CC PACKET 12011998 - Laserfiche WebLink

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3v MEMORANDUM DATE: November 2, 1998 TO: Mike Mornson, City Manager FROM: Roger Larson, Finance Director ITEM: WATER FILTRATION FUNDS Attached is the annual review of water filtration funds. Presently we are in our eighth year of the agreement with the MPCA. This agreement provides 90% funding for the operation and maintenance of the carbon filtration plant through 3/31/01. Upon completion of the 10 year funding agreement, the City is responsible for 100% of the operation, maintenance, repairs and building replacement costs. A concept review of the history of the funds include: Initial settlement from the Army $3,000,000 . Less: Attorney Fees ($ 500,000) Plus: Honeywell Settlement $ 500,000 Net Results $3,000,000 All of the money has been invested since the City received it with the exception of the $1,185,000 temporary water filtration bond paid off in 1993. In 1990, the City implemented a financial plan to build the funds to a level that would provide annual interest earnings adequate to provide funding for operation and maintenance and building capital improvements without reducing the principal. The theory in place is to provide safe drinking water for the community and using the lawsuit money to pay for it. The present financial plan is accomplishing that goal. Expenditures in 1997 totaled $123,079, compared to interest earnings of$265,178. The MPCA has indicated that the projected life to clean up the water could take as long as 100 years. This means there are long term planning issues and the financial plan needs to take in consideration the funds needed for building replacement costs (the . original plant was constructed for slightly over $4,000,000).