To the Editor:
It appears to me that we/Village residents have many unanswered questions before the board of the NSCUDD should consider the purchase of the Developer-owned utility company. These are a few questions sent to the POA for consideration and should be answered by the board:
1) Is it anticipated that the purchaser will assume all long term debt of the existing company of approximately $200M and add to that the financing debt required to purchase?
2) What is the estimated total long term debt of the new company?
3) Has the Board received any financial advice regarding this purchase from staff employed in full or partially by the Developer or it’s associated companies?
4) It is noted that no rate payer using this utility is to receive any increase in rates associated with the purchase higher than any other user. Are there any agreements currently in place which have rates lower than residents, if so what are these?
5) what has been the Developers total capital contribution in terms of cash, and value of land to the establishment of this utility?
6) Has the Board published a ten year annual forecast post purchase for an Income Statement, Cash Flow and Balance Sheet to determine financial viability and any required increases in rates? For this analysis current rates would be held constant while all other expense items would have reasonable assumptions for increased cost and the total cost associated with new bond issuance and debt coverage would be included.
7) It is presented that the board has the right to purchase or not to purchase. Does it have the right to not allow the sale to another entity?
8) It appears that all current debt is funded by tax exempt revenue bonds. Considering the sale of the utility is offered by a LLC and is occurring so shortly after the 2010 forming of the board; has the board’s legal representative assured that tax exempt financing meets IRS guidelines?
9) If it was determined that non tax exempt financing would have been required and higher interest rates resulted? What result would this have had on surplus funds and resulting future cash flow to determine enterprise value sale price?
10) Can the board’s valuation conducted in 2015 be made available to the public and if so how is it obtained?
11) According to the Board meeting minutes of 4/19/2015, board members asked it’s then District Manager, Ms. Tutt advice about accumulated financial surplus. The board was told that at the time it was unadvisable to reduce surplus balances due to unforeseen circumstances and possible future capital needs. In addition, it was stated that surplus could be used in the future to reduce rates. Was the Board advised that maintaining surplus balances would result in an increased enterprise value as that and future cash flow would be used to determine selling price?
12) If the surplus value of 4/19/2015 was deemed insufficient for use, should this amount be utilized in determining appraised enterprise value?
13) If the Board had the right to reduce rates associated with funds surplus what would this decision have on future cash flow and enterprise value?
Village of St. James