01-08-1994 CC MIN - SPECIAL - Laserfiche WebLink

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Special Worksession ofthe Elk River City Council January 8, 1994 Page 2 e The City Engineer distributed a wastewater treatment plant expansion timetable and cost estimate. It was noted that once MPCA approves the plans and specifications, the project can be completed within twenty months and ready for operation with increased capacity. At this time the earliest plans could be approved and ready for bidding would be in the spring of 1995. On a parrallel timetable is the expansion of utility pipes into the East Highway 10 area. The City Engineer noted that it takes approximately twenty months from the ordering of a public hearing for the project to completion of the installation of the pipes so that properties can hook up to the system. A determining factor in ordering the plant expansion and ordering the public hearing for the installation of utilities in the East Highway 10 corridor will be the available finances for the plant expansion. The Finance Director distributed a three page summary of wastewater treatment plant projected revenues and expenditures in order to help analyze when the City can afford a plant expansion. The Finance Director indicated that the projections for revenues were conservative and would change dramatically if higher than anticipated growth takes place. The projections provide an estimate of the amount available for debt service based on estimated growth factors. The amount available figures on Page 1 exclude depreciation. After the plant is expanded, these funds will need to be accumulated for the 2008 expansion; but prior to the expansion project currently discussed, the depreciation expense can be added to the total available in order to help service a portion of the bonded debt. At this time it appears that the City witl have about $215,000 in 1996 for debt payment and that this will increase to about $270,000 by 1999. e The Finance Director continued reviewing her handout and on Page 2 and Page 3 reviewed the amount available in 1994 for future projects as compared to the cost of the plant expansion. It was noted that if the project is not authorized until late 1996 or early 1997, then the City will have cash to buy down the bond issue to about $4.5 million. This can be financed over thirty years with a bond payment of approximately $345,000. At this time it appears the City will be short of that amount being available on an annual basis to meet the debt obligation. However, if growth exceeds projections and if less money is put away for the 2008 plant expansion, then it may be possible for the City to cash flow this debt around this timetable. It was noted that the timetable indicated by the Finance Director would allow for the plant to be expanded and in operation by 1998 which coincides with the plant capacity figures previously indicated by the City Engineer. Additionally, it is conceivable that this timetable can be moved up if higher than expected growth takes place. This will be closely monitored by the City staff. e Mayor Duitsman stated his desire to plan for the plant expansion and the extension of utilities to East Highway 10 for 1996 so that hook-ups can begin in 1997. The Finance Director indicated that the figures displayed in the handout are slightly conservative and that the Mayor's goal may be obtainable, but this will not be known until some time in 1995. The Finance Director indicated that a rate increase should be considered by the City Council if the plant is to be expanded in 1996 due to the need for funding the plant expansion and based on the ongoing operating expenses of the utility.