09/05/2007 Council Packet - Laserfiche WebLink

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DRAFT 8 -17 -07 XII. POSSIBLE FUNDING OPTIONS Water utility operations should be self - supporting from revenue received by providing service to the customers. Due to the substantial population growth and the water quality issues caused by the iron and manganese found in the supply wells, the City is investigating the feasibility of providing treatment of the well water. The water treatment plant complex and additional supply wells will cost approximately $16,875,000 based upon 2007 construction costs. This estimated cost includes engineering, administrative, and construction costs. We anticipate that the City of Lino Lakes will use General Obligation or Revenue bonds to fund the water system improvements as it is unlikely that state revolving fund loans would be available for these water system improvements. State revolving funds are generally utilized to fund community projects where regulatory compliance issues are of concern. Projects selected for state funding are ranked based on a priority system each year by the Minnesota Department of Health. The water treatment complex capital cost (including engineering, administrative, and construction costs) is estimated at $12,050,000, and the wells and associated distribution system improvements are estimated to cost $4,825,000. As the water treatment plant would provide substantial benefit for the existing water customers, which is 1/3 of the ultimate population, water rate increases could be utilized to fund 1/3 of the $12,050,000 water treatment plant cost. The remaining 2/3 of the water treatment plant cost and the cost of additional well supplies should be recovered from water availability charges for new connections to the system. The Lino Lakes City Council has authorized a more in depth study for funding the treatment plant and associated facilities which will be completed separately from this study. Water Treatment Plant Study 22 13843.000