A Look at Headquarters Building Financials

This process began in 2012 when the TWEC staff and Board of Directors began evaluating the future need for a new headquarters building. There has been extensive study and planning with many experts and consultants. Two of the experts were Ringdahl Architects and Contegrity Group – Construction Management that worked with staff and the Board to provide estimates to remodel or to rebuild. The cost estimate to remodel was approximately $2.9M. The proposal to rebuild is approximately $3M. The estimate to rebuild is to be done in phases at our current location. There are many cost savings and practicalities to rebuilding in the same location such as existing infrastructure, the location within our service territory, the ability for quick line crew response times, and the economics of already owning the land.

As can be seen from the graph to the right, the costs to rebuild and remodel are very close. However, the life of a new building would be significantly longer than that of a remodel. By rebuilding, we would ensure the quality of the building to serve TWEC members for over 50 years to come, versus needing additional remodeling in as little as 25 years. A breakdown of the costs over the lifetime of the building shows that rebuilding makes economic sense.

Potential New HQ Finances

The analysis has also consisted of a narrowly focused strategic planning session conducted by a financial planning expert from National Rural Utilities Cooperative Finance Corporation (CFC). Since that planning session, staff and the Board have been preparing financially as to how we would best pay for a potential new headquarters.

There are many positive financial factors that allow TWEC to fund the new HQ if it is approved.

Over the past several years, long-term interest rates have fallen and remained low. TWEC refinanced long-term debt that was repricing every few years to long-term fixed debt at low long-term interest rates.

Cash has been saved and invested to earn interest income, adding to non-operating margins that have contributed to our growth in equity. Our equity is currently in a good place at 45.10 percent. As you can see in the following chart, this has been growing since 2010. These investments have earned us interest—not only growing our equity but also creating a savings plan for projects such as unexpected storm work, distribution plant construction, or the new headquarters. 

Great River Energy (GRE), our wholesale power supplier, has managed their rates for the past few years to provide rate stability. GRE is forecasting the same stability in the foreseeable future.

TWEC has worked very hard to manage costs through staffing levels, maintenance programs, and the replacement of assets.

As a result of these factors, TWEC is in a position to pay for a new building without taking out a new loan. We are a not-for-profit, member-owned utility and our members’ needs, concerns, and equity are always front of mind with every decision we make. We are committed to serving our members effectively and efficiently for years to come.