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<br />, <br /> <br />VI-3 <br /> <br />OPERATIONAL COSTS <br /> <br />District operating income must be sufficient to cover all operation and main- <br />tenance expense and scheduled debt service on borrowed capital. Assuming <br />early connection of about 105 of the total estimated 133 EQR customers, the <br />estimated initial yearly operation and maintenance budget would be: <br />Operation and maintenance labor $3,600 <br />Billing expense 500 <br />Power and heat 450 <br />Chemicals and supplies 900 <br />Total Estimated System Operation <br />and Maintenance Budget $5,450/year <br /> <br />The above figures assume that the Board of Directors would serve without pay <br /> <br /> <br />and the system would be run on an extremely economical basis. <br /> <br />EMERGENCY RESERVE-REPLACEMENT FUND <br /> <br />The financial projections included herein are based on the most reasonably ex- <br />pected estimates of population growth, operating and maintenance costs, and <br />expected equipment life. To provide for emergencies of an unexpected nature, <br />it is recommended that the District establish an emergency reserve fund. The <br />fund could serve a dual role, by also acting as a source of funds by which to <br />replace minor equipment items as they fulfill their useful life expectancy. <br />It is suggested that all of the initial year's tap fees be used for the establish- <br />ment of such a fund. In future years, $200 of each tap fee would add to the fund, <br />so that all of the District customers would have an equitable share in the fund. <br />The emergency fund should be maintained at about $15,000 or 5% of the project <br />cost, and in later years of the project repayment period more of the District <br />income can be used to build up the replacement fund as equipment wears out. <br />