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Discussion <br /> The analyses in the attached table clearly indicate that debt service coverage ratios without tap <br /> fees under historic financial conditions and with the increase in debt service to begin this year do <br /> not meet the Board's existing parity lien test. The"Without Tap Fees"ratios for the 1999 level of <br /> debt are, in fact, an order of magnitude from what might generally be considered as acceptable. <br /> The numbers for the tap fees as a percent of total revenues is also a matter of concern. While <br /> there are no hard and fast rules about an allowable percentage of tap fees to revenues, these <br /> numbers are very high. <br /> Staff does not recommend applying the parity lien test in an inflexible manner simply to <br /> disqualify new debt from parity status. Nevertheless, this situation goes well beyond most tests <br /> that are applied. While recognizing that many smaller communities may need to borrow to meet <br /> the demands of growth and development, recognition also needs to be given to the degree of risk <br /> inherent in this type of situation should development fail to take place. <br /> Recommendation <br /> Staff recommends that the Board postpone the question of parity status for the Town of Erie's <br /> Water Enterprise Revenue Refunding and Improvement Bonds, Series 1998 until such time as <br /> the Town can demonstrate that it is capable of meeting the Board's parity lien test as defined in <br /> • the attachment to this memo. 6)-zt(4.- IM <br /> Ov' <br /> achments } <br /> Cc: Dave Stahl, Town of Erie <br /> Linda Bassi, AGO �. o ,f 6(�p� �—u� (ai--u/ d'I'Y'°) • <br /> h/v yip • <br /> +1 <br /> s -v-vvi <br /> (4.-0 j <br /> butm-4- ogtAA--- <br /> WYE ' 04143 <br /> kW 13 ati 41 (S <br /> • <br /> gy - ' t IV— 16 <br /> 3 <br />