Lukins ResolutionDATE OF ISSUANCE: 4/27/2018
PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
WATER DIVISION
RESOLUTION
RESOLUTION W-5159
APRIL 26, 2018
RES. W-5159) RESOLUTION GRANTING LUKINS BROTHE S
WATER COMPANY AUTHORITY TO BORROW Ul TO $2,200,000
FROM PLUMAS BANK, OTHER FINANCIAL INSTI TI ,
FROM THE STATE WATER RESOURCES CONTROL BOARD
UNDER THE SAFE DRINKING WATER STATE REVOLVING
FUND LOAN PROGRAM; TO ENCUMBER ASSETS IN
CONNECTION WITH THE LOAN; TO INSTITUTE A SURCHARGE
TO PAY OFF THE LOAN; AND TO REFINANCE THE BANK OR
FINANCIAL INSTITUTION LOAN IF AT A LATER DATE A MORE
FAVORABLE FUNDING SOURCE BECOMES AVAILABLE.
By Advice Letter No. 71-W filed on December 7, 2017.
SUMMARY
This Resolution grants the authority requested of the Commission by Lukins Brothers
Water Company (LBWC) in its Advice Letter (AL) 71-W.
LBWC requests authority, pursuant to §§ 816 through 851 of the Public Utilities Code
and the requirements of General Order 96-B, to:1
1. Borrow up to $2,200,000 from Plumas Bank, other financial
institutions or from the State Water Resources Control Board
SWRCB) under the Safe Drinking Water State Revolving Fund
SRF) program;
2. Use the loan proceeds to finance the construction of a Granular
Activated Carbon (GAC) treatment facility and upgrades to well
site;
1 All statutory references are to the Public Utilities Code unless otherwise indicated.
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3. Establish a surcharge as may be required under the loan
agreement to make payments of principal and interest on the
loan, cost of issuance, and to accumulate a reserve fund;
4. Encumber utility assets in connection with the loan; and
5. Refinance the bank or financial institution loan if at a later date, the
SRF loan or other more favorable funding source becomes
available.
BACKGROUND
LBWC, a California corporation, is a Class C water utility subject to the jurisdiction of
this Commission. LBWC provides water service to approximately 116 metered and 856
flat rate customers. LBWC also provides public fire protection water service to 27 fire
hydrants. LBWC's service territory is in the Lukins Subdivision, totally within the City
of South Lake Tahoe in El Dorado County. Two other water utilities, the South Tahoe
Public Utility District and the Tahoe Keys Homeowners Association serve water to the
remainder of the City.
On July 7, 2014, LBWC received laboratory reports documenting that its Wells 2 and 5
were both contaminated with PCE2 in excess of the State's established Maximum
Contaminant Level (MCL) for PCE in drinking water. LBWC ceased its use of both
wells and opened its emergency intertie with the South Tahoe Public Utility District
STPUD).
Since July 2014, LBWC's staff has spent significant amount of time addressing and
attempting to mitigate, to the extent possible, the contamination problem. On
December 23, 2016, LBWC applied for a construction loan with the SWRCB under the
SRF program. The loan process from the pre -application to the execution of a loan
contract could take months to complete. And prior to the execution of the loan contract,
the Lender requires that the Commission issue a resolution or ordinance dedicating the
source of repayment of the loan.
2 Tetrachlorethylene or Perchloroethylene is a man-made chemical used in dry cleaners, industrial
degreasers, and spot removers.
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April 26, 2018
According to LBWC, the need to move forward with building the GAC treatment plant
is crucial, as a) the current state of water in the South Lake Tahoe community has
reached a critical impasse, b) another neighboring water system is in danger of having
to shut down wells because of increasing contaminant levels and if this occurs, there
will be insufficient water supply for the community and for fire preparedness during
the dry season, and c) the Lake Tahoe Basin has a short building and construction
season (April to October) due to environmental sensitivity.
GROUND WATER CONTAMINATION
The PCE contamination in LBWC's Wells 2 and 5 was discovered through routine
sampling in accordance with Title 22 of the California Code of Regulations.
Following the initial discovery of PCE contamination, LBWC engaged with other local
water purveyors and local and state regulatory agencies through the Groundwater
Stakeholder Advisory Group (SAG) 3 in order to proactively determine the extent of the
regional PCE contamination and to begin the process of designing remedial actions.
LBWC completed a feasibility study to determine the best available technology to
remove PCE from the water pumped by its contaminated wells.and secured a grant
through the California State Revolving Fund to complete the design and engineering of
a Granular Activated Carbon Filtration System to treat a portion of the flow of Well 5.
According to LBWC, it is currently nearing 90% completion of the plans and
specifications for well head treatment at Well 5 and is approaching shovel ready status.
LBWC is also in the process of submitting a SRF application to complete a feasibility
study to replace Well No. 2. SAG is also in the process of completing a grant funded
feasibility study for remedial alternatives to determine the best aquifer remediation
solutions. The stakeholders have completed one well site extraction test and are
preparing to complete two more. SAG is also constructing a computer model of the
contamination plume to document past and future plume migration.
3 SAG is a twelve -member advisory group that provides input for updating the Tahoe Valley South Basin
Groundwater Management Plan. The purpose of the Groundwater Management Plan is to implement
basin management objectives to manage groundwater supplies, protect groundwater quality, and foster
stakeholder involvement.
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COMPLIANCE ORDER NO. 01-09-14R-001
On September 8, 2014, the SWRCB issued LBWC Compliance Order No. 01-09-14R-001
for violation or threatened violation of the California Code of Regulations (CCR), Title
22, Sections: 64444, 64445.1(5)(c), 64554(a)(2)&(3), 64554(c) and the California Health and
Safety Code, Division 104, Part 12, Chapter 4, Article 7, Section 116555(a)(1) & (3).
The Compliance Order indicated that two of LBWC's groundwater sources during the
months of June and July 2014 had elevated PCE concentrations based on laboratory
results from BSK Associates Engineers & Laboratories from raw water Title 22 samples.
On July 7, 2014, LBWC received the laboratory's reported PCE concentrations from Well
2 and from Well 5. Further samples were taken, and the confirmation samples still
exceeded the PCE maximum contaminant level (MCL) of 5 µg/L (ppb). The average of
the initial and confirmation samples for Well 2 is 33 µg/L (ppb) and for Well 5 is 25 µg/L
ppb).
The SWRCB recommended that an investigation report on the PCE spike be prepared
and shared with the California Regional Water Quality Control Board - Lahontan
Region (Regional Board), the Department of Toxic Substances Control, and the
California Public Utilities Commission. LBWC also was directed to prepare a study to
evaluate alternatives to meeting water demand, either with treatment or through
development of new water sources.
