HomeMy WebLinkAbout03282023 City Council Laydown - Electric .23 0.32g
City of Seward Electric Sale
Homer Electric Proposal Analysis
Analysis performed by MC Pehle, CPA - Carmen Jackson CPA, LLC
1. Purchase Offer:
Fixed Amount per Proposal $ 25,250,000
Subtotal Original Offer $ 25,250,000
Additional Assets Purchased
since Proposal (Estimated)
Add: New Capital Assets $ 15,000,000
Less: Depreciation $ (3,200,000)
Purchase Offer at Closing 1/1/2024 $ 37,050,000
2. General Fund Contribution:*
Deferred Acquisition Payments (10 Years) $ 1,100,000
Annex Building Lease (10 Years) $ 45,000
Interest from Electric Trust** $ 1,169,775
GF Contributions: 10 Years $ 2,314,775
GF Contributions: After 10 Years $ 1,169,775
3. City's Net Funds to Establish Electric Trust:
Purchase Offer $ 37,050,000
Cash Balance 1/1/2024 (estimated) $ 4,000,000
Accounts Receivable 1/1/2024 (estimated) $ 1,590,000
Less: Retire Bond Principal 1/1/2024 $ (16,345,000)
Less: Accounts Payable (Estimated) $ (300,000)
Estimated Residual Electric Trust $ 25,995,000
*General Fund Contributions in 2022 were approximately $1,988,000
**Estimated as 4.5% interest annually earned from the residual Electric Trust Funds
Note: An additional potential payment is included in section 6.19 of the contract. This lays out
payments of 8% of annual revenue for ships docked at the Port of Seward. These are estimated
at $200,000 annually but no amount is included in the schedule as a timeline of the payments is not
clear at this point and the value of the payment is variable and estimated.