Minutes 07/25/1983 - Laserfiche WebLink

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1~ MONDAY JULY 25, 1983 ----- Suspension Strategy and Efforts A letter of March 17, 1983, from Beck's project manager, George Nielsen, to Fred Ritts (See Appendix A) outlines the initial strategy between the two consultants. And this has been the course that we have generally been running. Ritt's Recent Concerns ----- As Ritts became more familiar with this overall proposition, he became more pessimistic about it. This culminated in a letter of July 7 (See Appendix B), in which he questions vigorously the financial feasibility of the project and suggests that (a) we're not likely to get a two-year suspension and (b) it probably would not do us much good if we did. Nielsen's Response Beck was asked by me to review Ritts' letter and recommendations and to respond. Nielsen did this by way of a July 15 letter (See Appendix C). It is basically contradictory of Ritts' reasoning and analysis, on a variety of technical grounds. Interestingly, however, it con- cludes by concurring with Ritts' recommendations. Position of Financial Advisors As prospects for the project dimmed, I also solicited the current views of the financial advisory group, headed by Wheat First Securities. Walter Craigie, of that firm, agrees that the project still does not display the proper economics and that interest rates (to which the project is so sensitive) have stabilized and are edging back up. He and his people are examining the potential of lease back scheme, involving the private sector. that such an idea is a long shot. some sort of sale- He feels, however, Summary and Conclusions The Ridgeway Hydro Project has been in planning and development since 1976 and has been the subject of substantial expense and effort by the City. It has enjoyed support by our staff, the Council and interested citizens. This was so because it was reasonably viewed as a hedge against the inflation of energy costs in the future. That view has been seriously affected in recent times by changes in the world energy picture and various economic factors considerably beyond our control. Since inception, cost estimates have increased greatly and the potential of added expense (dealing with the water quality issues) is troublesome. All that could change, of course, but the stakes are high. Pursuing a suspension will add to our current investment of over $800,000, but going on with processing of the license application would add substantially to our investment.