The SWRCB findings determined that LBWC had violated and continued to violate §§
64444 and 64554 of the CCR and § 116555(a)(3) of the CHSC and failed to ensure that
the water delivered to its customers is a reliable and adequate supply of pure
wholesome, healthful, and potable water.¢
Pursuant to § 116655, Article 9, Chapter 4, Part 12, Division 104 of the CHSC Code, the
SWRCB ordered and directed LBWC to:
4 CCR, Title 22, Section 64444 states that the MCLs for the primary drinking water chemicals shall not be
exceeded in the water supply to the public. CCR, Title 22, Section 64554(a) states that at all times, a public
water system's water source(s) shall have the capacity to meet the systems maximum day demand
MDD).. CHSC Sections 116555(a)(1)&(3) states in relevant part that any person who owns a public water
system shall ensure that the system complies with primary and secondary drinking water standards and
shall provide a reliable and adequate supply of pure, wholesome, healthful, and potable water..
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1. Keep Well 2 and Well 5 out of routing service and submit a permit
amendment application to change each well's status from "Active" to _
Standby".
2. Notify all customers, those that provide LBWC's drinking water to others,
and other service connects to which water is delivered of the PCE water
quality standard violation.
3. Investigate the potential causes of the violation and submit the results of
the investigation to the SWRCB.
4. Submit a plan and time schedule for improvements to the water system to
correct the PCE water quality problem and eliminate the delivery of water
to consumers that does not meet the primary drinking water standards.
In response, LBWC did the following:
1. Shut down operation of Wells 2 and 5 and removed them from service on
July 7, 2014. Filed a permit amendment to change the status of Wells 2
and 5 from Active to Standby, which was granted July 20, 2014.
2. On September 30, 2014, LBWC issued a notification to customers of the
PCE water quality standard violation.
3. The investigation and enforcement actions are currently ongoing. The
Regional Board is in direct communication with the SWRCB regarding the
matter.
4. A plan for treatment was completed and accepted by the SWRCB. LBWC
is currently in the design, engineering and permitting phase of the
accepted treatment project. The timeline of the project is ongoing and
updated as additional information becomes available. Water delivered to
customers meets primary drinking water standards. LBWC also opened
an emergency intertie with the South Tahoe Public Utility District (South
Tahoe PUD).
ROBINS BORGHEI LLP
LBWC retained Robins Borghei LLP (Borghei), a law firm specializing in groundwater
contamination litigation and regulatory investigations to aid it in responding to the PCE
contamination of its drinking water supplies. Since then, Borghei secured a written
agreement to toll the relevant statutes of limitations with the two known existing
parties that have been designated by the Regional Board as responsible for causing PCE
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impacts to groundwater at the Lake Tahoe Laundry Works (LTLW) site in South Lake
Tahoe, as well as several other potentially responsible parties. Borghei is closely
monitoring the Regional Board process to ensure that the agency is actively and
properly pursuing its investigation into the source of the regional PCE plume and is
committed to holding the responsible parties accountable in compliance with applicable
law.5
RESOURCE CONCEPT, INC.
In order to address and eliminate the PCE contamination in its wells as well as reduce
the cost of purchased water, LBWC engaged Resource Concept Inc. (RCI) for the design,
permitting, and plans for the construction of a water tank, treatment system and site
improvements.
The design and permitting requirements completed by RCI was submitted to the
SWRCB. According to LBWC, RCI will provide project management and oversight
throughout the entire design process. This includes scoping, budgeting and schedule
development for all phases of the project.
The engineering design cost is shown in the following table:
Table 2
Water Treatment Plant
Design and Permitting
Engineering Design Estimated Cost
RCI $ 102,000
Resource Development Co. as a sub to RCI $ 4,000
RL Engineering (structural) $ 5,150
American Innovative Structures $ 30,500
Subtotal Engineering Design $ 141,650
5 On May 12, 2017, the Regional Board issued a Clean Up and Abatement Order to the responsible parties
for the LTLW site. The order required that the LTLW responsible parties delineate the vertical and
horizontal extent of the PCE plume emanating from their site. Since then, the LTLW responsible parties
have submitted two work plans for conducting the required investigation, neither of which has been
approved by the Regional Board. In October 2017, comments on the responsible parties' second
revised" work plan were submitted by several stakeholders, including a consultant retained by LBWC.
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The scope of work for the water treatment system, and site improvements are
documented in Exhibit A to AL No. 71, which included the following tasks:
Plans and Specifications - siting and final design of the treatment system,
sizing and specifications for the pump for Well 5, sizing, siting and
specifications for the proposed new water tank, system integration,
completion of plans, special details for all water system improvements,
engineering design memorandum describing the new water system, basis
of design, system demands, hydraulic analysis, pumping facilities, storage
and disinfection. Upon receipt of comments from regulatory agencies,
RCI will prepare a final plan set for bidding.
2. Permitting - includes completion of application to the Tahoe Regional
Planning Agency (TRPA) for Soil/Hydrology Report, Commercial Project
Application, review of California Environmental Quality Act (CEQA)
regulations, biological and cultural assessment, prepare application for a
water project to be submitted to the SWRCB, and encroachment and other
permits.
3. Exclusions - includes identification of exemptions and exclusions.
4. Project Management - project management and oversight throughout the
entire design process.
5. Well 2 Destruction Permitting - includes contacting appropriately licensed
contractors to conduct the well destruction per the El Dorado County and
California State Department of Water Resources (I)WR) requirements.
6. Water Tank Design - coordinate with the Resource Development
Company for the completion of the design plans and provide complete
design plans and specifications.
7. Treatment System Building and Pump Shed Design - complete the design
plans for submittal to the TRPA, DWR, and/or El Dorado County, as
necessary, and for construction of the proposed buildings.
The engineering design and planning phase for the GAC facility calls for the destruction
of Well 2 to make room for an approximately 99,000 -gallon storage tank and the
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installation of two GAC filtration units housed within a new metal building to treat a
portion of the total flow capacity of Well 5. Included in the scope of work for the GAC
facility Will be some additional maintenance for Well 5, a new variable frequency drive
operating system, a generator, SCADA monitoring, a new pump and motor, and a new
enclosure around the well. The site will be retrofitted to meet all Best Management
Practices for storm water. LBWC intends to replace the resulting total loss of Well 2 as a
water source and the loss of significant pumping capacity from Well 5 through future
capital improvement projects.
The SWRCB has indicated that it will reimburse LBWC for the costs of the treatment
plant design and permitting with a $137,000 Proposition 1 grant.
A SWRCB grant agreement was received by LBWC on July 13, 2017 and was signed and
returned to the SWRCB so that payment could be processed.
On December 23, 2016, LBWC applied for a SRF loan with the SWRCB for the
construction of the GAC treatment facility and upgrades to its well site.
CONSTRUCTION BUDGET — GAC TREATMENT FACILITY
LBWC's projected budget for the construction of a GAC treatment facility and upgrades
to its well site is shown in the following table:
Table 3
Water Treatment System and Site Improvements
Cost Estimate
Construction Estimated Cost
Treatment Building & Pump House — Materials $ 60,000
Treatment Building & Pump House — Construction $ 250,000
Water Tank $ 168,000
Site Improvements $ 175,000
Treatment System $ 350,000
Well Pumping Equipment/Water Line Improvement $ 275,000
Backup Generator $ 55,000
SCADA System Improvement $ 20,000
Bidding, Construction Management & Inspection $ 140,000
Permit Fees $ 25,000
Subtotal Construction $ 1,518,000
Contingency $ 497,895
Total Construction Cost $ 2.OI5.895
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NOTICE AND PROTESTS
April 26, 2018
Pursuant to G.O. 96-B, Water Industry Rule 4.1, on October 16, 2017, LBWC served its
AL No. 71-W onitsservice list. Notice of AL No. 71-W was made by publication in the
Commission's Daily Calendar of October 20, 2017.
