Water board directors approve financing for pipeline relocation
By Karen Brainard
Ramona Municipal Water District directors authorized a debt service agreement to finance an approximately $4.8 million pipeline relocation project at its April 8 meeting.
The relocation is required for the county’s San Vicente Road Improvement Project that will widen and realign the road from Warnock Drive to east of Wildcat Canyon Road. The district has 19,000 feet of waterline within the right of way for the county’s road project.
When the pipeline was installed in 1973, it was allowed in the right of way by state law with the caveat that the water district pay to relocate it when the county made road improvements.
The installment purchase agreement will be with JP Morgan Chase Bank. Based on an interest rate of 3.06 percent, RMWD will incur annual debt service costs of $377,000 for the next 15 years, said the district’s financial services director, Richard Hannasch.
Considered a capital replacement project, the pipeline relocation is estimated to cost $4.73 million, which includes 13 percent for construction supervision costs to the county. The water district has said it will save money by aligning the project with the county’s contract.
“The pipeline has been there for about 45 years so there will be a benefit to replacing the pipe, which generally has a life expectancy of about 50 years,” said board president Darrell Beck. “It’s something we have to do. And, if we don’t do it, the county will do it for us and send us a bill.”
The county had anticipated beginning construction last fall but ran into delays. Hannasch said the county plans to award a construction contract in May.
Chase was selected because it had the lowest interest rate, 2.96 percent, of the six financial institutions responding to a request for proposals in November 2013, according to a water district report. Chase updated its interest rate proposal to 3.06 percent based on market conditions in March.
“It’s a good interest rate and I think the timing is pretty good,” said director Joe Zenovic.
Beck, Zenovic and director George Foote approved the financing. Directors Kit Kesinger and Rex Schildhouse were absent.
RMWD enters into the agreement along with the district’s Ramona Public Facilities Corporation, which is also served by the five directors.