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R & R Program Financial Analysis Key Factors

  • —  Analysis considers initial 20 years of 50 year program
  • —  Program to begin in January 2014
  • —  Replacement costs $1 million per mile – Total project cost $180 million (today’s dollars)
  • —  $3.7 million annual funding requirement
  • —  3.0% annual escalation factor applied to costs
  • —  In 2014 and beyond, all R&R program funding to be collected in additional fixed fee

 

Financing

Option chosen is a mix of cash from rates and new debt (Revenue Bonds). With this option existing and future rate payers contribute to the program.

 

Assumptions

  • —  Depreciation funding from rates $1.7 million to $3.7 million
  • —  $90 million total capital funding from rates for 20 year period
  • —  $35 million new debt funding – 40% debt funding

 

Funding

The option chosen is based on a fixed fee by meter size

The Pros for this funding

  • —  Recovers costs more equitably for larger users
  • —  Lower/smaller users pay less
  • —  Revenue stability

If you have any further questions please email either Randall Black at rblack@lakewood-water-dist.org or David Logan at dlogan@lakewood-water-dist.org  or call at 253-588-4423