On December 14, 2017, LBWC notified its customers of the proposed loan to fund its
project and the surcharge to repay the loan. On December 20, 2017, LBWC published
the proposed loan and surcharge in the Tahoe Daily Tribute, a local newspaper
circulated in South Lake Tahoe, California.
Ten protest letters were received by LBWC that raised the following issues:
1. LBWC's water quality is poor, charges are high, and many surcharges are
currently imposed.
2. Poor management and inability to immediately address the
contamination.
3. Utility will profit from the improvements if the assets are sold. Customers
should be provided equity share in the company.
4. Contamination was caused by a laundromat not the neighborhood.
Utility should not put the burden and costs on the customers.
5. The debt request coupled with surcharge requires a hearing that should
include government, homeowner association, district representatives, and
customers.
6. Utility should be sold.
LBWC acknowledged receipt of and responded to the customers between December 27,
2017 and January 9, 2018, stating that although LBWC understands the customer's
concerns over a rate increase during today's economic conditions, it must comply with
the safe drinking water standards. The contamination impacting its wells is the result
of chemical releases that occurred several decades ago that are the fault of third parties.
Additionally, LBWC informed the customers that it has been actively working with
DWR and the SWRCB to see if potential alternative sources of funding, such as grants
and low-interest loans, are available to reduce to the extent possible the costs associated
with the PCE contamination.
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DISCUSSION
April 26, 2018
LBWC filed AL No. 71-W to secure authorization to borrow up to $2,200,000 for the
construction of a GAC treatment facility to address the PCE groundwater
contamination of its Well 2 and 5 located at 2133 Twelfth Street, Lot 66 in Tahoe Island
Park, South Lake Tahoe, California and related cost of issuance.
LBWC claims that it explored other state and federal grants, all to no avail and it is not
able to disburse funds from its treasury at this time. Due to the urgent need to act on
the contamination issue and while waiting for SWRCB's confirmation of a SRF loan,
LBWC contemplates to secure a bridge loan with a bank instead of waiting for the SRF
construction loan to be finalized. The SRF loan process takes an extensive time to
complete and no commitments have been received from the SWRCB.
A. Plumas Bank Loan
On August 14, 2017, LBWC received from Plumas Bank an Expression of Interest (EOI)
letter, shown as Exhibit B to AL #71 (that is not a commitment to lend or a loan
approval), for a construction non -revolving line of credit.
Plumas Bank's EOI provides, among others, the following information:
1. Non -revolving line of credit totaling up to $1,582,875 with $82,875 ($1.5
million @ 6.5% for 1 year —interest only with 85% utilization) reserved
under the non -revolving line as an interest reserve for credit facility
during one-year construction period.6
2. Loan fee of 2% may be financed as part of project's costs.
3. A rolling six (6) month principal and interest reserve in a separate,
segregated Plumas Bank deposit money market account for surcharge
allocation.
4. Minimum interest rate of 6.50% and a cap of 7.73%.7
5. Interest only to be paid from interest reserve during construction period
for first 12 months. Term loan up to 20 -year term and amortization.
6. Total of 6 to 12 disbursements to take place within 6 —12 months of start
of construction based on percentage of completion of construction project.
6 According to LBWC, it is currently negotiating for a $2.2 million loan with Plumas Bank.
7 Current bank interest rate is 6.5%.
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April 26, 2018
7. Bank may allow prepayment of loan by SRF financing with prepayment
penalty of 2% (year 1), 1% (year 2) otherwise no prepayment of loan is
allowed.
8. Pledging all assets, accounts receivable, water rights, common and
preferred stock, real estate, etc. shall be pledged to the bank.
9. Loan fee, program fee, legal and documentary and other fees will be
assessed by the bank.
10. Customer surcharge is required.
The monthly amortization for the $2,200,000 loan at 6.5% interest and a term of 20 years
is estimated at $16,402.60. Plumas Bank requires a rolling six-month principal and
interest reserve equivalent to $98,416 to be accumulated while the construction is in
progress or during the first year of the loan.
B. Proposed Surcharge
LBWC calculated the monthly surcharge in direct proportion to the capacity of each
customer's meter, as shown in the revised Exhibit J to the filing:
Table 4
Estimated Surcharge Per Meter, Per month
12th Month
Metered Service 1St 11 Months' Onwards9
5/8 x3/4 -inch meter 3.31 6.07
3/4 -inch meter 4.97 9.10
1 -inch meter 8.28 15.17
1 -1/2 -inch meter 16.55 30.35
2 -inch meter 26.48 48.56
3 -inch meter 49.66 91.04
4 -inch meter 82.76 151.74
6 -inch meter 165.53 303.47
The monthly surcharge to be imposed during the first eleven months of the loan is
estimated to generate a total of $98,416 that will put LBWC in compliance with the loan
contract's requirement to accumulate six months of principal and interest reserve
8 Surcharge to accumulate reserve requirement.
9 Surcharge to pay loan principal, interest, and loan -related fees.
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during the 1St year of the loan. This reserve serves as security in case LBWC defaults at
any time in paying the monthly loan amortization.
The monthly surcharge beginning the 12th month of the loan is estimated to generate
16,403.
LBWC estimates the monthly bill10 for the first 11 months (principal and interest plus
reserve requirement) for a 1 -inch metered customer using an average of 600 cubic feet
of water per month, at a quantity rate of $1.86 per 100 cubic feet, and a service charge of
36.68 would increase by $8.28 from $47.84 to $56.12 or 17.3%. Thereafter, the monthly
bill (principal and interest) would increase by $15.17 from $47.84 to be $63.01 or 31.7%.
Currently, LBWC has a total of 975 active service connections of which 929 or 95.3%
have a 1 -inch meter connection.
C. SWRCB SRF Loan
To -date, the SWRCB has not confirmed when LBWC's construction loan application for
the GAC treatment facility can be approved, funded and disbursed.
The terms and interest rate that will apply if a construction loan is approved by the
SWRCB will be determined at the time a loan agreement is executed. The SWRCB
requires a dedicated source of revenue for repayment of the principal amount of the
loan plus interest (surcharge) and a reserve fund to be accumulated during the first ten
years of the term." The SWRCB also requires that a fiscal agent be engaged who will
act as trustee for funds deposited and oversee loan payments and accumulation of the
reserve.
In the event that at a later date the SWRCB approves LBWC's application for a $2.2
million construction loan and LBWC opts to refinance the bank loan, we will require
LBWC to file a Tier 2 Advice Letter to inform the Commission of the SRF loan, the
amount, terms and conditions, and LBWC's proposed surcharge pursuant to the
10 Consisting of quantity rate and service charge and excluding any other current authorized surcharge
and fee.
