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01/06/2011 1 Landfill Fees Settlement Payment Options ---PAGE BREAK--- 01/06/2011 2 Settlement Payment Options Background • Landfill Lawsuit Settlement is $2,050,000, litigation fees, and recovery of remediation costs. Total needed is $2,500,000. • Sanitation Fund does not have sufficient dollars to pay the settlement. • Settlement to be paid by January 31, 2011. ---PAGE BREAK--- 01/06/2011 3 Settlement Payment Options Questions Asked • What options are available? • What would be the costs and impacts? • Can the other Utility Funds (Water, Sewer, Surface Water) help the Sanitation Fund? ---PAGE BREAK--- 01/06/2011 4 Settlement Payment Options Option 1 • Borrow $2.5 million by selling 20-year Bonds. • Flat Rate Increase: Additional Cost to Customers • $1.60 per month • $19.20 per year • $384 per customer over 20-years • Costs are added to current Sanitation Rates • Residential $1.25 • Container Cans $14.67 ---PAGE BREAK--- 01/06/2011 5 Settlement Payment Options Option 2 • Borrow $1.0 million from Sewer Fund @ 2.13% for 5-years and sell $1.5 million in Bonds. • Additional Costs: • $1 million: $1.63 per month; $19.56 per year • $1.5 million: $0.96 per month; $11.52 per year. • Total Years 1-5: $2.59 per month; $31.08 per year then drops in 2016 to $0.96 per month; $11.52 per year. • 20-year additional cost to customer: $328.20. ---PAGE BREAK--- 01/06/2011 6 Settlement Payment Options Option 2 • CIP Impact • Cannot loan $1 million and accomplish all sewer CIP projects budgeted in 2011. Projects Must be Deferred/reduced. • Defer Replacement Generators at Pump Stations $521,000. • Reduce by $500,000 Treatment Plant Upgrades ($900,000 remaining). • $1 million in 2012 projects pushed to 2013; etc. ---PAGE BREAK--- 01/06/2011 7 Capital Improvement Plan Sewer Infrastructure (Page 5-6) ---PAGE BREAK--- 01/06/2011 8 Settlement Payment Options Option 3 • Borrow $2.5 million from Utility Funds, 5-year term @ 2.13%. • Flat Rate Increase: Additional Cost to Customer • $4.09 per month $49.08 per year • Total additional cost $245.40 (Loan retired in 2016) • CIP Impact: • Must defer Water, Sewer, and Surface Water Projects. ---PAGE BREAK--- 01/06/2011 9 Settlement Payment Options Option 3 Utility Projects Deferred / Reduced: • Sewer: • Defer Replacing Generators - $521,000 • Reduce System Improvements - $100,000 • Reduce Treatment Plant Upgrades - $1,000,000 • Reduce Inflow/Infiltration - $200,000 • Water: • Defer Salmon Springs Main Replacement - $251,000 • Defer Water Main Replacement on 7th St SE - $252,000 • Surface Water: • Defer Basin Plan Update - $150,000 ---PAGE BREAK--- 01/06/2011 10 Capital Improvement Plan Water Infrastructure (Page 5-3) ---PAGE BREAK--- 01/06/2011 11 Capital Improvement Plan Storm Infrastructure (Page 5-8) ---PAGE BREAK--- 01/06/2011 12 Settlement Payment Options Option 4 • Borrow $2.5 million from Utility Funds, 1-year term @ 0.5%. • Flat Rate Increase: Additional Cost to Customer • $19.28 per month • $231.36 per year • Total additional cost per customer is $231.36 • CIP Impact: • Same projects as Option 3 must be deferred / reduced. ---PAGE BREAK--- 01/06/2011 13 Settlement Payment Options Option 5 Have different rates for different classes of customers. Example: In lieu of all customers paying the same flat rate increase, have the residential customers pay 33% and commercial customers pay 67% of settlement costs. ---PAGE BREAK--- 01/06/2011 14 Settlement Payment Options Summary Additional Costs Yearly Total Costs Cost Cost Option 1: $1.60 $19.20 $384.00 Option 2: * $2.59 $31.08 $328.20 Option 3: * $4.09 $49.08 $245.40 Option 4: * $19.28 $231.36 $231.36 Option 5: Residential $1.37 $16.44 $328.80 Commercial $4.10 $49.20 $984.00 * Plus CIP Projects must be deferred / reduced. ---PAGE BREAK--- 01/06/2011 15 Settlement Payment Options 10 Year Bond Option 1 • Borrow $2.5 million by selling 10-year Bonds. • Flat Rate Increase: Additional Cost to Customers • $2.26 per month • $27.17 per year • $272 per customer over 10-years • Costs are added to current Sanitation Rates • Residential $1.25 • Container Cans $14.67 ---PAGE BREAK--- 01/06/2011 16 Settlement Payment Options 10 Year Bond Option 2 • Borrow $2.5 million by selling 10-year Bonds. • Increase split 3:1: Additional Cost • Residential Containers • $1.94 per month $5.81 per month • $23.23 per year $69.69 per year • $232 per residential customer over 10-years • $697 per container customer over 10-years • Costs are added to current Sanitation Rates ---PAGE BREAK--- 01/06/2011 17 Settlement Payment Options 10 Year Bond Option 3 • Borrow $2.5 million by selling 10-year Bonds. • Increase same percent to all – Additional cost • Residential Containers • $1.19 per month $13.91 per month • $14.23 per year $166.97 per year • $142 per residential customer over 10-years • $1,670 per container customer over 10-years • Costs are added to current Sanitation Rates