FINDINGS

1. The proposed OSL system improvements are needed to provide safe drinking water and reliable water supply in accordance with the requirements of DHS.

2. The SDWSRF loan provides low-cost capital for the needed water system improvements and is a prudent means of acquiring the necessary $3,408,447 capital.

3. With a state-funded loan and rate surcharge type of recovery, the utility or its owners do not personally benefit from the SDWSRF loan.

4. The DHS, responsible with the California Public Utilities Commission for the public health and safety of California residents, is best equipped to establish and enforce water treatment requirements.

5. Ordering Paragraph 7 of I.97-07-018 requires any proposals to increase rates and charges be consolidated with that proceeding.

6. D.02-01-041 granted Hillview permission to separately seek rate relief or other authorizations from the Commission if such matter is related to the provision of service.

7. Hillview will not be able to obtain the SDWSRF loan until Hillview demonstrates to DWR that the Commission has approved a rate surcharge in an amount necessary to project compliance with the terms and conditions of the loan.

8. DHS has approved Hillview's proposed improvements for the Oakhurst and Sierra Lakes water system.

9. The proposed borrowing is for proper purposes and the money, property, or labor to be procured or paid for by the proceeds of the loan authorized by this decision is reasonably required for the purposes specified, which purposes are not, in whole or in part, reasonably chargeable to operating expenses or to income.

10. It is in the public interest that the surcharge to repay the loan should begin no earlier than 30 days prior to plant completion as verified and certified by DHS.

11. Authorizing Hillview to encumber its properties as security for the loan is not adverse to the public interest.

12. Hillview's proposed surcharge would generate approximately $125,231 annually for the first ten years to repay the principal on the proposed borrowing and to accumulate a 10% debt reserve and $113,846 for the succeeding years.

13. The establishment of a reserve equal to two semi-annual loan payments is required by DWR administrative regulations.

14. The proposed rate surcharge will increase the water rates by $7.97 per month for approximately 87% of Hillview's Oakhurst-Sierra Lakes customers⁵.

15. Eleven protest letters were received during the third week of December 2000 in response to Hillview's proposed plant improvements and surcharge.

16. A public meeting was held at Oakhurst, California on September 18, 2002 to discuss the proposed project, the SDWSRF loan, and the surcharge rates. No formal protests were received thereafter.