11 Since the final terms of the SRF construction loan will not be established until LBWC executes the
Funding Agreement, the precise surcharge cannot be determined at this time. We will require LBWC to
file an advice letter to establish the surcharge seven months before it needs to make its first semi-annual
loan payment. AL No. 71 only described the surcharge required by a bank that carries a 6.5% interest
rate, monthly payments, and a 6 months accumulation of a reserve fund.
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SWRCB's loan agreement, reserve requirement, and loan amortization. LBWC is
required also to provide WD the details pertaining to the refinancing of the bank loan.
The filing is subject to review and approval.
Except for the interest rate and other loan -related fees, there are similar requirements
that Plumas Bank and the SWRCB have in common. Among the principal conditions
required by Plumas Bank or the SWRCB, are:
1. Disbursement of loan proceeds based on percentage of completion of
construction.
2. Surcharge rates or dedicated source of payment.
3. Accumulation of a reserve.
4. A fiscal agent who will manage the surcharge deposit, loan payment, and
accumulation of reserve.
5. Encumbrance of utility assets.
Henceforth, we will interchangeably refer to Plumas Bank and the SWRCB as "Lender".
D.10-10-018
In the Commission's D.10-10-018, dated October 14, 2010, which adopted rules for
accounting treatment of contamination proceeds arising from government grants and
proposing counterpart rules for government loans and damage awards, the
Commission acknowledged that contamination occurrences, and the responses they
prompt, can significantly disrupt an affected water utility's operations, straining
resources and personnel. The Commission also recognized that contamination events
are among the contingencies which a contemporary water utility, particularly one
depending on ground water from alluvial valleys in the State needs to be prepared to
confront and manage. Being ready and able to respond to contamination; however
arduous and frustrating that task, is now part and parcel of doing business as a water
company. In short, it is something that now normally comes within the obligation to
serve associated with utility status that also brings the opportunity to gain a reasonable
rate of return as granted by the Commission.
The obligation to respond to contamination events does not compel a standardized
response, however, such as suing the party responsible. Selection of the type of
appropriate response, whether it is litigation or another initiative, is a matter of
reasonable business judgement. Accordingly, if a utility can show that it is assuming
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above normal risk related to contamination litigation, the Commission can take that
circumstance into account in connection with cost recovery mechanisms .12
D.10-10-018 sets out the policies, framework for analysis, and rules to govern the
accounting and ratemaking treatment of grants and damage awards received by an
investor-owned water utility following contamination of its water supply is intended to
provide a fair and reasonable allocation of contamination proceeds between ratepayers
and shareholders, and assuring that ratepayers only pay a return on used and useful
plant in service funded by shareholders.
Ordering Paragraph No. 4 of D.10-10-018 states that:
When contamination proceeds arising from damage awards, settlements, government
order or insurance are initially received from the funding source, they shall be placed in
a memorandum account until the need for making expenditures arises, whereupon an
approval to transfer the proceeds to the appropriate dedicated 265 sub -account of the
Uniform System of Accounts shall be sought by a Tier 3 Advice Letter filing.
Ordering Paragraph No. 5 of D.10-10-018 states in part, that:
Any remaining amount of proceeds (net proceeds) may be shared between ratepayers
and shareholders upon Commission approval where circumstances warrant and on the
basis of factors relevant to the individual case, including factors enumerated in
Appendix D to D.10-10-018.
By AL No. 42-W, effective September 22, 2010, LBWC informed the Commission of the
various memorandum and balancing accounts it established and identified in its
Preliminary Statement Tariff Sheet. Included in such filing is LBWC's Water
Contamination Litigation Expense Memorandum Account authorized in Res. W-4094.
12 In 1998 the Commission granted all regulated water utilities the authority going forward to establish
water contamination memorandum accounts for litigation expenses. The utility bears the burden when it
requests recovery of the recorded costs to show that the costs are not covered by other authorized rates,
separate recovery of the types of costs recorded in the account is appropriate, that the utility acted
prudently when it incurred the costs, and that the level of costs is reasonable. Only costs incurred after
the establishment of an approved memorandum account qualify for cost recovery consideration.
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LBWC is aware of the rules for the accounting of contamination proceeds established in
D.10-10-018. We will require LBWC to follow the requirements of D.10-10-018 on grants
and damage awards in order to facilitate a fair allocation of contamination proceeds.
E. Capital Ratios
LBWC's capital ratios are shown below as recorded and adjusted to give pro forma
effect to the transactions listed:
Total Capitalization $4 100.00% $ •00
Proforma
4,337,847 93.51%
25,000 0.54%
616,389 13.29%
340,524) -7.34%
1) Reclassification of outstanding balance of Plumas Bank loan authorized by
Res. W-4886 and Res. W-4970 reported as Contribution in Aid of Construction
in 2016 to Long -Term Debt; and $2,200,000 loan requested in this filing.
2) Projected net loss of $54,905 for the year ending 2017 and net loss of $60,499
for the year ending 2018.
Although the financing requested in the filing changes the capital structure for
regulatory purposes, we show the recorded capital structure as compared to the pro
forma for illustrative purposes. As shown in the table above, the estimated change in
the recorded capital structure, given the proposed loan, is significantly high.
Capital structures are normally subject to review in cost of capital or general rate case
proceedings. We will not make a finding in this resolution on the reasonableness of the
projected capital ratios for ratemaking purposes.
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Table 5
Capital Ratios
Recorded Adjustments
Long-term Debt $ 226,851 35.27% $4,110,996(1)
Common Stock $ 25,000 3.89% -
Other Paid -In Capital 616,389 95.84% -
Retained Earnings 225,120) -35.00% (115,404)(2)
Total Capitalization $4 100.00% $ •00
Proforma
4,337,847 93.51%
25,000 0.54%
616,389 13.29%
340,524) -7.34%
1) Reclassification of outstanding balance of Plumas Bank loan authorized by
Res. W-4886 and Res. W-4970 reported as Contribution in Aid of Construction
in 2016 to Long -Term Debt; and $2,200,000 loan requested in this filing.
2) Projected net loss of $54,905 for the year ending 2017 and net loss of $60,499
for the year ending 2018.
Although the financing requested in the filing changes the capital structure for
regulatory purposes, we show the recorded capital structure as compared to the pro
forma for illustrative purposes. As shown in the table above, the estimated change in
the recorded capital structure, given the proposed loan, is significantly high.
Capital structures are normally subject to review in cost of capital or general rate case
proceedings. We will not make a finding in this resolution on the reasonableness of the
projected capital ratios for ratemaking purposes.
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F. Commission Authorization
April 26, 2018
As a public utility, LBWC has the responsibility to maintain its quality of service, meet
water treatment standards, and provide necessary improvements to its present water
system.
Section 817 provides that a public utility may issue stocks and bonds, notes, and other
evidences of indebtedness payable at periods of more than 12 months after the date
thereof, for certain purposes, including the construction, completion, extension, or
improvement of its facilities and the improvement or maintenance of its service.
