05-21-10 BPU RPT 11 - Laserfiche WebLink

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W A T E R I E N E R G Y I l I E E RIVERSIDE PUBLIC UTILITIES Board Memorandum P U B L I C U T T I I T T F $ BOARD OF PUBLIC UTILITIES DATE: May 21, 2010 ITEM NO: 11 SUBJECT: AUTHORIZE THE RIVERSIDE PUBLIC UTILITIES (RPU) TO PROVIDE INTERIM FINANCING TO SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY (SCPPA) FOR THE PURCHASE OF A NEW OFFICE BUILDING ISSUE: That the Board of Public Utilities consider approval of interim financing of up to two years to SCPPA for the purchase of a new office building. RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council approve: 1. Interim financing in the form of a loan in an amount not to exceed $6,000,000 to Southern California Public Power Authority("SCPPA"), at an interest rate of five percent(5%),for a maximum term of two years, collateralized by the building purchased by SCPPA with the loaned funds,for the purchase of a new headquarters building and tenant improvements to facilitate day to day operations; and 2. Authorization for the City Manager, or his designee, to execute the necessary documents for the loan to SCPPA. BACKGROUND: On November 1, 1980, the City of Riverside, along with other municipal entities, formed the Southern California Public Power Authority (SCPPA) by a Joint Powers Agreement under the laws of the State of California. The primary purpose of SCPPA is to plan, finance, develop, acquire, construct, operate and maintain projects for the generation and transmission of electric energy for sale to its participants and to provide legislative advocacy at the state and national levels. Since inception, SCPPA has financed four generation projects, three transmission projects, three natural gas projects, and four renewable energy projects, with many pending projects in the queue. SCPPA headquarters is currently located in Pasadena. With the continued expansion of SCPPA projects and activities, and their lease expiration in March 2011, SCPPA requires additional office space to facilitate day to day operations. There are no opportunities to add adjacent leased space at its current headquarters. With historically low real estate values and current market conditions, SCPPA explored various options, including remaining in Pasadena where the cost per sq. ft. is much higher than surrounding areas, looking outside Pasadena for more affordable space, and the economics of leasing versus buying a facility. After an extensive search, a facility was located in the Glendora/San Dimas area that more closely meets SCPPA's current and future needs. All administrative costs to operate SCPPA are shared among project participants, including Riverside. Leasing Versus Ownership The following table compares the economics of leasing or purchasing comparable facilities in the Pasadena and Glendora/San Dimas areas: 1