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HomeMy WebLinkAboutFinancial Plan 1982Financial Plan Construction of the Ithaca Area Wastewater Treatment Facility Introduction The Clean Waters Act of 1972 has mandated the City of Ithaca to meet certain standards for the removal of BOD, suspended solids and phosphates. As owners of the existing facilities, the City of Ithaca has acknowledged responsibility for com- pliance with the new regulations.. Such acknowledgement has included the completion of studies relating to the condition of collector sewers in the service area, evaluation of ten treatment alternatives and the undertaking of detailed de- sign of a new wastewater treatment facility, including an outfall in Cayuga Lake. The New 'York State Department of Environmental Conservation and United States Environmental Protection Agency have ap- proved the studies to date, and awarded grants in the amount of approximately 87.5% of costs through the Project STEP II Design Stage. During this period, the Towns of Ithaca and Dryden have participated in the deliberations with consult- ing engineers Stearns and Wheler and have entered into an agreement to jointly own the new facility. The joint agreement includes the creation of the SJS (Special Joint Subcommittee), a joint entity with the responsibility to ar- range for the construction and operation of the facility. The SJS recommends, at this time, that the governing bodies submit an application for the construction of the new facility (STEP III). Statement of Purpose and Need The approved STEP I Facility Plan identified a capital pro- ject including new primary, secondary and phosphate removal facilities. The consulting engineers estimated cost for the STEP III Phase is $36,000,000, based on the project being bid in late '83. The new facility is needed to prevent further contravention of the water quality of Cayuga bake for the long term future. It is not possible for the local municipalities to finance this improvement without very substantial assistance from the State or Federal government. The timing of local dis- cussions continues to be of increasing importance due to the decisions of Congress to severely curtail the program, start- Financial Plan -2- ing in October 1984. The prompt process of our application should enhance our chances of being the recipients of the maximum Federal and State aid. (7510 and 12.5% respectively) Scope of the Project The project is divided into two phases, namely Outfall and Treatment Plant. The design of the outfall is completed and the STEP III application is a request for State and Federal support of 87.5% of the eligible portion of the outfall pro- ject. The application to be considered, must include bond resolutions for the entire capital project. This is appro- priate since the users will need to know the impact of costs for the total project before the governing bodies borrow funds for one segment. The design of the Treatment Plant Phase is 28% completed with total design completion expected in December 1982. Detailed descriptions of the basis for the capacity and technical design parameters can be found in the five volume Facilities Plan and the Environmental Impact Statement. Budget The joint agreement includes provision for the allocation of capital and operating costs for the new facility. The fol- lowing tabulations are based on current engineering estimates and local assumptions of the cost of the project. Since the bond resolution process is lengthy, it is proposed that the maximums be used to minimize the probability of redoing the process and forcing delays in acceptance of the STEP III grant and the construction bids for the Treatment Plant. Assumptions (1) Actual local share will be 13.5% of project cost to cover ineligible items. This leaves a margin of $150,000 for the Town of Ithaca allocation. (2) Interest on Bonds will be 10%. Hopefully, this -is sufficiently conservative. (3) There will be no State aid on Operating and Maintenance cost. Presently there is 2510 on the City plant, but the Town does not enjoy the benefits since we are not owners. Should State legislature continue such aid, the Town of Ithaca as joint owners will enjoy benefit of such aid. Financial Plan -3- (4) Estimated capital cost to be retired does not include benefit of Tompkins County paying for the capital cost of the Septage Facility ($1,600,000). (5) Estimated first year operating cost does not include payment from Tompkins County for septage treatment estimated at $45,000/year. (6) 81% of the plant capacity will be utilized the first year of operation and both debt retirement and O&M will be allocated on basis of 64% City of Ithaca, 35% Town of Ithaca, 1% Town of Dryden. (7) 19% of plant capacity will be allocated as reserve capacity as follows: 29.5% City of Ithaca, 69.6% Town of Ithaca, 1% Town of Dryden. (8) Total STEP III project cost, excluding joint entity Land acquisition and retirement of remaining