C150223 Feasibility Study - Laserfiche WebLink

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Meeting the annual debt payment will require a combination of revenue from water sales, revenue from tap sales and possibly obtaining revenue from a water rater increase. The Town Board has the authority to implement a water rate increase to meet its debt obligation without the vote of the public. This authority is the result of the Towns water utility being an enterprise utility fund. A 30-year loan for the requested $1,018,080 at a 3.75 percent interest rate results in an annual payment of $57,100. The CWCB requires that the annual payment be increase by ten percent fora 10-year period to create a debt payment reserve. This 10 percent increases the annual debt payment from $57,100 per year to $62,826 per year. A summary of how the dept obligation would be paid in the first year is shown in the table below. Revenue Reauired With DOLA Grant Item Cost Percent of Total Projected Revenue From Water Sales $35,600 56.7 Revenue From $3.66 Rate Increase ($25.66) $20,226 32.2 Revenue From Tap Sales (1 tap) $7,000 11.1 Total Dept Service Required $62,826 100 It can be seen that a rate increase of $3.66 may be required to fund the debt. Comparing the new rate of $25.66 to the state average of $34.68 shows that the Town is in a good position to fund this project. The Town expects to receive approval of the $500,000 grant in July of 2006. Should the DOLA Grant not come to fruition, the Town will need to borrow the $500,000 that it was counting on receiving from DOLA. This would result in the need to borrow $1,518,000 and the annual debt payment would be $93,700, which includes the ten percent annual loan reserve. A summary of how the debt would be paid is as indicated below. Revenue Reauired Without DOLA Grant Item Cost Percent of Total Projected Revenue From Water Sales $35,600 38.0 Revenue From $7.97 Rate Increase ($29.97) $44,100 47.0 Revenue From Tap Sales (2 taps) $14,000 14.9 Total Dept Service Required $93,700 100 The two respective summaries show that the town will require the sale of two or three taps to cover the dept service for the two funding scenarios. With the 80 plus residential units being platted and available for purchase of building permits this year, the Town will most likely be capable of making the annual dept payment and will not need to raise the rates. However, to secure a strong loan position, the Town Board will need to implement a resolution acknowledging the Feasibility Study - Keenesburg, CO 1 /23/2009 10