05/15/1969 Council Minutes - Laserfiche WebLink

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Art. V. Mr. Busch stated that the wording was as such so that laying of the lines would cause the least interference with the construction of the streets. At the time that the Village installs }.;municipal sewer it shall be mandatory that an outlet be provided for the developer's use. Art. VI., The word 'shall' to be changed to 'may' and the words ' at the expense of the Company ' to be added after ordinance in line one. Art. Vii. To hold the Village harmless in case of accident in repairing streets, the company shall provide a permanent bond in the amount of $5000.00. Also, a paragraph from Mr. Busch's letter _page 2) concerning an additional bond if the cost of road work in an instance shall exceed $2500.00. Art. VIII. On page 7 of sewer contract, second line, add the words 'or until such time as the Village acquires such system' after franchise. Mr. Busch stated that no people would be living in the development before November. Mr. Jaworski questioned the 60% market value pric.e which the Vil- lage would have to pay for the system under default, etc. Mr. Busch couldn't conceive of the company allowing the systems deteriorate by 40% since the creditors would have to take over and the company would lose too much. Mr. Locher pointed out that at the end of 25 years the Village must either take over the system or grant a new franchise. Art. IX. Page 8 of the franchise, fourth line, wording changes to read 'if it is deemed by the Village not Wto be useable by it.' The company would receive some salvage from sale of the sewage plant in this case. Mr. Locher asked whether they would depreciate the treatment plant rapidly and was told that a normal life depreciation would be charged. They expect 15 years on an aeration system and 40 years on the pipes life expectancy. Mr. Locher asked whether the said of the plant at a loss would be included in the 'reasonable profit' and was told no. The rate was to be determined thus: annual depreciation (different rates on different parts) plus the operating expenses plus salaries prorated over the volume plus a reasonable return. Depreciation should amortize the losses. Mr. Locher asked whether any losses would be reflected in the rates and was told no since the company must swallow loses. In this case when the company loses the treatment plant it will be out of business as the Village has taken over. Mr. Jaworski wanted to be sure that the cost of the system to the Village would not exceed the cost of the original construction, He was told this was impractical to put in the franchise as using 'market value' was safer, despite inflation or depression. The market value will re- flect the depreciation. Art. X. The Village will receive a copy of an annual audit of the company. Art. XI. This had been rephrased in Mr. Busch's letter under No. 4. There was much discussion on the determination of a 'reasonable returns. Mr. Busch hedged on this, saying it couldn't be determined until the system was at 60 -75% capacity (density usage), but that it wouldn't be set so high so as to prevent persons from buying the homes. Mr. Busch finally stated that the 'market value of interest' is about what they considered to be a reasonable return. However, they wouldn' receive this until 60 -75% utilization was oper- ating; they would lose money until then. They expect no profit while expanding, and would not make a regular profit until the system was complete. Mr. Bohjanen asked whether the rates would be kept compatible with those of neighboring similar systems. Mr. Busch stated that their costs would be the same as that of the Village installing the same system except that they must pay personal prop- erty taxes which run as high as $12,000 on a $5000000 assessment.