PROJ00283

• Contract/PO #: FS0009X
• Contractor Name: Swink, Town of
• Contract Type: Loan
• Water District: 0
• County: Otero
• Loan Projects - Doc Type: Feasibility Study

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6.6 EMERGENCY OPERATING FUND

An emergency operating fund to be used for financing extraordinary costs be-
yond the scope of normal operation, maintenance and replacement costs should be
established. Such extraordinary costs might be repairing damages to project
facilities as a result of violent windstorms, fire, explosions, vandalism, etc.
Hazard insurance can be obtained to provide coverage for most of these losses.
However, such insurance is relatively expensive in proportion to the risk involved.
Most of the project is (1) below ground level and therefore not subject to wind
damage, lightning, hail or vandalism, (2) constructed of non-combustible materials
and therefor not subject to fire damage, and (3) diversified whereby one component
of the system could be lost for a period of time without causing a major dis-
ruption of service. For these reasons, the emergency operating fund can be
maintained at a low cost figure relative to the overall cost of the project.
The most probable damage to the system would be lightning damage to the electrical
controls and motors. The total cost of replacing all motors and electrical con-
trols in the system is approximately $60,000. An emergency operating fund of
approximately 50% of this figure should be established ($30,000). The fund can
be established in annual installments over theffirst ten years of the design
period.

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