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Combined Water & Sewage System Improvements Financial Feasibility Report ,,----- II I I I I I I I I I I I I I I I I I I CITY OF SALINA, KANSAS COMBINED WATER AND SEWAGE SYSTEM IMPROVEMENTS FINANCIAL FEASIBILITY REPORT GOVERNING BODY Gerald F. Simpson, Mayor Jack Weisgerber, Commissioner Wm. "Bill" Usher, Commissioner Keith G. Duckers, Commissioner Robert C. Caldwell, Commissioner ADMINISTRATION Norris Olson, City Manager Don L. Harrison, City Clerk Larry Bengston, City Attorney Dean Boyer, City Engineer Ron Webster, Director of Utilities Laverne Pauls, Office Manager of Water and Sewage Department CONSULTING ENGINEER Wilson and Company Salina, Kansas BOND COUNSEL Stinson, Mag, Thomson, McEvers and Fizzell Kansas City, Missouri FINANCIAL CONSULTANT First Securities Company of Kansas, Inc. Wichita, Kansas I I I I I I I I I I I I I I I I I I I TABLE OF CONTENTS Page I. Preface.. ...... ............................ ........... ...... .... ....... ............... ....1 II. Scope... ......... ........ ........ .... ..... ... .... ...... .... .... ........... .... ......... ....3 III. Allocation of Costs ...............................................................4 IV. Analysis of Present Water and Sewage System Revenue Bonded Indebtedness - Series 1961.................................................... ........... .......... ...6 V. Analysis of Water and Sewerage System Operations........... ..... ........ .... .... .... ... ........ ...... .... .... .... .......... ..8 VI. Water and Sewer Rate Schedules.....................................30 VII. Comparative Water and Sewer Rates for Cities in Kansas.................................................................38 VIII. Additional Indebtedness Requirements............................44 IX. Projection of Future Water and Sewage System Operations ...............................................49 X. Flow of Funds.....................................................................50 XI. Revenue Bond Maturity Schedules...................................53 XII. Summary and Recommendations......................................61 I I I II , I I I I I I I I I I I I I I I I. PREFACE In determining the financial feasibility of bond issuance to develop an adequate water treatment and distribution system, it is necessary to examine the effect of such financing of the additional Water and Sewage System Revenue Bond Debt capacity of the combined Water and Sewage System of the City of Salina, Kansas. The possibilities ofthe issuance of additional revenue bonds rang- ing from $1,500,000 to $3,000,000 junior lien revenue bonds are analyzed, and maturity schedules for the ranging amount of bonds to be issued are set forth in order that the cost is clearly reflected. Several basic facts should be emphasized in setting up finan- cial procedures for revenue bond programming: A. Revenue Bonds will constitute a lien on the revenues of the entire Water and Sewage System operations ofthe City and will not be a general obligation tax liability of the City. By statute, such bonds and the interest thereon are to be paid solely from the rates, fees, and charges for water and sewer services, and not from any other funds or sources. B. Revenue Bonds establish the burden of payment for water service and sewer service on the actual user of such service rather than upon the assessed valuation of properties lying within the corporate limits of the City. Revenue Bonds are not and cannot become general obligations of the City, and revenue bond financing is expressly a "self-liquidating" financial vehicle. C. Revenue Bond procedures require that the service charge and rates shall be sufficient to pay the cost of operation, improvement, and maintenance of the com- bined utility system financed, provide adequate bond reserves, and pay the principal of and interest on all outstanding Water and Sewage System Revenue Bonds. This, of course, means that revenue bond schedules must be adapted to the net income available for servicing any new additional revenue bonded in- debtedness, as well as the balance of$l,820,OOO Water and Sewage System Revenue Bonds, Series of 1961, which will mature on August I, 1986. 