6.1. SR 11-06-1995ity of�
kr 1•
FROM:
DATE:
MEMORANDUM
Mayor & City Council
Lori Johnson, Assistant City
Administrator
November 6, 1995
ITEM h_1_
SUBJECT: Financing of Wastewater Treatment
Plant Expansion
Last Monday we briefly discussed the finances related to the proposed
Wastewater Treatment Plant expansion project. At this time I would like to
provide additional information regarding proposed debt schedules and funds
needed to pay for the proposed expansion. It is anticipated that this item will
receive considerable discussion at the January 15 Capital Improvement Plan
meeting and again prior to the bids being awarded.
There are numerous factors which will need to be considered before the
• Council takes final action authorizing the expansion. Some of the items the
Council will need to consider include the following:
• Contract Amount - The current estimates are that construction and
related expenses are between $4.7 to 4.9 million. Hopefully the
bids will be somewhat less than that. If not, a considerable amount
of additional analysis will need to be completed.
• Connection Revenues - It is estimated that the city will receive
approximately $475,000 in connection fees in 1995. 1991 is the
first year that connection fees were credited to the Treatment
Plant. Prior to that time they were used to pay for the 1981 sewer
interceptor project. Since 1991, an average of 214 connection
equivalents have been made each year.
• Rate Increases - In 1994, the Council approved rate increases for
1994, 1995, and 1996. If this project proceeds, appropriate rate
increases will need to be considered.
In an attempt to give you some parameters in which to make your decision,
attached is some history information regarding collections and expenses as
• well as projected debt service payments and required revenues. Projections
of funds available for debt service based on assumptions given current
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441 -7420 • Fax: (612) 441 -7425
of funds available for debt service based on assumptions given current
• information are also provided.
In conclusion, the information provided is intended to help determine which
growth and expenditure assumptions the Council finds most realistic so that
when bid results are received more accurate revenue and debt projections can
be made. More detailed information on estimated required rate increases
and connection revenues will be provided when this is before the Council in
January.
•
•
WASTEWATER TREATMENT PLANT EXPANSION
November 6, 1995
(4) Based on 20 year term and current interest rates plus 1/4 percent
(5) Includes 6% annual increase
These are estimated projections only which will change significantly depending on connections, rate and expense increases, and other factors.
FIVE YEAR DATA
1991
1992
1993
1994
1995•
stomer Charges
428,804
429,612
469,386
532,020
534,000
*Estimated
Connection Fees
177,911
139,150
238,640
358,546
475,000
Connection Equivalents
137
107
184
276
365
(1) Excludes Interest Income & Other Revenue
(2) Excludes Other Non - Operating Expenses
TOTAL REVENUE (1)
606,715
568,762
708,026
890,566
1,009,000
(3) Capital Outlay
Expenses are
not included
Operating Expenses
272,632
318,359
291,966
306,197
326,500
Depreciation
124,448
126,828
142,046
162,467
170,000
TOTAL OPERATING EXPENSES
397,080
445,187
434,012
468,664
496,500
Transfer to General Fund
6,000
6,000
6,000
6,000
6,000
CASH BALANCE
1,185,802
959,834
1,076,994
1,236,980
1,714,528
(Sept. 30)
Annual Revenues in Excess of
Expenses (1)(2)(3)
203,635
117,575
268,014
415,902
506,500
DEBT SERVICE
AND ANNUAL REVENUE REQUIREMENTS
Debt Service
Estimated
Estimated
Estimated
ANNUAL
Estimated Revenues based on
Bond Issue
Annual
Operating
Transfers
Avg. Cap.
