CC PACKET 06081993 - Laserfiche WebLink

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• MEMORANDUM DATE: June 1, 1993 TO: Thomas D. Burt, City Manager FROM: Roger Larson, Finance Director ITEM: DEBT SERVICE PAYMENT/TEMPORARY WATER FILTRATION PLANT The debt service issued in July of 1988 to construct the temporary water filtration plant has matured and is now payable in the amount of $_1,185,000.00. The funding to pay this debt is derived from the monies received from the $3,000,000 Army settlement. For the first ten years of operation, federal funding is to maintain 90% of the operating costs and 10% is paid by the City of St. Anthony. After the initial 10 years, St. Anthony will bear the full cost of plant operation and maintenance. These costs can be significant(carbon changes can be as much as $80,000 plus) which makes it essential to carefully plan the use of these monies. The intent of using these monies is to provide safe drinking water at little or no cost to the • residents. In addition, this money is dedicated to build the water filtration fund balance to a level that uses annual interest earnings to fund the operation of the plant after expiration of the first ten year agreement. In May of 1991, staff provided Council with four long term funding analyses to determine what financial direction was needed to provide long term funding for operation of the filtration plant. These options analyzed included: 1) Pay off the debt service in 1993; 2) Keeping all existing cash and rebond in 1993; 3) Paying off the debt in.1993 and levying a one time 3 cent per 100cf of water consumed to fund maintenance costs; 4) Rebond the debt due in 1993 and levy a one time 3 cent per 100cf of water consumed. After reviewing the financial data, Council was in agreement with staff to pay off the debt in 1993 and amended the Ordinance to increase water rates 3 cents per 100cf. The additional water revenue (approximately $15,000 annually ) is used to fund the City's portion of operating costs for the first 10 years. All years thereafter, the funds will be used for building maintenance, repairs, improvements and.modifications to the system. This one time levy costs the average homeowner 75 cents per quarter and contributes to long • range planning for maintenance and repairs which are inevitable in the years to come.