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<br />Town of Akron - Well and Pipeline Construction <br />September 11-12, 2002 <br /> <br />Agenda Item 12c <br /> <br />The selected alternative. Alternative No.1. involves drilling wells in Sections 22 and 27, T3N, <br />R53W, located in the Chadron formation. The proposed test well sites are relatively close to the <br />Town of Akron's feeder line. These wells should provide potential sources of water for long-term <br />growth. The second portion of this project is to purchase a backup generator, which will be placed <br />at an existing well, to provide backup electrical power in case of a power failure. <br /> <br />The economic benefit of this project is significant. Without this project, it is uncertain whether the <br />Town of Akron can continue to provide an adequate, reliable source of water to both residential and <br />commercial water customers. Drawdown of the Town's wells in this year of drought has been great, <br />and the two new wells are needed for the continued economic stability of the community. In <br />addition to meeting current needs, these wells also allow for modest growth, both residential and <br />commercial, which to this point has not been possible. <br /> <br />The generator for backup power supply will allow businesses to rely on a steady supply of water in <br />time of electrical outages and to continue to operate, benefiting not only the businesses themselves <br />but everyone who depends on those businesses. <br /> <br />Total Project cost is estimated to be: <br /> <br />1. <br />2. <br /> <br />Construction Cost <br />Engineering Fees <br /> <br />TOTAL <br /> <br />$ 386,087 <br />2.712 <br />$ 388,799 <br /> <br />Once funding is obtained, construction on the transmission line from the Hoyer Well is anticipated to <br />begin immediately, and will take approximately one month. The Thomas/Kusel Well will be drilled <br />and the transmission line constructed immediately. <br /> <br />All permitting has been granted for both the Hoyer and the Thomas/Kusel Wells. Easement <br />agreements are in place for all of the transmission lines. The wells themselves are both located in <br />undeveloped pasture land, and the transmission lines will go through county road rights-of-way and <br />across pasture land. <br /> <br />Financial Analvsis <br /> <br />The total estimated cost of the project is $388,799. The Town qualifies for the Municipal Low <br />Income Interest Rate. Staff is recommending a 30-year maximum amount of $.349,799 <br />(approximately 90% of estimated project cost) for 30 years at an interest rate of 3.75% . The Town <br />has budgeted the $39,000, the 10 percent local match needed for their portion of the project, and <br />the money is in place in reserves for that purpose. The current water rates are sufficient to support <br />the loan payment, and no rate increases are necessary to complete this project. The Town of <br />Akron will cover any costs that exceed the estimated project cost. <br /> <br />Alternative financing sources: The Town of Akron originally planned on funding this project over <br />time out of their own reserves, but drought conditions have made the need greater than anticipated, <br />with a need to implement the project more quickly. Funding was requested from the Y-W Electric <br />Association's revolving loan fund, which was created by the payments being made by the Town of <br />Akron on their loan, but the loan fund did not have adequate money available for the entire project. <br /> <br />Table 1 is a summary of the financial aspects of the project. A CWCS Small Project Loan of <br />$349,799 would have an annual payment of $21 ,582 (including the 10% reserve requirement) at the <br />loan terms of 3.75% for 30 years. <br /> <br />Page 4 of 7 <br />