1 2 I I I I I I I I I I I I I I I I I I I D. Revenue Bonds, through procedures established at the time of issuance, create a businesslike climate in the operation and maintenance ofthe combined Water and Sewage System. This is a result of Kansas statutory requirements, the continuing financial interest of bondholders and bond underwriters, and the necessity for maintaining adequate net earnings and efficient and businesslike operational procedures. Excessive op- erational expenses and failure to maintain net balances in operational accounts would result in inferior net incomes and thus focus the attention of City officials on any uneconomical operational conditions. E. Revenue Bonds establish procedures which assure a maximum number of continuous water and sewer con- nections, and emphasize the necessity that all proper- ties afforded water and sewer service shall be fairly and equitably charged for the availability of such services. F. There is no election required in the case of the issuance of additional Revenue Bond financing; however, a Notice of Intent to issue additional Revenue Bonds would be published and a fifteen (15) day protest period would have to elapse without a 200/0 protest from the qualified electors of the City before bonds would be issued. The total amount of the construction project would be listed in the Notice ofIntent, which includes the Government Grant portion of $972,900. G. Moody's Rating Services reduced the rating of the Series 1961 Water and Sewage System Revenue Bonds from an "A" to a "Baa", and it is necessary to proceed with reestablishing the Series 1961 Bonds to an "A" rating and to pursue the possibility of obtaining an "A" rating on the new revenue bonds to be issued. I I I I I I I I I I I I I I I I I I I '1 ,II. , .. SCOPE In developing this Report, the fiscal operations of the Com- bined Water and Sewage System Departments for the past five years have been examined, covering the period of time from January 1, 1971 through December, 1975, and also the first ten months operations of 1976. The Report has taken into considera- tion the increased annual gross revenue and also the increased annual operational expenses of the Water and Sewage System during these periods of time in order to project additional water and sewer rate increases over the next five year period to cover debt of the Series 1961 Bonds and any additional indebtedness. The object in the revenue bond program contained herein is to coordinate all system indebtedness which is shown in the six dif- ferent financial pro formas with the schedule as follows: Exhibit I - $1,500,000 - 20 year maturity Exhibit II - $2,000,000 - 25 year maturity Exhibit III - $2,250,000 - 25 year maturity Exhibit IV - $2,500,000 - 25 year maturity Exhibit V - $2,750,000 - 25 year maturity Exhibit VI - $3,000,000 - 25 year maturity 3 The following is an incomplete list of projects that are needed to develop an adequate water treatment and distribution system. These projects are those listed of highest priority and should be completed in the shortest time frame to help eliminate existing problems within the City's present system. 1. Water Treatment Plant Sludge Disposal Facilities To meet E.P.A. discharge requirements. . . .. $ 575,000.00 2. South Santa Fe Avenue Main 30" main from Water Plant south to Crawford Avenue. This main is needed to supply a distribution system and is a prerequisite to the mains on Crawford Avenue................ 142,000.00 3. West Crawford Main 20" main along Crawford Avenue from Santa Fe A venue to Broadway Boulevard. This main is needed to supply a distribution system in the west central part of town. This main should be installed prior to any reconstruction work on Crawford Avenue................................. . 169,500.00 I I I I I I I I I I I I I II I I I, I I III. ALLOCATION OF COSTS 4. East Crawford Main 30" main along Crawford Avenue from Santa Fe Avenue to Ohio Street. This main is needed to supply a distribution system in the east side of town and to supply a 20" main on Ohio Street. This main should be installed prior to any reconstruction work on Crawford Avenue . . . . . . . . . . . . . . . . . 