LBWC's proposed loan would be for the purpose of constructing and improving its water
treatment facilities and maintaining its service, which falls within the scope of purposes
in § 817. Moreover, LBWC's proposed borrowing and the money, property, or labor to be
procured or paid for with the proceeds of the debt authorized by this Resolution is
reasonably required for the purposes specified in this Resolution, since these
improvements will benefit ratepayers over many years. LBWC's proposed project is not
reasonably chargeable to expenses or income.
The surcharge method of recovery ensures that the loan will be repaid without financial
stress to the water utility. The surcharge serves only to repay the loan and will not
generate any profit to the utility owners.
The Lender assesses the utility's need for water system improvements, its financial
needs, and the utility's ability to meet loan obligations. The Lender requires that loan
funds may only be used for eligible project costs and the Lender verifies all work
performed prior to reimbursing the utility with the loan proceeds.
Accordingly, we are assured that the payments made through ratepayer surcharge, is
for proper purposes. _ I
Therefore, pursuant to §§ 818 and 851, we will authorize LBWC to obtain a loan in the
amount of $2,200,000; encumber its assets in connection with the loan; and impose a
surcharge on its customers, as set forth herein. Since the final terms of the loan will not
be established until LBWC executes the loan with the Lender, the precise surcharge
cannot be determined at this time and only estimates are provided. The surcharge rates
shown in Table 4 of this Resolution are estimates. LBWC should file a timely Tier 2
16
Resolution W-5159
WD
April 26, 2018
advice letter to establish the surcharge (for the Plumas Bank or SRF loan, adjusted as
necessary), so as to collect enough revenue to make its first loan payment to the Lender.
We also authorize LBWC to refinance the bank or financial institution loan if at a later
date a more favorable funding source becomes available.
The Commission has also ordered utilities to impose a service fee for new service to
vacant and undeveloped lots when the Commission authorizes loan surcharges. The
amount of the service fee, subject to a maximum amount of $2,000, is the accumulated
total of the loan surcharge from its inception to the time of service connection. Only the
monthly surcharge applies thereafter.
The service fee serves to recover some of the system improvement costs from future
customers who will benefit from the system improvements. Here, as in the past, it is in
the public interest to implement a service fee and we will require LBWC to establish
and implement it.
G. Conditions Attached to Debt Authorization
In order to ensure proper treatment of the surcharge and plant financed, the
Commission will impose the following conditions:
a. The loan repayment surcharge shall be separately identified on customers'
bills.
b. The surcharge to repay the loan shall last until the loan is fully paid.
c. Surcharge revenues shall not be commingled with other utility revenue.
d. LBWC shall use a balancing account to be credited with revenues
collected through the surcharge and to be charged with payments of
principal and interest on the loan, and fiscal agent and loan -related fees.
e. LBWC shall deposit all surcharge revenues with a fiscal agent approved
by the Lender. Such deposits shall be made within 30 days after the
surcharges are collected from customers.
f. Any surplus accrued in the bank account shall be refunded or applied on
behalf of the customers when ordered by the Commission.
g. No less frequently than once per year, LBWC shall review the balance in
the balancing account immediately following a payment to the Lender,
and if the balance is less than the required reserve or exceeds the required
reserve by more than thirty five percent of the next payment, LBWC shall
17
Resolution W-5159
WD
April 26, 2018
file an advice letter to adjust the surcharge. Changes in surcharge rates
shall be accomplished by normal advice letter procedure subject to review
and approval. A Tier 3 filing is required for a surcharge increase and a
Tier 2 filing for a surcharge decrease.
h. The cost of the project financed through the surcharge shall be excluded
from ratebase for ratemaking purposes.
i. LBWC shall file a Tier 2 Advice Letter to implement a surcharge and the
service fee at an appropriate time prior to the first loan payment and
include in the filing a request to establish a balancing account.
j. LBWC should file with WD a copy of the loan documents within 15 days
of execution.
Our approval does not authorize any capital expenditures or specific construction
projects, but rather the creation of a funding mechanism to finance improvements to the
existing utility system.
Normally, for plant expenditures that will be included in ratebase, the reasonableness of
such expenditures is addressed during a general rate case. In this case, the plant
expenditures will not be included in ratebase and we will not make a finding in this
Resolution on the reasonableness of the cost estimates. However, for this construction
project to be paid by surcharge the utility may only expend funds based on the Lender's
approved components and the Lender verifies all work performed prior to reimbursing
the utility. Accordingly, we are assured that the payments made are for proper
purposes. In addition, with the conditions required of LBWC in this Resolution, there
will be sufficient check and balances to ensure proper handling of the loan proceeds,
surcharge, and any grant and damage award.
The surcharge to pay the proposed loan is independent of the quantity rate and service
charge that the customer pays, and the surcharge serves only to repay the loan and does
not generate any profit to the utility or its owner. The plant financed by surcharge is
permanently excluded from rate base for ratemaking purposes. General rate increase
and rate of return are matters established during a rate case, distinct from a dedicated
surcharge required by Lender.
In this filing, LBWC's proposed treatment facility would be paid through the surcharge
and the plant would be permanently excluded from ratebase. Theoretically, the
surcharge is a rate increase. But it is not one in the context of a general rate case, step -
rate increase, rate base treatment, or in connection with a utility's revenue requirement.
18
Resolution W-5159
WD
April 26, 2018
The surcharge will offset LBWC's future loan repayments and not contribute to an
increased rate of return. For this reason, the requested surcharge to repay the loan does
not have any impact or effect to any assessment that could lead to changes or reduction
in LBWC's tariff rates. In fact, there are conditions unique to a surcharge authorization
as shown above that ensures proper accounting and handling of this fund. To wit,
among others, (1) the surcharge is separately identified on customer's bills; (2) the
utility plant financed through the surcharge is permanently excluded from ratebase; (3)
all rate surcharges collected are deposited with a fiscal agent approved by the Lender;
and (4) the surcharge rate is adjusted periodically to reflect changes in the number of
connections and resulting overages or shortages in the balancing account.
Clearly, with a surcharge authorization, the utility is held responsible for refunding or
applying on behalf of the customers any surplus accrued in the balancing account and
the utility is directed by the Commission to make a filing whenever a decrease in rate
surcharge is warranted.
We find no substantive evidence from'the customers' objection to LBWC's proposed
GAC treatment facility and upgrades to its well site, the loan and the surcharge to pay
the loan, that should dissuade us from giving favorable consideration to LBWC's
requests in AL No. 71-W. LBWC's planned construction is in response to a Compliance
Order and other public agencies' requirements and the Commission should provide
LBWC the means to comply.
The ratepayers ultimately pay for all water system requirements and improvements,
regardless of the manner in which they are financed. If the utility owners invested their
own funds to pay for the water system improvements, they would be entitled to
earnings on such funds.
