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maintenance reserve of$12,662 annually beginning in 2012,with a maximum of$126,626. An <br /> additional reserve is required for short lived assets in the amount of$1,952 annually. The Town <br /> has funded these reserves through restrictions of its cash balances in the Water Fund, in the <br /> amount of$43,842 as of December 31, 2014. <br /> In 2013,the Town received an additional$549,000 USDA Rural Utilities loan and an additional <br /> $153,853 USDA Rural Utilities Grant to help fund cost overruns on the water project. The loan <br /> amount of$549,000 requires semi-annual payments of$10,223 beginning in February 2014 <br /> through August 2053 with interest at an effective rate of approximately 2.125%. <br /> According to the 2015 Budget, the Town had an annual debt service amount of nearly $200,000, <br /> with$147,072.00 due to USDA for the loan payment for the existing RO system. The operations <br /> cost for 2015 is estimated to be$98,200,with$52,000 of that dedicated to utilities and $34,000 <br /> dedicated to treatment/operating supplies. Typically,the actual operations costs for the Town <br /> range from$100,000 to $150,000 per year. The 2016 O&M budget includes approximately <br /> $250,000 for new distribution piping and equipment replacement. <br /> According to a 2013 Water Rate Study,the Town has 364 residential customers and nine <br /> commercial taps. The Town currently has a base fee of$69.50 per month and $3.20 per thousand <br /> gallons for a usage fee. The Town's tap fee is currently $11,500.00. <br /> The Town plans to fund water system improvements, including this request, using a combination of <br /> grants and low interest loans. The Town may need to phase the various portions of the project as <br /> grant monies become available. The debt payments will be funded by tap fees collected from the <br /> proposed 520 new homes, as well as the base and user fees paid by new customers. The Town also <br /> collects a 1% sales tax that is allocated towards capital projects. The Town has good credit and has <br /> never defaulted on a loan or general obligation. <br /> Page 11 of 15 <br />