REVENUE
Scenario
Year 1994
1996(4)
Total
Exp. 15)
Out
Outlay
REQUIRED
#1
#2
#3
1995 82,034
82,034
496,500
6,000
584,534
1,009,000
1,009,000
1,009,000
1996 133,560
133,560
516,700
6,000
110,000
766,260
911,300
878,800
878,800
1997 134,915
307,120
442,035
542,500
6,500
200,000
1,191,035
902,252
902,252
914,447
1998 131,135
308,838
439,973
599,600
6,500
10,000
1,056,073
906,825
939,325
952,261
1999 132,220
310,316
442,536
629,600
6,500
12,500
1,091,136
900,198
932,698
959,874
2000 133,017
316,491
449,508
661,100
6,500
15,000
1,132,108
976,098
1,013,598
1,042,426
133,580
317,121
450,701
694,200
6,500
17,500
1,168,901
1,004,642
1,042,142
1,087,566
002 128,990
F
317,421
446,411
728,900
7,000
20,000
1,202,311
1,049,764
1,087,264
1,135,450
22001
003 129,265
347,381
476,646
765,300
7,000
22,500
1,271,446
1,081,255
1,118,755
1,186,245
2004 129,270
350,521
479,791
803,600
7,000
25,000
1,315,391
1,131,035
1,168,535
1,240,129
2005 129,005
348,021
477,026
843,800
7,000
27,500
1,355,326
1,209,526
1,253,276
1,347,289
2006 128,418
350,118
478,536
886,000
7,000
30,000
1,401,536
1,264,445
1,308,195
1,407,924
2007 132,310
351,536
483,846
930,300
7,500
32,500
1,454,146
1,302,773
1,346,523
1,472,246
2008 130,670
402,261
532,931
976,800
7,500
35,000
1,552,231
1,363,362
1,407,112
1,540,479
2009 128,625
399,453
528,078
1,025,600
7,500
37,500
1,598,678
1,405,646
1,449,396
1,612,860
2010
400,733
400,733
1,078,900
7,500
40,000
1,527,133
1,516,239
1,566,239
1,739,642
2011
400,783
400,783
1,130,800
7,500
42,500
1,581,583
1,562,889
1,612,889
1,821,092
2012
399,695
399,695
1,187,300
8,000
45,000
1,639,995
1,636,633
1,686,633
1,907,494
2013
417,440
417,440
1,246,600
8,000
47,500
1,719,540
1,688,098
1,738,098
1,999,150
2014
422,940
422,940
1,306,900
8,000
50,000
1,787,840
1,769,454
1,819,454
2,096,378
2015
456,765
456,765
1,374,400
8,000
52,500
1,891,665
1,826,232
1,876,232
2,199,518
2016
467,060
467,060
1,443,100
8,000
55,000
1,973,160
1,915,987
1,965,987
2,308,929
Assumptions Annual Growth
Rate Increases
Connection Fee Inc.
Number of Connections
Scenario #1
4%
2% every other
year
$250 every five years
Total 3825: Avg. 191
Scenario #2
4%
2% every other
year
$250 every five years
Total 4725: Ave. 214
Scenario #3
4%
2% every year
$250 every five years
Total 4725: Ave. 214
(4) Based on 20 year term and current interest rates plus 1/4 percent
(5) Includes 6% annual increase
These are estimated projections only which will change significantly depending on connections, rate and expense increases, and other factors.
RESOLUTION 95- _
A RESOLUTION FOR THE CITY OF ELK RIVER
A RESOLUTION APPROVING THE PLANS AND SPECIFICATIONS
AND ORDERING THE ADVERTISEMENT FOR BIDS
IN THE MATTER OF THE WASTEWATER TREATMENT PLANT
IMPROVEMENT OF 1995
WHEREAS pursuant to City Council direction, the Project Engineer has prepared plats and
specifications for the Wastewater Treatment Plant improvement, which plans and
specifications have been reviewed by the City;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota:
1. Such plans and specifications, a copy of which is attached hereto and incorporated herein by this
reference, are hereby approved.
2. The City Administrator shall prepare and obtain the publication of an advertisement for bids for the
malting of the improvement pursuant to the attached plans and specifications. The advertisement
shall be published once each week for three consecutive weeks, shall specify the work to be done,
and shall state that the bids will be received by the City Administrator until 10:00 a.m. on Thursday,
• December 14, 1995, at which time the bids will be publicly opened in the Council chambers of the
City Hall by the City Administrator and the Project Engineer and will then be tabulated for
consideration by the City Council at a meeting thereof at 6:00 o'clock p.m. on January 16, 1935,
in the City Council chambers at City Hall. No bids will be considered unless sealed and filed with
the City Administrator and accompanied by a cash deposit, cashier's check, bid bond, or certified
check payable to the City in the amount of 5 % of the amount of such bid.
5. The City reasonably expects to reimburse itself for the payment of certain costs of the Project out
of the proceeds of a bond issue or similar borrowing (the "Bonds ") to be issued by the City after the
date of payment of such costs. As of the date hereof, the City reasonably expects that $5,OCO,000
is the maximum principal amount of the Bonds which will be issued to finance the Project.
b. Each expenditure to be reimbursed from the Bonds is or will be a capital expenditure or a cost of
issuance, or any of the other types of expenditures described in Section 1.150 -2(d) (:3) of the
Regulations.
