Victorville’s VV2 power plant gamble presents massive loss for years to come
May 29, 2010 12:30 PM
VICTORVILLE • The city breathed a sigh of relief to recently get out from under threat of a lawsuit from General Electric for just $50 million, with twice that amount potentially on the line.
However Victorville will be paying for that loss for another 30 to 40 years, bond documents show — at a total cost, under current interest terms, of roughly $193,000.
Money from residents’ water bills was also borrowed to cover part of that loss, with city officials still struggling to get new bonds to repay that borrowing.
The city gave General Electric $50 million in 2007, as down payment on $183 million in equipment being built for the planned Victorville 2 power plant. But Victorville was unable to pay off the balance and was forced to walk away from the deposit earlier this month.
The lion’s share of the lost down payment was made using $37.4 million in proceeds from a 2007 bond package, according to Deputy City Manager Doug Robertson. By the time those bonds are paid in full in 2043, bond documents show Victorville will have spent roughly $90.4 million on the portion paid to GE.
According to Robertson, the other $12.5 million of the payment sent to GE in December 2007 was made using unrated short-term notes — though those notes weren’t issued until February 2008.
To read the full story, see Sunday’s Daily Press. To subscribe to the Daily Press in print or online, call (760) 241-7755, 1-800-553-2006 or click here.
Brooke Edwards may be reached at (760) 955-5358 or at bedwards@VVDailyPress.com.