ENVIRONMENTAL IMPACT
The California Environmental Quality Act (CEQA) applies to projects that require
discretionary approval from a governmental agency, unless exempted by state or
regulation. It is long established that the act of ratemaking by the Commission is
exempt from CEQA review. As stated in the California Public Resources Code, the
establishment, modification, structuring, restructuring or approval of rates, tolls, fares,
or other charges by public agencies" is exempt from CEQA.13 Likewise, the creation of
13 Public Resources Code Section 21090(b) fl)
19
Resolution W-5159
WD
April 26, 2018
government funding mechanisms or other government fiscal activities which do not
involve any commitment to any specific project which may result in a potentially
significant impact on the environment are not "projects" subject to CEQA.14
This Resolution does not authorize any capital expenditures or construction projects.
Construction projects which LBWC intends to finance via this filing should undergo
CEQA review as early as feasible in the planning process, as required by CEQA
Guidelines Section 15004(b). To the extent capital expenditures are financed with the
proceeds of the loan issued pursuant to this Resolution, ongoing projects have already
been subject to any necessary CEQA review undertaken prior to LBWC receiving a
certificate of public convenience and necessity or permit to construct. CEQA review for
future projects will occur through the regulatory processes applicable to each capital
project when meaningful information necessary for conducting an environmental
assessment is available.
LBWC should comply with all environmental permitting requirements applicable to the
project that it will undertake in conjunction with the proposed loan.
FEES
Whenever the Commission authorizes a utility to issue debt, the Commission is
required to charge and collect a fee in accordance with § 1904(b).
The fee for this financing authority as required by § 1904(b) is $3,200.15
SAFETY AND COMPLIANCE
As discussed above, the SWRCB issued LBWC Compliance Order No. 01-09-14R-001
due to the PCE concentrations from its Well 2 and Well 5. LBWC's proposed
construction of a GAC treatment facility and upgrades to its well site would address
and provide LBWC the means to comply with the order to meet 'all applicable water
quality standards set forth by the SWRCB. LBWC pays the Commission User Fees and
files its Annual Reports regularly. There are no other outstanding Commission orders.
14 CEQA Guidelines Section 15378(b) (4).
15 The fee is assessed on $2,200,000 of authorized borrowing as follows: $2 times ($1,000,000/$1,000) + $1
times (1,200,000/1,000) equals $3,200.
20
Resolution W-5159
WD
COMMENTS
April 26, 2018
Public Utilities Code § 311(g) (1) provides that resolutions must generally be served on
all parties and subject to at least 30 days public review and comment prior to a vote of
the Commission.
Accordingly, on February 20, 2018, the draft resolution was mailed to parties based on
the service list attached to AL No. 71, and to customers who protested the filing, with
comments due on March 12, 2018.
One customer submitted a late -filed comment asking a) the source of the Commission's
authority to grant loans and encumber utility assets in connection with the proposed
loan, b) steps the Commission will take to ensure that customers will have safe and
reliable water service should LBWC default in the loan payments or become insolvent,
and c) what future charges will be imposed to meet the metering mandate by 2025.
A regulated utility is required under Pub. Util. Code §§ 817 and 818 to secure
Commission authorization for stocks and security transactions and under § 851 for
transfer or encumbrance of utility property. LBWC's proposed loan surcharge, which is
at this instance, required by the lender, is a dedicated source of loan payment that will
relieve LBWC of any cash flow problems. In addition, a trust account is established to
ensure proper handling of surcharge collections and loan payments.
A loan paid for by surcharge is excluded from ratebase and does not provide profits to
the utility. The utility is required to separately identify the loan repayment surcharge
on customers' bills. Also, the loan surcharge is reviewed periodically and any
overcollection in the trust account would be refunded to customers when so directed by
the Commission. The surcharge rates are reviewed through the advice letter process
and adjusted, subject to Commission approval. Other rate proceedings, including any
metering mandate onother capital improvements, are not covered in this Resolution
and are subject to future Commission review and approval.
FINDINGS AND CONCLUSIONS
1. LBWC, a California corporation, is a Class C water utility subject to the jurisdiction
of this Commission.
21
Resolution W-5159
WD
April 26, 2018
2. On October 16, 2017, LBWC served its AL 71-W to its service list pursuant to the
requirements of GO 96-B. With this filing, LBWC requests Commission authorization
for a loan to construct the GAC treatment plant to address the Well No. 5 contamination
in order to have sufficient water supply for the community.
3. On September 8, 2014, the SWRCB issued LBWC Compliance Order No. 01-09-14R-
001 for violation or threatened violation of the CCR, Title 22, Sections: 64444,
64445.1(5)(c), 64554(a)(2)&(a)(3), 64554(c) and CHSC, Division 104, Part 12, Chapter 4,
Article 7, Section 116555(a)(1)&(3) for exceeding the PCE maximum contaminant level
at two of its three water sources.
4. CCR, Title 22, Section 64444 states that the MCLs for the primary drinking water
chemicals shall not be exceeded in the water supply to the public.
5. CCR, Title 22, Sections 64554(a) states that at all times, a public water system's water
source(s) shall have the capacity to meet the system's maximum day demand (MDD).
6. CHSC Sections 116555(a)(1) & (3) states in relevant part that any person who owns a
public water system shall ensure that the system complies with primary and secondary
drinking water standards and shall provide a reliable and adequate supply of pure,
wholesome, healthful, and potable water.
7. LBWC is actively engaged in the Regional Water Quality Control Board's
investigation into the source of the PCE impacting its ground water supplies.
8. LBWC engaged Borghei to hold accountable the responsible parties that caused the
contamination.
9. LBWC engaged RCI for the design, permitting, and plans for the construction of a
water tank, treatment system, and site improvements.
10. On July 13, 2017, the SWRCB provided LBWC a $137,000 Proposition 1 grant
agreement to cover the engineering design cost.
11. The SWRCB has not confirmed when a construction loan can be approved, funded
and disbursed.
22
Resolution W-5159
WD
April 26, 2018
12. On August 14, 2017, Plumas Bank provided LBWC an EOI letter for a construction
loan that LBWC is currently negotiating.
13. LBWC received several letters from customers expressing concerns regarding the
proposed loan, surcharge, quality of water, and the contamination problem.
14. LBWC acknowledged receipt of and responded to the customers between December
27, 2017 and January 9, 2018.
15. LBWC is responsible for maintaining its quality of service and providing necessary
improvements to its water system.
16. In D.10-10-018, the Commission recognized that contamination events are among
the contingencies which a contemporary water utility, particularly one depending on
ground water from alluvial valleys in the State needs to be prepared to confront and
manage.
17. LBWC wishes to correct the contamination of its water source as soon as possible in
order to be in compliance with the SWRCB's Compliance Order No. 01-09-14R-001.
18. LBWC requests authority to refinance the loan for the construction of the GAC
treatment facility should a loan with more favorable terms subsequently becomes
available.
19. The proposed borrowing is for proper purposes.
20. To ensure proper treatment of the surcharge and plant constructed with the loan,
LBWC should be subject to the conditions specified in this Resolution.
21. The loan authorization herein is not a finding of the reasonableness of LBWC's
proposed construction or expenditures, the resulting capital structure, or the cost of
money, nor does it indicate approval of matters subject to review in a general rate case
or other proceedings.