debt will be $36,000,000. Total STEP III Project Budget $36,000,000 (Note: Stearns and Wheler recommendation $35,900,000) Base load Plant (81% of capacity) Portion of Project budget City of Ithaca Debt Allocation Town of Ithaca Debt Allocation Town of Dryden Debt Allocation Reserve Plant (19% of capacity) Portion of Project Budget City of Ithaca Debt Allocation Town of Ithaca Debt Allocation Town of Dryden Debt Allocation. Total Debt Allocation City of Ithaca Town of Ithaca Town of Dryden 64% 35% 1% 29.5% 69.6% 0.9% 20,680,200 14,966,640 353,160 $36,000,000 $29,160,000 18,662,400 10,206,000 291,600 $6,840,000 2,017,800 4, 760, 64.0 61,560 % Total .57445 .41574 .00981 1.00 Financial Plan Maximum Possible Federal Share Maximum Possible -4- 36,000,000 x .75 = 27,000,000 State Share 36,000,000 x .125 = 4,500,000 Local Share 36,000,000 x .125 = 4,500,000 The local share is to be allocated to the City of Ithaca, Town of Ithaca, Town of Dryden as follows: City of Ithaca 2,585,025 .57445 Town of Ithaca 1,870,830 .41574 "Town of Dryden 44,145 .00981 4,500,000 Please note that the reserve capacity has been redistributed to reallocate the 30.2% formerly identified as industrial users and septage. The SJS recommends that the redistribution be made on the same basis as the distribution of the original 69.8%. Town debt allocation per bond resolutions $2,286,792 round. to $2,300,000 for calculation of user costs. Dote: Approximately 32% of Town debt is allocable to reserve capacity. If benefit assessment were set to recover this part of the debt, remainder would be in the sewer rent rate and thereby eligible for debt exclusion. These percentages are also consistent with the benefit assessment for the Bolton Point water supply system. 2,300,000 for 20 years at 10%8 Maximum annual Principal & Interest = $345,000* 345,000 x .32 = 110,400 Benefit Assessment Base 345',000 x .68 = 234,600 Sewer Rent Rate.Base * See Appendix B for projected maturity schedules. Financial Plan. -5- Designation of Town Wide Benefit Area Units for 1986 1982 Sewer Units 4,640 add Biggs Complex 200 add Development (3 Years) 300 add Cornell Consumption Units 530 add. -Cornell Undeveloped Units 250 TOTAL 5,920 $110,400 = 18.64 say $19/unit 5,920 In 1986 the existing Town of Ithaca water and sewer debt will have diminished sufficiently to set the actual benefit assessment at $15/unit and still provide funds for a portion of 10 year water improvement plan. (See appendix A). Sewer Rent Rate EPA/DEC regulations require a flat rate schedule with no discount for volume users. Users who place a heavy burden on the treatment process, i.e., industries, can be charged incrementally above the base rates. For the purposes of the bond resolution, we present the fol- lowing "worst case" assumption for the average residential consumer. First year Operating & Maintenance Estimate by Stearns and Wheler $750,000. City Estimated Share Town of Ithaca Share Town of Dryden Share 750,000 x .64 = 480,000 750,000 x .35 = 262,500 750,000 x .01 = 7,500 1.00 750,000 Note actual O&M will be discounted by Tompkins County pay- ment for-Septage Treatment estimated by Stearns and Wheler @ $45,000 in first year. Financial Plan -6- First year Town of Ithaca Flow to New Plant 70,000,000 Cu,Ft* "includes 30,000,000 cu ft from Cornell,. 497,100 262,500 + 234,600 = .00710/cu ft or .71/100 cu ft 70,000,000 Current City Rate to Town Customers 0.92/100 cu ft for first 12 units 0.78/100 cu ft for next 88 units Current Average Cost/year (family of 2.5) 48 x .92 = 44.16 32 x .78 = 24.96 .80 $69.12 New Project Average Cost/year 0.71 x 80 $56.80 Savings $10.40 If larger family consumption may be 140 units current average cost/year 48 x .92 = 44.16 92_ x .78 = i1. 76 - Total $115.92 New project cost/year 0.71 x 140 = 99.40 Possible savings $11.40/year Construction Schedule The submittal of the STEP III application for the Outfall Project prior to July 1, may mean the award ofa construction Financial Flan -7- contract by January 1, 1983. If this were accomplished, such contracted debt could be excluded from our debt limit per Section 124. The preliminary priority rating of the outfall, however, is presently below the funding line. We are confi- dent the rating can be increased prior to publication of the final list. The Outfall Project is expected to take one year to construct. ND/js 6/18/82 Revised - 7/12j82 Ithaca Area Wastewater Treatment Plant Local Impact ($ x 106) Project Budget 30.0 32.5 35.0 40.0 Local Share 3.75 4.06 4.375 5.0 Base Load Plant (80%) 3.0 3.25 3.5 4.0 City (.64) 1.92 2.08 2.24 2.56 Towns (.36) 1.08 1.17 1.26 1.44 Reserve (20%) .75 .81 .875 1.0 City (.30) 0.225 .24 .26 .30 Towns(()70) .525 .57 .62 .70 Total Local Debt* City 2.15 2.32 2.5 2.86 Towns 1.60 1.74 1.88 2.14 Total 3.75 4.06 4.38 5.00 *Does not include existing; plant debt nor property acquisition by joint entity. Actual local share will be slightly higher since some of the project costs will be ineligible.