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Mr. Michael Mornson City of St Anthony May 16, 2000 Page 2 The type of work involved and the anticipated cost of the work both tend to discourage residents from having the work done. In order to encourage participation in a voluntary program, the City could offer some incentives. A basic assistance program could include preparing a list of plumbers that have expressed an interest in doing the work, and assisting the resident in.reviewing and evaluating the various bids on the work. Additional assistance that could be considered include: 1. The City could purchase the pumps and provide them directly to the plumber for a specific project. This is an easy thing to do but may bring liability on the City if there is a pump failure or other problem. 2. The City could provide a $1,000 loan for the work and collect installment payments with the sewer and water billing. A $1,000 loan financed with no interest and a 5-year term would add about $17.00 per month to the individual water/sewer bill. City ost — Assuming 100 connections will be corrected each year for period of Y g p 3 years, and the cost of the program will be financed by the City at a 5 percent interest rate, the overall cost to the City would be about $50,000 but the cash flow would require about $200,000, of in debtedness according to the following schedule. Year Construction Cost Interest Income End of Year (Bond) (5%) @$17/mo Cash Balance 1 100,000 5,000 20,400 ($84,600) 2 100,000 9,230 40,800 ($153,030) 3 100,000 12,652 61,200 ($204,480) 4 . . 10,224 61,200 ($153,510) 5 7,675 61,200 . ($99,975) 6 5,000 40,800 ($64,170) 7 3,209 20,400 ($46,980) ------------------------------------------------:------------------- -------------------------------- Total Resident Cost $306 ,000 -- Total City Cost -- $46,980 FAWPWIM106542\051600-mm 2