After a very positive half-year budget report, General Manager Jerry Holldber recommended that the Pine Cove Water District Board of Directors “spend money to save money” at last week’s meeting.
In December 2013, the district purchased about 4 acres along Franklin Drive. One incidental purpose of the property is to serve as a demonstration site for abatement. More importantly, PCWD has drilled two successful wells on the property and is considering drilling more wells.
The purchase price of about $118,000 was financed with a loan for most of the balance. The loan’s annual interest rate is 5.25 percent and the current loan balance is about $58,000.
The district’s cash only earns 1.6 percent, whether in a commercial bank or with the state’s Local Agency Investment Fund, according to Holldber.
With about five years left on the loan, he recommended paying it off now. This would result in savings between $4,000 and $5,000 over the loan’s life, Holldber estimated.
In his mid-year budget review, Holldber reported that PCWD’s cash balance was $290,000 and could easily provide the funds to pay off the loan.
After some questions, the board unanimously approved his recommendation.
Director Diana Luther asked if there were any very large projects planned for the next few years for which Pine Cove would need the money. The major planned projects are pipe installation and most of that hardware has been bought, Holldber replied.
For the first six months of fiscal year 2018-19, PCWD has received about $460,000 in revenue, of which 60 percent is from water sales. The district has received a little more than a third of the expected property tax revenue and the lease revenue is slightly less than half.
Expenses from July through December were about $485,000 and reserves are sufficient to offset the negative balance. With a greater portion of the revenue expected in the second half of the year and fewer expenses, Holldber assured the board its finances were in good and stable condition.
“The revenue estimates look pretty good,” he said. Because the district may sell three new water meters, Holldber is optimistic that the cash balance would still approach $300,000 at the end of the fiscal year, even if the property loan were paid.
In other business, the board approved a resolution setting its meetings at 10 a.m. the second Wednesday of each month. This is not a change, but just an update of the resolution.
Holldber also reported that the California Rural Water Association survey of median family income in the district has started. When completed, he hopes the results will enable PCWD to qualify for more state grants.
Water production for December totaled 2.1 million gallons, which was 340,000 gallons or 14 percent less than December 2017.
“Everything is fine. There have been no surprises and I’m not aware of any frozen pipes,” he said.
For the whole year, PCWD produced 33.6 million gallons, which was 3.2 million or 8.6 percent less than all of 2017. This is the first year production has declined since 2015. However, the water theft for illegal cannabis production increased production in 2016 and 2017.
In December, the district’s well levels remained constant and Holldber expects the current rains to lift them later in the spring and summer.