Two Resolutions were passed at Tuesday night’s Joint Utility Board Meeting, including Resolution 17-06, which resolved to accept a fuel financing proposal from Northrim Bank for the 2017 Fuel Loan.
The 2017 Fuel Loan is another installment of an annually-required loan for the purchase of generation diesel fuel which has been historically provided by Wells Fargo. The unanimous decision of the Utility Board to accept Northrim Bank’s proposal of a 2.85% interest rate and a Utility Revenue Note structure beat out Wells Fargo’s proposal of a 2.65% interest rate under a City General Obligation structure.
As per Utility Manager John Handeland’s recommendation to the board, he explains: “what we asked for was a utility revenue anticipation [note], we wanted to get back to stand on our own.”
Though the City General Obligation structure proposed by Wells Fargo is lower risk and has a lower interest rate, it relies on the credit of the City, including a pledge to levy any property taxes necessary to meet the obligation. The final interest rate is also subject to change upon close. A Revenue Anticipation Note – such as proposed by Northrim Bank – only requires that NJUS is pledged to pay the note and has a fixed interest rate.
Utility Board Chairman Carl Emmons initially had reservations denying Wells Fargo’s proposal, stating “it kind of bothers me not to support local businesses, even though they’re world-wide or whatever, they do have an office here that nobody else has.”
However, after discussion, the board unanimously agreed to accept Northrim Bank’s proposal after concluding it was the proposal that best met NJUS’s solicitation requirements. Historically, Wells Fargo had provided the annual fuel loan over the last 14 years, with a break in 2009 where the loan was provided by NSEDC.
The second resolution passed by the NJUS board was Resolution 17-07, which proposed that NJUS submit two projects for consideration in the State of Alaska’s solicitation of proposals for President Trump’s Federal Infrastructure Initiative Program. These projects were listed in priority order as “Utility Maintenance Response Equipment Storage and Office Facility” first, and “Water-Sewer Infrastructure Construction” second.
The next NJUS board meeting will take place on July 18th at 7:30pm.