276,000.00 5. North Fourth Main 20" main from the Water Treatment Plant to 1.0 MG Tower located at Santa Fe A venue and Lincoln Avenue . . . . . . 427,500.00 4 ,', '."'''j.' ,..;' I I I I I I II I I I I I I I I I I I I :;:(~ 6. Northwest Main 12" main on Grand Avenue from Woodlawn Avenue to Ninth Street, then north to Euclid Avenue and the new elevated tower ....................... 350,000.00 7. North Elevated Tower 0.5 MG Elevated Water Tower in Thomas Park or 1-70 area. Needed to increase deficient fire flow in 1-70 area................................. 8. South Ohio Main 20" main on Ohio Street from Crawford Avenue to Magnolia Road and 20" main on Magnolia Road from Ohio Street to Key Acres Tower and from Key Acres Tower to South Ninth Street. This loop will hopefully alleviate the riled water situation which prevails in the southeast area ....... 295,000.00 600,000.00 ESTIMATED CONSTRUCTION COSTS.. $2,835,000.00 TOTAL ESTIMATE FOR BOND ISSUE............................... $3,000,000.00 In addition to the above cost, A Grant from the Federal Govern- ment of $972,900 will be allocated to item #1. 5 6 I I I I I I I I I I I I I I I I I I I IV. ANALYSIS OF PRESENT W ATERAND SEWAGE SYSTEM REVENUE BONDED INDEBTEDNESS. SERIES 1961 The following annual principal and interest requirements of the Water and Sewage System Revenue Bonded indebtedness and funds in reserve accounts are listed below. The principal and interest payments are due August 1 of each year and semiannual interest due on February 1 in each year. All funds in the accounts listed below are as of October 30, 1976. Water and Sewage System Revenue Bonds, Series of 1961 (Issued under Ordinance No. 6546) Maturity Interest Year Rate Principal Interest Total 8-1-77 3.50% $ 150,000 $ 33,097.50 $ 183,097.50 8-1-78 3.60% 155,000 60,945.00 215,945.00 8-1-79 3.60% 160,000 55,365.00 215,365.00 8-1-80 3.60% 170,000 49,605.00 219,605.00 8-1-81 3.60% 175,000 43,485.00 218,485.00 8-1-82 3.60% 185,000 37,185.00 222,185.00 8-1-83 3.70% 195,000 30,525.00 225,525.00 8-1-84 3.70% 200,000 23,310.00 223,310.00 8-1-85 3.70% 210,000 15,910.00 225,910.00 8-1-86 3.70% 220,000 8,140.00 228,140.00 $1,820,000 $357,567.50 $2,177,567.50 Account Funds Bond Reserve Fund ................. $ 560,000.00* Depreciation and Emergency Replacement Account ............... $ 146,605.91** Bond Retirement Account ........... -0-- Principal and Interest Account. . . . . . . 69,121.65 *The Bond Ordinance No. 6546 requires a maximum Bond Reserve of $300,000. The additional $260,000 is interest ac- cumulated from investments: **Bond Ordinance No. 6546 requires a maximum Deprecia- tion and Emergency Replacement Account of $125,000. The additional $21,605.91 is interest accumulated from invest- ments. ,-- I I I I I I I I I I I I I I I I I I I The call provisions provide that bonds may be called for re- demption and payment on August 1, 1971, or any interest payment date thereafter at par and accrued interest to date of redemption, together with a premium of 3% of the principal amount of each such bond so redeemed and paid. Bond Numbers remaining out- standing at the writing of this Report are Nos. 1781/3600. 7 I I I I I I I I I I I I I I I I I I I v. ANALYSIS OF WATER AND SEWERAGE SYSTEM OPERATIONS The following analysis has been made of the City's annual audits, annual financial report, and profit and loss statements for the years 1971 through 1975 and the first ten months of 1976 (unaudited). The comparison of operating revenue and operating expenses have been examined to determine the areas of increases in each department. 1976 FIRST 10 1971 1972 1973* 1974 1975 MONTHS OPERATING REVENUE Water Revenue.............. $ 651,739 $ 630,858 $ 965,012 $1,003,236 $1,041,120 $ 965,160 Sewage ..................... 372,516 384,634 390,624 366,817 399,484 347,008 Miscellaneous Income . . . . . . . . 13,684 4,091 2,086 8,258 20,354 9,814 Tapping Service and Frontage .. .. .. .. .. .. .. .. .. 