Passed and adopted this 5th day of November, 1995.
Henry A. Duitsman, Mayor
. ATTEST:
Sandra A. Thackeray, City Clerk
MS1BACK UP FROM 10/30/95 MEETING
CONSULTING ENGINEERS
1326 Energy Park Drive
October 12, 1995
Sr. Paul, MN 55108
File: 230- 151 -20
612- 644 -4389
1.800- 888 -2923
Mr. pat Klaers
Fax: 612. 644 -9446
City Administrator
City of Elk River
13065 Orono Parkway
P.O. Box 490
Elk River, MN 55330
RE: WWTF UPGRADE
ELK RIVER, MINNESOTA
Dear Mr. Klaers:
CIVIL ENGINEERING:
ENVIRONMENTAL The plans and specifications for the wastewater treatment facility upgrade have been
MUNICIPAL completed and are ready for the Council's approval. The project will upgrade the existing
•PLANNING facility from its currently rated 1.04 million gallons per day (MGD) capacity to 2.20 MGD
SOLID WASTE capacity for the Year 2012. Current wastewater flow averages about 0.70 MGD.
STRUCTURAL
SURVEYING As you may recall, the design of the 2.20 MGD upgrade was initiated in the spring of 1993.
TRAFFIC Shortly after the preliminary design, the rotating biological contactors (RBC) failed and
TRANSPORTATION prompted us to proceed with the $914,000 interim improvement project. For the interim
improvement, we basically took the trickling filter pump station and one of the two trickling
ELECTRICAL/MECHANICAL filters out of the 2.20 MGD upgrade and installed them earlier to replace the failed RBC. The
ENGINEERING:
HVAC interim improvement project was completed in December of 1994, and the trickling filter has
POWER DISTRIBUTION been in operation since.
SCADA
SYSTEM CONTROLS This project is the continuation of the 2.20 MGD wastewater treatment plant upgrade.
Initially, some process equipment will not be installed per Mr. Darrell Mack's request, due
to the expected low flow condition in the first few years. The intent was to allow the City to
defer approximately $300,000 equipment cost for 5 to 10 years, and also to keep that
equipment from sitting idle for an extended period of time. Since we have finished the design
for a complete 2.20 MGD facility, in addition to the plans and specifications for this
construction, we will also send a copy of the plans and specifications for the deferred
equipment to you as a record for future use.
OFFICES IN:
. MINNEAPOLIS
PRIOR LAKE
ST. PAUL
230 /151- 1107.oct
WASECA
An Equal Opportunity Employer
Mr. Pat Klaers
October 12, 1995
Page Two
In the feasibility study report, our estimated construction cost for a complete 2.20 MGD
expansion was $5,930,000, based on 1995 construction cost index (which was 5350). Deduct
the costs for miscellaneous interim improvements and the equipment deferment as follows.
2.20 MGD Expansion
$5,930,000
Digester Rehabilitation
( 18,000)
Interim Improvements
( 914,000)
Equipment Deferment
( 300,000)
Building Repainting
( 19.000)
Project Cost in 1995
$4,679,000
Inflation (5650/5350)
x 1.05
Project Cost in 1996
$4,913,000
Note: Construction cost index was 5480 in July, 1995
and is projected at 5650 for July of 1996.
We also conducted an engineering cost estimate based on the quantity take -off from the actual
design. Our estimate for the construction cost is $4,720,000, including 5% contingency.
The following is a tentative project schedule:
Submit Plans and Specifications to the City
10 -25 -95
City Council Authorize Advertisement for Bids
10 -30 -95
Advertisement
11 -09 -95
Bid Opening
12 -12 -95
City Council Award Contract
12 -18 -95
Pre - Construction Meeting/Notice to Proceed
01 -15 -96
Construction Commence
04 -29 -96
Substantial Completion
06 -27 -97
Project Completion
07 -31 -97
Recently, we received a few phone calls from Contractors expressing their interest in bidding
this project. At this time, many Contractors are willing to bid projects aggressively as they
are planning next year's work loads. We recommend the City take this opportunity to bid the
project by the end of this year.
230 /151- 1107.oct