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Mr. Joseph Chlebeck January 24, 1984 Page 4 Our computations were made basd upon the 29 and 19 years for simplicity and consistency. By staying with the original bond terms, the City makes these com- putations only once. If we were to use remaining bond years, we would have to re- compute as the remaining bond years are shortened. As shown above, the final result is the same. Mr. Echtenkamp also questioned our discount factor based upon bond interest rather than a current commercial rate of 12 %. Again, our computations were done as they were for simplicity and consistency. If we were to use a current interest factor, we would have to change such factor as the market changed. Furthermore, the City would not use a commercial factor of 12 %. The City would use a governmental (tax- exempt) factor of say 10 %. The final outcome would be about the same. The following computations for the Sanitary Sewer System using the November calculations and Mr. Echtenkamp's concept (adjusted per the above) reflect the true variance: November Objection Description Calculations Calculations 1. Total Scheduled Tax Levies $ 2,868,100 $ 2,868,100 2. Total Years = 29 yrs. _ 14 yrs. 3. Average Annual Levy $ 98,900 $ 204,864 4. 1981/1983 Amount Equivalent to 1 mill - 50,241 - 50,241 5. Equivalent 1982/1983 Mills 1.969 4.078 6. Total Tax Years @ 29 yrs. @ 14 yrs. 7. Total Mills 57.101 57.092 8. Present Value Factor Adjustment: 29 Years @ 4.75% 14 Years @ 10% 9. Equivalent Trunk Tax Levy Factor (in mills) (26.440) (27.051) 30.661 30.041 Difference (.620) mills Difference (as a %) ( 2.02%) As shown above, the variance between the November calculations (using original bond years and interst) and the objection (adjusted) calculations (using remaining bond years and current assessment interest) is about 2%. More important, we thought about using many of the concepts referred to by Mr. Echtenkamp. We chose not to for simplicity and consistency purposes.