COM 0689.004 1996-1998 - Laserfiche WebLink

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being added to the system due to the Hanapepe, Kapaa, and Lihue collector sewer projects. Because this study has developed a plan to eventually make the utility self-supporting, use of revenue bonds for capital financing is recommended for projects in fiscal year 2000 and forward. Revenue bonds would not be included in the County's debt limit thereby enhancing the ability of the County to issue General Obligation Bonds for other County purposes. General Obligation Bond financing should continue to be used until such time as sufficient revenues are generated from the utility to support its debt service and coverage requirement for revenue bonds. A total of $18,200,000 in General Obligation Bonds and $6,000,000 in revenue bonds have been planned throughout the study period. The results of the study would not be materially different if the County continued funding all improvements with General Obligations Bonds. State Revolving Fund (SRF) loans totaling $18,610,000 in financing have been assumed for the study period. Operation and maintenance expenses are projected to increase between 6 and IS percent per year throughout the study period. The increases are slightly higher in the first few years mainly due to filling vacant staff positions and adding additional manpower needed for the plant expansions. Administrative costs increase in 1996 to account for approximately $200,000 of indirect cost incurred by the Finance Department on behalf of the sewer enterprise. Costs for the Department of Water to do the billing have not been specifically included but are assumed to have a net effect on the casts incurred from the finance department. DOH and EPA regulations mandate that an adequate level of reserve funds be provided and set aside for equipment replacements. Based on an analysis of the utility's fixed assets, we estimate that $175,000 per year beginning in fiscal yeaz 1997 is an appropriate level of equipment replacement reserves. The funds are to be used annually, as needed, to replace plant equipment when it wears out. If the funds are not spent in a given year, they should be carried over in a reserve for use in future years. Required revenue increases throughout the study period are based on an analysis of the sewer utility's revenues and revenue requirements. Several alternative financing strategies were evaluated and presented to the County, ranging from continuance of the current rate setting approach to a full enterprise fund operation. After evaluating the alternatives, the County selected an altemative whereby OM&R costs will be fully recovered through user rates in each year and existing SRF costs will be fully recovered by the end of the study period. This altemative will still require $20,518,400 in support from the General Fund during the study period. A cost of service approach is used to develop rates for wastewater service. This means that customers are charged based on their proportional usage of facilities. The proposed rates are consistent with USEPA guidelines and recognized rate industry standards as described in the Wastewater Environment Federation (formally Wastewater Pollution Control Federation) rate manual. Rates are developed using uniform unit costs. These are applied to loadings and demands for service from each customer category. The rate schedule which then follows is based on a uniform cost of service and recognizes loadings from each customer class. All the customer classifications have been left the same for this sewer user charge update, only the rates have changed. We have added non-residential dual meter rates to the user classifications for those users who elect to have separate irrigation meters. 5