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Feasibility Evaluation of the Arkansas Valley Pipeline <br />Water Works! Committee <br />July 2003 <br />Section 4 -Financial Evaluation <br />Potential Funding Sources for the Arkansas Valley Pipeline <br />Potential funding sources for the Arkansas Valley Pipeline must come from one of the following <br />sources: <br />• Borrowing by local government <br />• State funding sources <br />• Federal funding sources <br />• Tap fees and user charges <br />• Customer contributions <br />The first three groups of funding sources are discussed below. Capital and operating charges, <br />local user fees or other customer contributions are discussed in the evaluations of institutional <br />alternatives. <br />Local Government Debt <br />The most traditional source of funds for building the Arkansas Valley Pipeline would be for the <br />local governments in the Valley to issue debt and re-pay that debt with consumer charges. The <br />data listed in Table 1 indicates total outstanding debt, unused debt capacity, bond credit ratings <br />and net operating revenues for counties and municipalities in the Valley that might be <br />beneficiaries of the project. This data indicates that local governmental entities appear to be <br />averse to incurring debt. The amount of outstanding debt totals $4.5 million for all of the <br />jurisdictions, which is a very small number considering that four counties and eight <br />municipalities are included in this figure. Local governments are also using only a small portion <br />of their total debt capacity, which amounts to $57.3 million in the aggregate. However, even if <br />all of the jurisdictions used all of their debt capacity for this one project, only a fraction of the <br />total pipeline costs could be funded by local government borrowings. This is considered highly <br />unlikely, although some local government debt financing is likely to be required. <br />GEI Consultants, 1nC. a 07284 03-07-21 ieasibilty repot executive summary <br />