8.0. SR 04-26-1993 - Laserfiche WebLink

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. . . ~~- ~vt Over six years, the operating income has been $697,000 and has averaged $116,100 per year. Over six years, the total income from WAC fees was $183,350 for an average of $30,550 per year. At $300 per WAC fee, there are 102 WAC fees equivalents collected per year. This WAC fee increased in 1992. The water operating income and WAC fees have been used over the last six years to finance a well out west, a new building on the creamery site, and system improvements associated with the Proctor Avenue, Main: Street, and Jackson Avenue, Orono/Main Street and School water projects. The WWTS and the water system never make a profit, but must have funds available for emergencies and to improve the system. Prior to the mid 80's, limited water funds were available for emergencies or system improvements. It now appears that sufficient revenues are available to meet needed system improvements due to growth in the water system. Since 1986, the improvements at the mall and in the Deerfield subdivisions have added finances to the water department to help with system wide expenses. WATER SYSTEM FINANCES AND OPTIONS Bill has completed a number of computer runs that show a variety of options for financing the three most immediate water system needs and still saves money for future needs in the northwest and east. Most of these computer runs show a 30 year bond issue which is the preference of the City staff. This may not be the preference of the Utilities Commission or the City Council though. The reason the staff prefers a 30 year option is that the interest rates are low and bonds can be paid off at any time when funds are available. The interest rates are low at this time and it may be that, in ten or twelve or fifteen years, the Utilities can invest their money at a higher rate than what the bonds are selling for in 1993. The longer term of course requires more total interest payments, but also allows for a lower annual bond repayment. This longer term with an lower annual rate allows the Utilities to save more monies for future improvements. Associated with any computer run related to future revenues and expenditures, there are a number of predictions that are involved. The predictions are more difficult the further in the future you go. The assumptions used in putting together the computer runs are always subject to scrutiny and second guessing. Compounding the uncertainty of assumptions is the issue of how the weather affects water utility revenues. Nonetheless, the predictions include a growth rate assumption, an assumption of the necessary improvements (the total cost and when the first bond payment is due), the interest rates projection, and a 100% WIF collection assumption.