Discussion and possible action on any and all matters regarding using the Operating Reserve/Repair/Contingency Account to purchase a new A.C. to replace one that stopped working in the San Luis Regional Detention and Support Center's kitchen. (Monica Castro, Finance Director)

A.C. Stopped Working in the Heat of the Summer
On Monday, August 14, 2023, the Warden alerted staff that the air conditioning unit ("A.C.")  for the San Luis Facility Detention Center's kitchen went out. The Warden informed staff that It was from an original installation in 2007, 16 years in service. On that Monday, the outside temperature was 110ºF and peaked on Thursday at 111ºF only to dip into the nineties when clouds and then rain rolled in on Friday and over the weekend.

Proposals
The Warden had obtained two proposals to remove the old and install a new A.C. Arizona Valley Refrigeration Heating and Cooling, L.L.C.("Arizona Valley") was the low bid at $37,050.50. (They were $817.70 lower than Valle Air Conditioning, L.L.C.) Both bids are attached to this agenda item. Arizona Valley agreed to invoice after the installation. This has given staff time to arrange for this Board Meeting.

Account Balance and Detention Center Waterfall
The U.S. Bank Trustee informed staff that $551,419.73 has built up in the Operating Reserve / Repair/ Contingency Account. In January 2023, the Board agreed to use the same account to purchase a water softener system.  Before that purchase, the balance was $420,000.00, so the account was able to rebound. The balance after the purchase of $37,050.50 will be approximately $514,369.23.

The federal agencies pay directly into the U.S. Bank's Trust Account for the services of the Detention Center.  The U.S. Bank Trustee pays out to each account in the below order as funding is available.  This order of priority is called a "waterfall" and is found in the language of the contract ( called the "Trust Indenture") between the U.S. Bank and the San Luis Facility Development Corporation.  

The Waterfall under the Trust Indenture (references to the sections of the Trust Indenture):
All revenue is deposited in the General Account and disbursed in this priority (5.06 (a))
1. Bond Interest, see 5.06 (b)(i),
2. Restore Bond Reserve if necessary under 5.02; see 5.06(b), 
3. Bond Principal, see 5.06(b)(ii),
4. Operation & Maintenance Costs, see 5.06 (c),
5. Trustee Fees, see 5.06(c) (sub-account of the Operating Account),
6. Operator Fee, see 5.06(d),
              Through the 2018 Operating Agreement with LaSalle, the $35,000 
              City Business License Fee is paid equally with the 6% of Operation & Maintenance Costs paid to LaSalle. Note: LaSalle will be setting up a meeting with staff
              to discuss that the waterfall has not funded this fee.

7. Operating/Reserve/Repair/Contingency pay up to $10,000 per month until there is $300,000 in the account, see 5.06(e)
                
8. Surplus, see 5.06(f).

Procedure to Pay

For the Trustees at U.S. Bank to pay, they must have a requisition approved by the Board.  The staff has prepared the attached letter, so the Trustee can release the funds from the Operating Reserve / Repair / Contingency account for the A.C. 
 

I MOVE TO APPROVE THE USE OF THE OPERATING RESERVE / REPAIR / CONTINGENCY ACCOUNT TO PAY ARIZONA VALLEY REFRIGERATION HEATING AND COOLING, L.L.C. FOR REMOVAL OF THE OLD A.C. AND INSTALLATION OF A NEW A.C. FOR THE DETENTION CENTER'S KITCHEN AND APPROVE THE ATTACHED REQUISITION.