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ity of� <br />kr 1• <br />FROM: <br />DATE: <br />MEMORANDUM <br />Mayor & City Council <br />Lori Johnson, Assistant City <br />Administrator <br />November 6, 1995 <br />ITEM h_1_ <br />SUBJECT: Financing of Wastewater Treatment <br />Plant Expansion <br />Last Monday we briefly discussed the finances related to the proposed <br />Wastewater Treatment Plant expansion project. At this time I would like to <br />provide additional information regarding proposed debt schedules and funds <br />needed to pay for the proposed expansion. It is anticipated that this item will <br />receive considerable discussion at the January 15 Capital Improvement Plan <br />meeting and again prior to the bids being awarded. <br />There are numerous factors which will need to be considered before the <br />• Council takes final action authorizing the expansion. Some of the items the <br />Council will need to consider include the following: <br />• Contract Amount - The current estimates are that construction and <br />related expenses are between $4.7 to 4.9 million. Hopefully the <br />bids will be somewhat less than that. If not, a considerable amount <br />of additional analysis will need to be completed. <br />• Connection Revenues - It is estimated that the city will receive <br />approximately $475,000 in connection fees in 1995. 1991 is the <br />first year that connection fees were credited to the Treatment <br />Plant. Prior to that time they were used to pay for the 1981 sewer <br />interceptor project. Since 1991, an average of 214 connection <br />equivalents have been made each year. <br />• Rate Increases - In 1994, the Council approved rate increases for <br />1994, 1995, and 1996. If this project proceeds, appropriate rate <br />increases will need to be considered. <br />In an attempt to give you some parameters in which to make your decision, <br />attached is some history information regarding collections and expenses as <br />• well as projected debt service payments and required revenues. Projections <br />of funds available for debt service based on assumptions given current <br />13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441 -7420 • Fax: (612) 441 -7425 <br />