Agenda Packets - 1990/12/17 - Laserfiche WebLink

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This increase is a result of two factors. Operations expenses will increase by 5 . 64% in 1991. That increase is a result of inflationary increases in the costs of chemicals used to treat water and in the cost of electricity used to pump water from the City's six wells. During 1991 maintenance costs are expected to be 66.84% less than 1990 expenses. Maintenance expense may vary considerably from year to year pursuant to the City's Long Term Water & Sewer Systems Maintenance and Capital Improvements Plan adopted in 1983 . The Plan advocates a proactive vs reactive approach to system maintenance in the belief that preventive maintenance is the least expensive option over the long term. Major activities include: reroofing and tuckpointing of several well houses, the sealcoating of driveways at several well houses, and a well inspection and preventive maintenance of its pumping equipment. Capital Outlay budgeted for 1991 is 6.46% less than that budgeted for 1991. Budgeted Capital Outlay includes: updating remote terminal units which monitor various aspects of the pumping system to automatic status to back-up the computerized pumping system; new safety equipment for monitoring air quality in confined spaces; modem software for the water system computer; and the fencing of water tower number 1. Further details regarding Water Fund Capital Outlay may be found in the Capital Improvements Budget Section of this document. Debt Service costs of $135,475 have been budgeted for 1991 and represent annual debt service on an estimated $1.5 million bond issue needed for system improvements. During the Fall of 1989 and early Winter of 1990, the consulting engineering firm of Short Elliott Hendrickson performed a study of the City's utility system which evaluated system capacity, future needs and construction/improvement costs associated with the projected needs. This engineering study concluded that to provide for the future needs of users of the water system through the year 2000 the City should upgrade its water treatment plants, redevelop a well and install a generator at the ground reservoir to provide a back-up system of filling the water tower in the event of a power failure. To complement the engineering study the City engaged the certified public accounting firm of Voto Tautges Redpath & Co. , LTD to evaluate alternatives for financing the improvements recommended by the consulting engineering firm and to project water rate requirements over a five year period. The Accountant' s report proposed a revenue bond issue of $1.5 million to finance the improvements recommended by the City's consulting engineer. Water rate increases of 6% annually would be necessary to meet debt service costs and operating expenses over the five year period for which projections were made. Present water rates of $0.90 per 1, 000 gallons of water used would not have been sufficient to pay for increased operations costs and debt service in 1991. The Utility Study mentioned above recommends that the 1991 water rate be set at $0.95 per 1, 000 gallons of water used. That rate will allow the Water Fund a projected net income of $4,218 for 1991.