Agenda - 04-01-2008-5a - Laserfiche WebLink

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4 FINANCIAL IMPACT: There is little to no financial impact associated with the public hearing itself: There are two significant fiscal impacts related to the construction project. First is the projected cost of the full northern Buckhorn community/central Efland sewer expansion project. That cost is estimated at approximately $ 4.27 million, of which approximately $2.55 million is currently budgeted. There are several potential ways that these additional costs can be addressed, with an effect on customers ranging from $0 to $55 per month (assuming 300 total customers, a $1.7 million loan at 4% simple interest for ten years) for 5000 gallons of sewer use, as per STAG funding requirements: • The central Efland portion of the project can be cut back as necessary to eliminate the $1.72 million in overage costs (the Buckhorn portion of the project is funded by the STAG grant). This strategy has $0 effect on customer bills; or • The County can apply for a low interest loan from the State Revolving Loans and Grants Program, with all or some portion of the ten-year annualized capital costs included in the rate base (with a fully recaptured cost coming in at approximately $55 per month per customer (assuming 300 customers generating 5000 gallons each of wastewater flow per month). The cost to customers (using 5000 gallons per month) falls $3.00 per month for each $100,000 that does not have to be recaptured through the rate structure); or • Either a portion or all of the shortfall may be paid through alternative financing with the annualized debt costs being paid through the general fund, with no additional costs related to financing the construction deficit addressed through the rate base). This alternative has $0 effect on customer bills. The expanded system in central Efland will also bring additional operating costs for the system as a whole. The current rate structure -unchanged since implemented in 1988 -captures approximately 25% of the costs for operating the system. Currently, the Efland system's rate of $4.50 per thousand gallons (over the $15.20 minimum for the first 3000 gallons) is less that one- half the rate per thousand gallons that the County pays Hillsborough to treat the waste. Furthermore, the County spends several thousand additional dollars per month as necessary to fund system administration, billing, maintenance, miscellaneous operating and capital improvement costs. All of these cost overages are currently subsidized from the County's General fund. The Raftelis rate study discussed above provides the County with the opportunity to address these sewer rate shortcomings as well as some portion of system expansion costs. RECOMMENDATION(S): The Manager recommends that the Board: • Receive and review the County Engineer's update/status report; and • Receive and review the preliminary Engineer's Report; and • Receive public comment at the public hearing for the northern Buckhorn community/central Efland sewer expansion project Preliminary Engineering Report; and • Direct staff to bring this item for a decision at the BOCC's next regular meeting in Hillsborough (May 1St)