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<br />.. . <br />" . <br /> <br />-r <br /> <br />7. In the cost estimate for Well No. lIon page 4-14, the subtotal in the right column should be <br />$265,250 rather than $263,250. <br /> <br />8. The table at the bottom of page 5-6 gives an estimated cost of $203,000 for development of Well <br />No. 11 but the detailed cost estimate for Well No. 11 on page 4 -14 gives a figure of $302,700 (which <br />should be revised upward slightly per comment no.7). The difference is important since the requested <br />loan at the January Board meeting was apparently based on the $203,000 figure. <br /> <br />9. Finally it should be noted that this report does not include a financial analysis for the project. The <br />following comments deal with information which apparently was submitted in lieu of the financial <br />analysis. <br /> <br />Amendment No.2 to Preliminary Enf!ineering Reoort City of Fort Lupton. Colorado Water Supply and <br />Treatment Pro;ect <br /> <br />1. In a letter to John Van Sciver dated January 16, 1995, Lee Robbins of Black & Veatch provides an <br />opinion that "the City is generating sufficient water sales revenues to make loan payments through <br />1996" and that the City will raise water rates in 1997 to continue repaying the loan or will use reserve <br />funds to pay the loan in full. The letter then refers to cash flow analyses done for the Farmers Home <br />Administration in the above-referenced report amendment. <br /> <br />2. The report amendment provides revenue and expenditure analyses and information related to <br />capital improvements as well as operation and maintenance expenses for the years 1993 through 1997. <br />It appears, however, as if the capital expenditures and the loan for this project are not included in the <br />analyses. <br /> <br />3. Section 4.2.11 j. (page 27) of the Construction Fund Guidelines requires: "A detailed financial <br />program to describe financing arrangements and the sources and uses of funds for the proposed <br />project. Each feasibility study should include a detailed schedule of annual revenues and annual <br />expenditures for the entire period of debt retirement." While the project sponsor may repay the entire <br />loan in a couple of years as suggested in Robbins' letter, a cash flow projection for the period of debt <br />retirement (30 years) is still needed. <br /> <br />4. Robbins' letter also refers to "the City's water enterprise" but a review of the Projected Revenues <br />and Revenue Requirements in Table 1 indicates that sales and property tax revenues exceed ten <br />percent of total revenues. The enterprise status of the water fund should be clarified and the issue of <br />an election should be discussed if necessary. <br /> <br />5. The financial information submitted to date is not adequate to assess the financial condition of the <br />project sponsor, their ability to undertake the project or the potential impact of the project on water <br />users in terms of rate increases. <br /> <br />cc: Bill Stanton <br />Mike Serlet <br />Bernadette Kimmey, City of Fort Lupton <br />Lee Robbins, Black & Veatch <br /> <br />2 <br />