Agenda Packets - 1991/01/22 - Laserfiche WebLink

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0 TO: Mayor & Council FROM: Don Brager, Finance Director - Treasurer .AiL DATE: January 17, 1991 SUBJECT: Issuance of Water Revenue Bonds Our auditing firm, Voto,Tautges,Redpath & Co. ,LTD, conducted a utility rate study in December 1989 to determine rates necessary to finance various water system improvements. The study concluded that the City should issue Water Revenue Bonds to finance the improvements and recommended the Water rates required to pay annual debt service on the bonds. The recommendations contained in the study were accepted by Council and the 1990 and 1991 Water Utility budgets which were adopted reflect the recommended rates and projected debt service payments. City Public Works Director/Engineer Minetor has worked with the consulting engineering firm of Short Elliott Hendrickson to develop specifications and cost estimates for the new water treatment plant which is the major project of the water system improvements proposed. The estimated costs of the treatment plant have changed since the original study was performed. Mr. Minetor 40 will comment upon that in a separate memorandum. Since estimated costs of the project had changed I requested the Voto firm run new projections of Water Fund financial statements to determine the amount of water system improvements the City could do at the Water rates the Council had previously approved. Attached please find the updated financial projections based upon different levels of bonding and based upon water rates through 1994 which Council had previously approved. The first page lists two levels of bonding which are labeled "Scenario A" and "Scenario B" . Estimated bonding requirements of Scenario A are $2 , 200, 000 and,delete redevelopment of well #4, $50, 000; and the Scenario A projects plus redevelopment of well #4 and the transmission line. Bonding requirements for Scenario B are $2, 390, 000. Water utility rates through 1994, previously approved by Council, are listed on page two of the update. Projected financial statements for Scenario A are contained in Exhibits 1, 2 , 3 . The Projected Statement of Revenue, Expenses and Changes in Retained Earnings shows a net loss for the years 1991 - 1994 of between $20, 030 and $125, 023 . Those statements were prepared under generally accepted accounting principles which require the taking of depreciation on all assets. The City's policy for many years has been not to take depreciation on 0 assets that were paid for by residents who had been assessed for water mains. Exhibit 3 is a Statement of Cash Flows. That Statement indicates that, although in 1992 and 1993 there will be a negative cash flow of $36, 541 and $26,709, over the five year