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RIVERSIDE PUBLIC UTILITIES <br /> Board Memorandum. <br /> BOARD OF PUBLIC UTILITIES DATE: December 17, 2010 <br /> ITEM NO: 5 <br /> SUBJECT: TRANSFER OF AB BROWN SPORTS COMPLEX PROPERTY FROM PUBLIC <br /> UTILITIES WATER FUND TO PUBLIC UTILITIES ELECTRIC FUND—SUPPLEMENTAL <br /> APPROPRIATION <br /> ISSUE: <br /> That the Board of Public Utilities consider approval of the transfer of the Ab Brown Sports Complex (the <br /> "Complex") Assessor Parcel No. 246-060-001 (Exhibit A), from the Water Fund to the Electric Fund. <br /> RECOMMENDATIONS: <br /> That the Board of Public Utilities recommend that the City Council: <br /> 1. Approve the transfer of the Complex from the Water Fund to the Electric Fund at fair market value <br /> in the amount of$11,600,000; and <br /> 2. Approve a supplemental appropriation from the unappropriated Electric Fund Balance in the amount <br /> of$11,600,000 to an account number as assigned bythe Finance Division and increase revenue for <br /> the Water Fund in the same amount for the transfer of the Complex. <br /> BACKGROUND: <br /> Over its one-hundred year history,the Water Utility has acquired significant real property assets,including the <br /> Complex property. Conversely, the Electric Utility has very limited real property holdings. To better balance <br /> the Utilities' respective short-term and long-term investment and reserve assets, staff is seeking the Board's <br /> approval to transfer-this 56-acre property at fair market value (as required to comply with applicable bond <br /> covenants) from the Water Fund to the Electric Fund. This allows the Electric Fund to capitalize on future <br /> appreciation of real estate values,while increasing the financial liquidity of the Water Fund.This transaction is <br /> anticipated to improve the overall financial positions,and help maintain the high credit ratings,of both Utilities. <br /> Based on a November 2009 appraisal of the land underlying the Complex, the Electric Fund will pay the <br /> Water Fund the fair market value amount of$11,600,000. While the appraisal is over one year old, staff is <br /> confident that market trends in relation to the subject property indicate that property values have stabilized <br /> and as a result valuation adjustments would be minimal and offset by the time and expense involved in <br /> obtaining an updated appraisal report. <br /> FISCAL IMPACT: <br /> The cost to transfer the Complex land from the Water Fund to the Electric Fund is$11,600,000. Sufficient <br /> funds are available in the Electric Fund Balance to complete this transfer. <br /> Prepared by: :3,ary L. Nolff, Public Utilities Assistant General Manager/Resources <br /> Concurs with: Kevin A. Milligan, Public Utilities Assistant General Manager/Water <br /> Approved by: David H. Wright, Public Utilities General Manager <br /> Approved by: Belinda J. Graham, Assistant City Manager <br /> Approved as to form: Gregory P. Priamos, City Attomey <br />