22. LBWC should establish a balancing account to be credited with revenue collected
through the surcharge and any interest earned on the account and reduced by loan
payments and fiscal agent and loan related fees.
23
Resolution W-5159 April 26, 2018
WD
23. The plant paid for by the surcharge is excluded from ratebase.
24. The Lender requires LBWC to secure this Commission's approval of the loan, a
customer surcharge to repay the loan, and a security interest on the utility's properties.
25. The customer's protests did not provide any substantive evidence or reason for this
Commission to reject LBWC's proposed treatment facility.
26. With a surcharge type of recovery, the utility or its owners do not personally benefit
from the loan.
27. LBWC should maintain adequate records of the surcharge collections, payments of
principal and interest, and any fees or costs related to the loan.
28. LBWC should comply with all environmental permitting requirements applicable to
the construction and improvements that it will undertake in conjunction with this filing.
29. D.10-10-018 sets out the policies, framework for analysis, and rules to govern the
accounting and ratemaking treatment of grants and damage awards received by an
investor-owned water utility following contamination of its water supply.
30. The Commission has required utilities to impose a service fee for new service to
currently vacant and undeveloped lots when the Commission authorizes surcharge
recovery for improvement loans.
31. The service fee serves to recover some of the system improvement costs from future
customers who will benefit from the system improvements. By this, the construction
cost is distributed to a larger base that may lead an overall future decrease in surcharge.
32. The Commission has routinely required utilities to maintain records to (i) identify
the specific long-term debt issued, and (ii) demonstrate that the proceeds from such
debt have been used only for authorized purposes.
33. Notice of the filing appeared on the Commission's Daily Calendar on October 20,
2017 and LBWC notified its customers of the proposed loan and the surcharge to repay
the loan on December 14, 2017. Several protests were received.
24
Resolution W-5159
WD
April 26, 2018
34. On or before January 31, 2019, and annually thereafter, LBWC should file a report to
the WD stating the changes in the number of connections by type of customer and by
size of connection, the amount of surcharge collection, the amount of loan payment, the
outstanding balance of the loan, and the overages or shortages in the balancing account.
If the surcharge requires to be adjusted, LBWC should file a Tier 3 Advice letter for an
increase and a Tier 2 Advice Letter for a decrease.
35. The fee for this financing authority as required by § 1904(b) is $3,200.
25
Resolution W-5159 April 26, 2018
WD
THEREFORE, IT 1S ORDERED THAT:
1. Lukins Brothers Water Company, Inc. is authorized to borrow $2,200,000 to
finance the construction of a Granular Activated Carbon treatment facility,
upgrades to well site, and any issuance costs; encumber utility assets to secure
the loan; and impose a surcharge on its customers as set forth herein.
2. Lukins Brothers Water Company, Inc. shall file an Advice Letter to implement a
surcharge and service fee at an appropriate time prior to the first loan payment
and include in the filing a request to establish a balancing account.
3. Upon signing a loan agreement with a bank, Lukins Brothers Water
Company, Inc. shall file a Tier 2 Advice Letter to establish the surcharge
and service fee so as to collect enough revenue to accumulate the required
reserve and make its first loan payment. The filing shall include the loan
amortization schedule, the reserve requirement, the calculation of the
surcharge, and tariff sheets similar to those attached to this Resolution as
Appendix A, updated for the correct amounts.
a. If the loan is procured from the State Water Resources Control
Board and upon signing a loan agreement, Lukins Brothers Water
Company, Inc. shall file eight months before the first semi-annual
loan payment a Tier 2 Advice Letter to establish the surcharge and
service fee. The filing shall include the loan amortization schedule,
the reserve requirement, the calculation of the surcharge, and tariff
sheets similar in form to those attached to this Resolution as
Appendix A.
4. Lukins Brother Water Company, Inc. is authorized to refinance the debt
authorized in this Resolution if at a later time a more favorable funding source
becomes available.
5. The authority granted herein shall be subject to the conditions enumerated on
pages 17 and 18 of this Resolution.
26
Resolution W-5159
WD
April 26, 2018
6. Lukins Brothers Water Company, Inc. shall not use the proceeds authorized by
this Resolution to begin the construction of capital projects until Lukins Brothers
Water Company, Inc. has obtained any required environmental review under the
California Environmental Quality Act.
7. If Lukins Brothers Water Company, Inc. refinances the debt authorized in this
Resolution it shall file an Advice Letter with the details pertaining to the
refinancing, including all documentation. The filing is subject to review and
approval.
8. Lukins Brothers Water Company, Inc. shall maintain records to (i) identify the
specific long-term debt issued pursuant to this Resolution, and (ii) demonstrate
that the proceeds from such debt have been used only for the purposes
authorized by this Resolution.
9. Any contamination proceeds received by Lukins Brothers Water Company, Inc.
shall be reported to the Water Division within fifteen (15) days of receipt.
10. Lukins Brother Water Company, Inc. shall abide by the rules and regulations
prescribed by the Commission in Decision 10-10-018.
11. Lukins Brother Water Company, Inc. shall record contamination proceeds arising
from damage awards, settlements, government order or insurance in a
memorandum account until the need for making expenditures arises, whereupon
an approval to transfer the proceeds to the appropriate sub -accounts of the
Uniform System of Accounts shall be sought by a Tier 3 Advice Letter filing.
12. Any remaining amount of proceeds (net proceeds) arising from damage awards,
settlements, government order or insurance may be shared between ratepayers
and shareholders upon Commission approval where circumstances warrant and
on the basis of factors relevant to the individual case, including factors
enumerated in Appendix D to D.10-10-018.
13. The authority granted by this Resolution shall become effective when Lukins
Brothers Water Company, Inc. pays $3,200 as required by Public Utilities Code §
1904(b). Lukins Brothers Water Company, Inc. must issue the check payable to
the California Public Utilities Commission and remit the payment to the
Commission's Fiscal Office.
27
Resolution W-5159
WD
This Resolution is effective today.
April 26, 2018
I certify that the foregoing Resolution was duly introduced, passed, and adopted at a
conference of the Public Utilities Commission of the State of California held on April
26, 2018. The following Commissioners voting favorably thereon:
s/ ALICE STEBBINS
ALICE STEBBINS
Executive Director
MICHAEL PICKER
President
CARLA J. PETERMAN
LIANE M. RANDOLPH
MARTHA GUZMAN ACEVES
CLIFFORD RECHTSCHAFFEN
Commissioners
28
Resolution W-5159
WD
LUKINS BROTHERS WATER COMPANY, INC.
CFR\/irr I ICT
Per Section 4.3 of GENERAL ORDER NO. 96-13)
EI Dorado County
Development Services Dept.
