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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8 - PROJECT EVALUATION

8 ~,l STAGE I CONSTRUCTION

The need for an adequate supply of~safe potable water is well documented throughout
history as a human necessity. The various uses of water for human consumption
transportation of human wastes, washing, irrigation, and the protection of
property from fire has a direct impact on the standard of living which can be
achieved within a community. The need for expanding and up-gradingtthe_'municip.n
water system as ppoposed in this report is based primarily on the quality and
quantity of existing water supplies to the Town. A secondary consideration is
the historical growth rate from 1960 to the present and the anticipated growth
projected for the next forty four years. The primary alternative to completion
of the project is to stop or limit growth in the Town and to continue useage
of a water which does not meet U.S. Public Health Standards for potable water
supplies.

The need for the project is based on quality and quantity of existing water
supplies, population growth, and the condition of the existing system. If the
population growth does not occur or is artificially restricted in some manner, the
project could be slightly reduced in~scope and size. However, this growth has
occurred for the past sixteen years and is expected to continue as projected.

The "payment capacity" of a community for water system improvements is extremely
difficult to measure or estimate. That portion of a system used for human
consumption is considered a necessity to sustain life and the consumer can
and must pay whatever costs are required for that necessity. That portion of
the system which provides other uses such as::ifire protection and lawn irrigation
would have a slightly lower priority. The ability to pay for the system
would be reflected by the standard of living in the area. Some Federal agencies
use a percentage of the median income as a measure of the payment capacity for
debt service on public works projects. The median income of $5,390 per year for
the Swink area as shown previously in this report is taken from the 1970 census
summaries. In addition to user charges for debt service, water ratesr--must::be
adequate to provide revenue for: operating and maintaining the system, replacing
components of the system, and providing funds for emergencies and unexpected
expenses. Allowing 1% for debt service, 1% for operation and maintenance costs
and 0.5% for replacement and emergency funds, the average annual user charge
for the system should not exceed approximately 2.5% of the median income for
the community. Therefore, the maximum user charge should be 2.5% x $5,390 =
$134.75 per year. Rate Structure No.1 as developed previously in this report
would yield an average annual user charge of $235.17 per year and would be
approximately 4.4% of the median income.

Due to the low median income in the community, the Town should be eligible for
Federal grant funds in the amount of 50% of the project cost or more.

50% of $834,000 = $417,000 Under most federal aid programs, federal grant
assistance is limited to a maximum of 50% of the total project cost. However,
under severe economic hardship cases this might be increased to greater than
50% grant eligibility, or, additional grant funds might be obtained under a
different agency or program.

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