HomeMy WebLinkAbout16 WTR ENTER CONST. 04-15-96NO. 16
4-15-96
DATE'
APRIL 4, 1996
Inter-Com
TO:
FROM:
SUBJECT:
RONALD ~LT, FINANCE DIRECTOR
AUTHORIZE PREPAYMENT OF WATER ENTERPRISE CONSTRUCTION
CONTP. ACT- CORNICHE DEVELOPMENT
RECOMMENDATION:
Authorize the Finance Director to pre-pay the outstanding
construction contract due to Corniche Development at a present
value discount of 26%, the net amount to be paid will be
approximately $4,300.
DISCUSSION:
The outstanding ~onstruction contracts are a carryover from when
the Water Enterprise was a privately owned utility and operated
under the rules of the Public Utilities Commission (PUC). As new
development took place that required extending water mains to
provide the necessary service, the developer advanced the cost of
the main line extensions to the Water Utility to be paid back from
future Water revenues generated by the main line improvements.
When the City purchased the Water System we assumed approximately
$1 million of outstanding construction contracts. The 6-30-95
balance of the contracts was $9,943 of which approximately $7,000
is due Corniche Development.. Their contract will expire in 2002,
and it is anticipated that they will receive full payment at that
time. The City has been. approached by Dan O'Connor from Corniche
and asked if we would consider pre-paying this balance due at a
discount from the remaining life. Net the amount due Corniche
Development for 1995 payable April 30, 1996 the City will save
about $1,600 over the remaining life of the contract. If the City
Council approves this pay-off, the remaining construction contracts
will be about $4,600.
RAH4:WaterCon.Apr