924 B Emerald Bay Road
So. Lake Tahoe, CA 96150
South Tahoe PUD
1275 Meadow Crest Dr.
South Lake Tahoe, CA 96150
Tahoe Keys POA
356 Ala Wai Blvd.
South Lake Tahoe, CA 96150
Fern Erskine
786 Patricia Lane
South Lake Tahoe, CA 96150
Mike Mosca
Po Box 9136
South Lake Tahoe, CA 96158
Alan Miller
Po Box 7526
South Lake Tahoe, CA 96158
Teri Jamin
1052 Tata Lane
South Lake Tahoe, CA 96150
Maureen Froyum
920 Patricia Lane
South Lake Tahoe, CA 96150
Robert Blaney
PO BOX 14447
South Lake Tahoe, CA 96151
Lawrence Suydam
895 Secret Harbor Drive
South Lake Tahoe, CA 96150
Richard Munk
780 Eloise Ave.
South Lake Tahoe, CA 96150
N. McRae
3243 Rohner Drive
LaFayette, CA 94549
Robert Haney
PO BOX 14447
South Lake Tahoe, CA 96151
James Getz
597 Tahoe Island Drive
South Lake Tahoe, CA 96150
Carol Daum
PO BOX 550160
South Lake Tahoe, CA 96155
Lynne Bajuk
780 South Shore Drive
South Lake Tahoe, -CA 96150
Robert Jaeger
colostate06(@hotmail.com
Steve and Karen Benton
PO BOX 551210
South Lake Tahoe, CA 96155
Heidi Clark
cl <i rksski@sbcgl o ba l . net
April 26, 2018
Edmund Viray
admundviray@gmail.com
James Cullen
shawncullenl@att.net
Jerry Keyser
ikeyser@keysermarston.com
Nancy Kerry, City Manager
nkerry@cityofslt.us
Danny Lukins, Manager
Lukins Brothers Water Co.
danny@lukinswater.com
Robert Mann, Plumas Bank
robert.mann@pl umasbank.con
Larry Montoya
montoyafami ly1@sbcgl obal . ne
Ryan Biggs
no_toriousbiggs@comcast.net
Ethel Aubrey
ethella53@outlook.com
Cyndi Hertzog
mchertzog@gmail.com
Jackie Wilson
wi l sonliomebasephotmai Icor
Hazel Guy
tahoehaze I C yahoo.com
Sue-ze Guy
itsstillsqpg_qy_@_y,ahoo.com
Kenneth Renwick
renrowe@earthlink.net
Via First Class US Mail
Service List:
City of South Lake Tahoe Ronald G. Renaldi
Administrative Center PO BOX 9926
1901 Airport Blvd. South Lake Tahoe, CA 96158
So. Lake Tahoe, CA 96150
EI Dorado County
Development Services Dept.
924 B Emerald Bay Road
So. Lake Tahoe, CA 96150
South Tahoe PUD
1275 Meadow Crest Dr.
South Lake Tahoe, CA 96150
Tahoe Keys POA
356 Ala Wai Blvd.
South Lake Tahoe, CA 96150
Fern Erskine
786 Patricia Lane
South Lake Tahoe, CA 96150
Mike Mosca
Po Box 9136
South Lake Tahoe, CA 96158
Alan Miller
Po Box 7526
South Lake Tahoe, CA 96158
Teri Jamin
1052 Tata Lane
South Lake Tahoe, CA 96150
Maureen Froyum
920 Patricia Lane
South Lake Tahoe, CA 96150
Robert Blaney
PO BOX 14447
South Lake Tahoe, CA 96151
Lawrence Suydam
895 Secret Harbor Drive
South Lake Tahoe, CA 96150
Richard Munk
780 Eloise Ave.
South Lake Tahoe, CA 96150
N. McRae
3243 Rohner Drive
LaFayette, CA 94549
Robert Haney
PO BOX 14447
South Lake Tahoe, CA 96151
James Getz
597 Tahoe Island Drive
South Lake Tahoe, CA 96150
Carol Daum
PO BOX 550160
South Lake Tahoe, CA 96155
Lynne Bajuk
780 South Shore Drive
South Lake Tahoe, -CA 96150
Robert Jaeger
colostate06(@hotmail.com
Steve and Karen Benton
PO BOX 551210
South Lake Tahoe, CA 96155
Heidi Clark
cl <i rksski@sbcgl o ba l . net
April 26, 2018
Edmund Viray
admundviray@gmail.com
James Cullen
shawncullenl@att.net
Jerry Keyser
ikeyser@keysermarston.com
Nancy Kerry, City Manager
nkerry@cityofslt.us
Danny Lukins, Manager
Lukins Brothers Water Co.
danny@lukinswater.com
Robert Mann, Plumas Bank
robert.mann@pl umasbank.con
Larry Montoya
montoyafami ly1@sbcgl obal . ne
Ryan Biggs
no_toriousbiggs@comcast.net
Ethel Aubrey
ethella53@outlook.com
Cyndi Hertzog
mchertzog@gmail.com
Jackie Wilson
wi l sonliomebasephotmai Icor
Hazel Guy
tahoehaze I C yahoo.com
Sue-ze Guy
itsstillsqpg_qy_@_y,ahoo.com
Kenneth Renwick
renrowe@earthlink.net
Resolution W-5159
WD
APPENDIX A
Schedule 3a
April 26, 2018
Loan Surcharge
APPLICABILITY
Applicable to all flat or meter service. This surcharge is specifically for the repayment of the loan described in
Resolution W-
TERRITORY
Lukins Tract and vicinity near State Highway 89 and U.S. Highway 50 in the City of South Lake Tahoe, California.
Metered Water Service
Monthly Surchar
1st 11 Months 12th Onwards
For 5/8 x3/4 -inch meter 3.31 6.07
For 3/4 -inch meter 4.97 9.10
For 1 -inch meter 8.28 15.17
For 1 -1/2 -inch meter 16.55 30.35
For 2 -inch meter 26.48 48.56
For 3 -inch meter 49.66 91.04
For 4 -inch meter 82.76 151.74
For 6 -inch meter 165.53 303.47
Flat Rate Water Service
Monthly Surcharge
1st 11 Months 121h Onwards
For 3/4 -inch meter 4.97 9.10
For 1 -inch meter 8.28 15.17
For 1 -1/2 -inch meter 16.55 30.35
For 2 -inch meter 26.48 48.56
For 3 -inch meter 49.66 91.04
For 4 -inch meter 82.76 151.74
For 6 -inch meter 165.53 303.47
SPECIAL CONDITIONS
1. The surcharge is in addition to the water bill. The surcharge must be identified on each bill. The surcharge is
specifically for the repayment of the loan juthorized by Resolution W- .
2. All bills are subject to the reimbursement fee set forth in Schedule No. UF,
3. The surcharge shall be deposited in a trustee account and shall be used only for the repayment of the loan
described in Resolution W- .
4. A service fee will be charged for new service to vacant and undeveloped lots. The amount of the service fee,
subject to a maximum of $2,000, shall be the accumulated total of the monthly surcharge from its inception to the
time of service connection. Only the monthly surcharge applies thereafter. The service fee was authorized by
Resolution W-
5. The surcharge rates to repay the loan shall last until the loan is fully paid.
6. The surcharge rates are subject to periodic adjustment.
END OF APPENDIX A