07-06-2020 Council Work Session Packet

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Feasibility Study Water Treatment Plant City of Lino Lakes, MN WSB Project No. 015822-000 Page 28 9.1 Water Treatment Plant Financial Analysis The estimated costs for the recommended gravity filtration water treatment plant option analyzed in this report are summarized in Table 9-1 below and are broken out in greater detail in Appendix E. The 20-year total costs include both the initial capital costs and the annual operations and maintenance (O&M) costs for the first twenty years of plant operation. The capital costs include a 10 percent construction contingency and 15 percent indirect costs (engineering, legal, administrative, etc.). The annual operation and maintenance (O&M) costs are based on a 3.5 percent inflation rate. Funding this project through an adjustment to the City’s water rates, water availability charge (WAC), or trunk watermain charges, or a combination that uses all of these funding methods, should be evaluated as part of a detailed water utility rate study. Table 9-1. Estimated Cost Summary for Water Treatment Plant 20-Year Capital Cost $20,032,155.40 20-Year Loan Interest (1.5%)$3,303,597.25 20-Year Operation and Maintenance Cost $3,323,438.80 20-Year Total Cost Including Loan Interest $26,659,191.45 9.2 Future Trunk Watermain Improvements Financial Analysis The estimated costs for the Phase 1 trunk watermain improvements were not included in this financial analysis because this project is already proceeding and being funded by other means. The estimated costs for the future Phase 2, 3, and 4 trunk watermain improvements analyzed in this report are summarized in Tables 9-2, 9-3, and 9-4 and are broken out in greater detail in Appendix E. The capital costs include a 10 percent construction contingency and variable indirect costs (engineering, legal, administrative, etc.) depending on the size of the project. Funding these trunk watermain projects through an adjustment to the City’s trunk watermain charge should be evaluated as part of a detailed water utility rate study. Table 9-2. Estimated Cost Summary for Phase 2 Trunk Watermain Improvements 20-Year Capital Cost $178,571.25 20-Year Loan Interest (1.5%)$29,449.03 20-Year Total Cost Including Loan Interest $208,020.28 Table 9-3. Estimated Cost Summary for Phase 3 Trunk Watermain Improvements 20-Year Capital Cost $1,646,346.90 20-Year Loan Interest (1.5%)$271,506.83 20-Year Total Cost Including Loan Interest $1,917,853.73 Table 9-4. Estimated Cost Summary for Phase 4 Trunk Watermain Improvements 20-Year Capital Cost $3,921,500.00 20-Year Loan Interest (1.5%)$646,713.06 20-Year Total Cost Including Loan Interest $4,568,213.06 9.3 Future Well Nos. 7 and 8 Raw Watermain Improvements Financial Analysis Estimated costs for constructing raw water mains from future Well Nos. 7 and 8 are summarized in Table 9-5 if the City decides to treat these wells at the water treatment plant versus pumping them directly into the distribution system without treatment. These costs are broken out in greater detail in Appendix E. The capital costs include a 10 percent construction contingency and 15 percent indirect costs (engineering, legal, administrative, etc.). Funding these raw watermain improvements through an adjustment to the City's water rates, water availability charge (WAC), or trunk watermain charges, or a combination that uses all of these funding methods, should be evaluated as part of a detailed water utility rate study.