KYLE MURPHYStaff Writer

The Tullahoma Utilities Authority (TUA) Board of Directors checked off to creating a loan agreement between the electric and fiber systems for upcoming projects.

In his memo to the board, TUA President Allen Potter said the planned AMI and Software Conversion projects on the horizon, it was essential for the electric system to secure financing for the two projects to avoid using the electric system reserves.

“The first step in this process involved assessing our financial requirements and establishing a timeline for the projects,” Potter said in the memo. “Our analysis indicates that an estimated total of $3 million will be needed to cover the costs of both the AMI implementation and the initial capital outlay for the software conversion. Funding for these projects will be required at various intervals over the course of the next three years, as we procure meters and implement the software conversion.”

He added staff recommended that the fiber system extend a revolving line of credit to the electric system with the following terms: $3 million, the loan term will be 10 years from the disbursement date, the interest rate would be set at 25 basis points over the average LGIP (local government investment pool) interest rate and further details regarding the loan agreement can be found in the revolving line of credit loan agreement and line of credit promissory note.

The motion was made to approve the revolving line of credit loan agreement and line of credit promissory note between the electric system and fiber system for upcoming projects by board member Jimmy Blanks, with Patty Dean seconding the motion.

Jason Penny, TUA CFO, said they worked with Comptroller’s Office and the Tennessee Valley Authority with the goal of securing finances for the projects, and when looking at TUA’s financials it was noted there was good amount in reserves in the fiber system. Penny explained the idea was TUA would pay the interest in whatever amount is taken out as needed. 

“We felt that was the best move for us financially, and it keeps it within the system so it’s profitable for the fiber system but also it works out great for the electric system,” Penny said.

With no further discussion, the board unanimously approved the revolving line of credit loan agreement and line of credit promissory note between the electric system and fiber system for upcoming projects.