C150004 Approval Letter - Laserfiche WebLink

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. . . . . Southern Water Supply Project offers a practical and, in the long-run, a cost-effective solution to the City's water supply problems. The economic and financial issues here come down to the question of the willingness of water users to pay the costs associated with the project Staff believes that the public relations effort conducted this year by the City staff, in which costs were openly discussed, and the election in June give a positive indication ofthe willingness of the water users of Fort Morgan to pay the costs for a safe and reliable water supply. Recommendation Staff recommends loans of $4.0 million from the Construction Fund and $4.0 million from the Perpetual Base Account of the Severance Tax Trust Fund for a total of $8.0 million to the City of Fort Morgan for the purpose of refinancing a portion of the variable rate bonds to be issued by the City in December 1997. Staff recommends a 30-year term for the loan and the Municipal Low Income lending rate for 1998 as may be approved by the Board in November 1997. As security for the loan, the City will pledge water fund revenues at parity with any other lenders, the City's portion of capacity in the entire pipeline from Carter Lake to Fort Morgan, and a security interest in the proceeds of any lease of the pipeline capacity. Staff further recommends that the loan be conditioned upon adoption by the Fort Morgan City Council of a schedule of rate increases which are adequate to pay the costs of all debt service to be incurred as well as system operation and maintenance for the proposed water system. cc: Dave Yamada, City of Fort Morgan Perry Eisenach, City of Fort Morgan Dan Law, Water and Power Leroy Cruz, USDA Rural Development Eric Wilkinson, NCWCD Alan Matlosz, George K. Baum Linda Bassi, AGO Loring Harkness, Ballard Spahr Andrews & Ingersoll Attachments 5