Middletown Water & Sewer Committee Recommendations for Future Financing of Improvements Water &...
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Transcript of Middletown Water & Sewer Committee Recommendations for Future Financing of Improvements Water &...
MiddletownWater & Sewer Committee
Recommendations for Future Financing of Improvements
Water & Sewer Committee Members:
Jennifer Falcinelli, Chairman
Mark Carney
Daphne Gabb
David Lake
Bob Smart
Scott Bolcik
Richard Gallagher
History of Improvements Funding
Town established the Capital Improvements Program in 1996. Primary purpose was to plan for major infrastructure
improvements and financing of those improvements. Prior to 1996, all improvement fees and operating fees were
combined in the operations fund and expensed each year. The only source of funding in the early CIP’s was growth dollars
(Tap fees). Starting in 1998, the Town began leasing space on the water tank
to cell phone companies to provide an additional source of revenue.
In 1999, the Town established the Debt Service Fee for new homes.
Future Grant & Loan Opportunities
Grants Based on the criteria
established by MDE for grant eligibility, i.e. 60% of State Median Income, Middletown will not likely received any substantial grants for future improvements and maintenance of the water and sewer system.
Loans Town is eligible for numerous
types of tax exempt loans. These loan are typically 2%-3% below prime with fixed rates.
Town has the ability to issue its own bonds for raising capital.
New Philosophy for the CIP Budget
Growth will pay for growth projects System users will pay for system improvement
projects
Goals of Water & Sewer Committee
Short-term Goals Fund existing debt without
dependence upon growth dollars (tap fees)
Refinance an existing loan to a lower interest rate.
New growth projects paid by growth dollars (tap fees)
Amend Operating & CIP Budgets to move 2 system improvement loans from CIP to Operating Budget
Establish a Capital Improvement Fee
Long-term Goals Ensure funding is available for
needed improvements without dependence upon growth dollars (tap fees)
System improvement projects paid by system users via Capital Improvement Fee
Replacement of waterline on Main Street
Short Term Goal:Fund existing debt without dependence upon growth dollars (tap fees)
In a depressed economy, cannot depend upon new home sales (tap fees) to fund debt
Limited water supply/allocation limits tap fees
Short Term GoalRefinance an existing loan to a lower interest rate.
Existing FHA Loan
Remaining Principal 344,248.96$ Interest Rate 5.00%Yearly Payment 39,946.00$ Term Remaining 12 Years
Refinanced Loan Thru DHCD
Prinicipal 344,248.96$ Interest Rate 3.85%Yearly Payment 24,825.89$ Term 20 Years
Overall Additional Cost to Refinance Loan
39,102.30$
Yearly Debt Service Savings
15,120.11$
Short Term Goal:New growth projects paid by growth dollars (tap fees)
New growth projects must be developer funded and/or financed with tap fees.
Short Term Goal:Amend Operating & CIP Budgets to move 2 system improvement loans from CIP to Operating Budget
The future goal for the Operating Fund will be a zero surplus due to the implementation of a Capital Improvement Fee.
It is an industry standard that debt service is paid from the Operating Budget
Recommending moving the I&I Loan and the MDE waterline improvement loan
Our current Operating Fund surplus is $75,908.25. The payments for these loans are $80,876.06
The impact is minimal to the Operating Budget
Water & Sewer FundTotal Outstanding Debt
$3,337,810.02
Water Tank, $754,750.00 , 23%
East WWTP, $2,099,138.95 , 63%
I&I, $139,672.11 , 4%
Waterline Project (1980's), $344,248.96 , 10%
Water & Sewer FundHow the Debt Service is Currently Paid
Debt Service Fees $119,400.00
28%
Tank Leases $127,727.00
30%
Tap Fees (Growth) $100,395.01
24%
Operating Fund Contribution $75,908.25
18%*
Water & Sewer FundGoal for Payment of Debt Service
Debt Service Fee (Existing) $119,400.00
28%
Moving Loans to Operating Fund $80,876.06
19%
Tank Leases $127,727.00
30%
Reduction Due to Refinancing FHA Loan
$15,120.11 4%
Tap Fees (Growth) $- 0%
Capital Improvement Fee $80,307.09
19%
Calculations for Capital Improvement Fee
Changes to CIP Funding Current Proposed Change
Debt Service Fee (Existing) 119,400.00$ 119,400.00$ Moving Loans to Operating Fund -$ 80,876.06$ Operating Fund Contribution 75,908.25$ -$ Tank Leases 127,727.00$ 127,727.00$ Reduction Due to Refinancing FHA Loan -$ 15,120.11$ Tap Fees (Growth) 100,395.01$ -$ Capital Improvement Fee -$ 80,307.09$
423,430.26$ 423,430.26$
Capital Improvement Fee 80,307.09$ Account Not Paying Debt Service Fee 930
Yearly Total Capital Improvement Fee 86.35$ Quarterly Cost 21.59$
Recommendation
Refinance the FHA Loan for a Longer Term and lower interest rate to Lower Yearly Debt Service
Move the MDE I&I Loan and FHA Loan back into the Operating Fund
Establish a Capital Improvement Fee on all Accounts that are not currently paying a Debt Service Fee
Debt Service Fee
In 2020 system users paying the Debt Service Fee will begin paying the prevailing Capital Improvement Fee.
Timeline for Implementation
October 2009 - Presentation of issues to public November 2009 - Introduction of Ordinance to
establish Capital Improvements Fee in December 2009 - Adoption of Ordinance for
Capital Improvements Fee April 2010 – First Water & Sewer Bill which will
include the Capital Improvement Fee