," the staff member said, and explained that the actual project cost is the same under either financing option but that interest and small tax-credit differences change the economics. The staff member estimated a roughly 5½-year payback when the district funds the project up front versus about 9½ years under a lease, and recommended using the fund balance while keeping the board's policy threshold intact.
Consultant Mario Malanzi said design refinements had been made to adjust panel sizing and that final interconnection details would be set when bids are returned. A second presenter, Dan, described the process for project management and recommended using an outside project manager for the design-build phase to handle bidding and scheduling.
Committee members raised questions about rebate timing and energy-price assumptions; staff said the analysis uses current energy prices with a three- to three-and-a-half percent annual escalation and includes degradation and replacement allowances. The committee did not take a formal vote but asked staff to bring a discussion item to the full board and to secure auditor confirmation on rebate treatment before final board action.