11,607 12,171 6,810 19,374 13,250 15,059 Service Charge - Sanitation Dept. ........... 3,124 3,183 3,275 5,368 5,734 4,384 Gross Revenue.............. $1,052,670 $1,031,754 $1,367,807 $1,403,053 $1,479,942 $1,341,425 OPERATING EXPENSES Water Supply ............... $ 9,702 $ 7,046 $ 10 ,220 $ 12,776 $ 21,344 $ 16,891 Softening and Treatment ................ 201,504 191,059 204,009 280,758 299,644 271,849 Pumping................... . 50,794 47,969 52,493 62,982 81,418 72,763 Distribution. . . . . . . . . . . . . . . . . 84,171 80,138 103,615 96,203 116,546 88,655 Customers Account and Collection. . . . . . . . . . . . . 114,801 119,051 128,068 160,621 168,966 147,411 Administrative and General .. .. .. .. .. .. .. .. . .. 147,250 155,871 161,242 199,577 212,899 244,069 Sewage Treatment and Collection .. .. .. .. .. .. . 160,920 157,092 ~,502 207,025 261,525 229,44~ Total Operating Expenses .. .. .. .. .. .. . .. ... $ 769,142 l 758,226 ~~~149 $1,019,942 $1,162,342 $l,071,08() Net Operating Income for Debt Service........... $ 283,528 $ 273,528 $ 511,658 $ 383,111 $ 317,600 $ 270,345 *Water rates increased on January I, 1973. 8 I I I I I I I I I I I I I I I I I I I IV;;; THE CITY OF SALINA WATER AND SEWAGE FUND COMPARATIVE INCOME STATEMENT DECEMBER 31 1972 1971 REVENUE Water revenue . . . . . . . . . . . . . . . . . . . . . .. $ Sewage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous income ................ Tapping service and frontage ......... Service charge - Sanitation Department....................... 3,183.45 TOTAL REVENUE. . . . . . . . . . . . .. $1,034,938.89 630,858.30 384,634.35 4,091.42 12,171.37 OPERATING EXPENSES................ NET INCOME AVAILABLE FOR DEBT SERVICE.................. $ 758,229.86 $ 651,739.39 372,516.99 13,684.33 11,607.85 3,124.26 $1,052,672.82 769,146.06 276,709.03 $ 283,526.76 9 $ 234.35 4,597.21 1,840.32 1,917.60 101.08 1,012.24 $ 9,702.80 I I I I I I I I I I I I I I I I I' I I I THE CITY OF SALINA Saline County, Kansas WATER AND SEWAGE FUND COMPARATIVE OPERATING EXPENSES STATEMENT WATER SUPPLY EXPENSES DECEMBER 31 1972 1971 Maintenance - Well pumps and equipment. $ Well power .............................. Well house signals ....................... River intake power. . . . . . . . . . . . . . . . . . . . . . . Maintenance - Building and grounds ...... Maintenance - River basin................ .62 2,266.39 1,893.16 2,268.80 52.54 564.97 $ 7,046.48 SOFTENING AND TREATMENT EXPENSES Supervision. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 22,516.56 Salaries ................................. 42,726.06 Electric power ........................... 15,736.00 Gas service .............................. 3,460.62 Building operating supplies . . . . . . . . . . . . . . . 44.96 Chemicals............................... 84,815.74 Maintenance - Equipment ................ 9,068.18 Maintenance - Buildings.................. 327.92 Electricity - Calcium plant. . . . . . . . . . . . . . . . 3,043.20 Gas - Calcium plant...................... 6,885.27 Supplies - Calcium plant ................. 2,435.42 $191,059.93 PUMPING EXPENSES Supervision.............................. $ Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Electric power ........................... Gas service. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . Lubricants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Building operating supplies . . . . . . . . . . . . . . . Maintenance - Electrical equipment & pumps .............................. Maintenance - Station building and grounds. . . . . . . . . . . . . . . . . . . . . . . . . . . 14,027.36 26,309.56 5,361. 72 353.23 47.85 1,175.51 514.10 179.84 $ 47,969.17 10 $ 21,527.76 43,137.22 14,016.00 3,797.68 141.63 99,515.66 6,550.72 302.88 3,128.00 7,127.22 2,259.75 $201,504.52 $ 13,339.71 25,909.61 9,245.85 396.20 108.21 1,130.60 564.02 99.90 $ 50,794.10 I I I I I I I I I I I I I I I I I I I DECEMBER 31 1972 1971 DISTRmUTION EXPENSES Supervision. . . . . .. .. .. . . . . .. . . .. . . . .. .... $ Salaries ................................. Meter maintenance salaries. . . . . . . . . . . . . . . Meter maintenance supplies .............. Vehicle and equipment expense........... Tapping supplies. . . . . .. ... . ... . . .. . . . . . . . Maintenance - Distribution mains. . . . . . . . . Maintenance - Elevated tanks ............ Maintenance - Reservoirs. . . . . . . . . . . . . . . . . Maintenance - Hydrants. . . . . . . . . . . . . . . . . . Miscellaneous materials and labor ........ 8,125.76 38,577.86 12,865.68 308.90 6,851.40 5,891,24 4,253.86 778.46 0.00 441.00 2,044.23 $ 80,138.39 $ 7,829.46 43,869.94 12,265.74 1,375.27 7,520.77 2,399.82 5,672.44 258.94 455.00 434.65 2,089.54 $ 84,171.57 CUSTOMERS' ACCOUNTING AND COLLECTION EXPENSES Office salaries ........................... $ 49,199.54 Servicemen and meter readers salaries .... 47,431.99 Servicemen and meter readers supplies . . . . 470.93 Collection stations ....................... 1,807.00 Maintenance - Office equipment. . . . . . . . . . . 1,814.07 Office supplies ........................... 2,706.49 Vehicle expense.......................... 3,154.79 Postage ................................. 12,466.57 $119,051.38 ADMINISTRATIVE AND GENERAL EXPENSES Supervision. . . . . . . . . . . . . . . .. . . .. . . . . .. . .. $ 13,752.00 Salaries ................................. 5,332.44 Telephone expense....................... 3,381.25 Office supplies........................... 227.51 Special engineering...................... 675.00 Social security ........................... 19,689.31 Insurance ............................... 7,009.99 Sales tax ................................ 954.77 Property taxes ........................... 35,000.00 Accounts charged off..................... 843.13 Long and short cash...................... 6.44 Employees' retirement. . . . . .. . .. . . .. . . . . . . 20,918.77 Accident insurance. . . . . . . . . . . .. . .. . . . . . . . 15,695.10 Auditing expense ........................ 3,120.00 Contracting service ...................... 3,822.85 Organizational dues and memberships. . . . . 733.29 Office maintenance and utilities .......... 6,900.00 Service performed - Other departments .... 16,650.00 Car mileage and travel expenses .......... 1,159.96 $155,871.81 11 $ 47,052.82 44,920.75 390.87 1,814.55 2,324.37 3,474.53 2,727.17 12,096.55 $114,801.61 $ 13,152.00 5,208.00 3,512.85 586.88 675.00 19,264.89 7,298.80 1,165.58 30,000.00 636.63 63.62 18,549.48 16,127.99 4,000.00 2,933.04 718.53 6,900.00 15,519.00 938.45 $147,250.74 $ 39,860.31 70,859.21 25,055.69 3,156.22 194.68 5,429.01 593.99 6,583.72 2,455.49 6,732.40 $160,920.72 $769,146.06 I I I I I I I I I I I I I I I I I I I DECEMBER 31 1972 1971 SEWAGE TREATMENT AND COLLECTION EXPENSES Supervision. . . . . . . . . . . . . . . . .. . . . . . . . . . . .. $ 34,819.72 Salaries ................................. 70,415.92 Electric power ........................... 26,800.20 Gas service ...... . . . . . . . . . . . . . . . . . . . . . . . . 3,378.05 Plant operating supplies . . . . . . . . . . . . . . . . . . 872.04 Maintenance - Equipment ................ 6,894.82 Maintenance - Buildings and grounds..... 524.13 Maintenance - Pumping stations .......... 4,931.22 Maintenance - Sanitary sewers. . . . . . . . . . . . 2,221.50 Vehicle expense. . . ... . . . . . . .. . . . . . . . . . . . . 6,235.10 $157,092.70 TOTAL OPERATING EXPENSES ...... $758,229.86 12 I I i I , I I I I I I I I i I II I I I I I I THE CITY OF SALINA WATER AND SEWAGE FUND COMPARATIVE STATEMENT OF REVENUE AND EXPENSE DECEMBER 31 1974 1973 REVENUE Water Revenue.............. $1,003,236.78 $ Sewage...................... 366,817.60 Miscellaneous income ........ 8,258.52 Tapping service and frontage. 19,374.33 Service charge - Sanitation Department ................. 5,368.95 TOTAL REVENUE .... $1,403,056.18 OPERATING EXPENSES...... 1,019,945.44 NET INCOME AVAILABLE FOR DEBT SERVICE............. $ 383,110.74 13 965,012.73 390,624.31 2,086.08 6,810.33 3,275.64 $1,367,809.09 856,153.29 $ 511,655.80 $ 455.54 3,391.53 2,304.10 2,186.96 110.32 1,772.22 $ 10,220.67 I I I I I I I I I I I I I I I I I I I THE CITY OF SALINA Saline County, Kansas WATER AND SEWAGE FUND COMPARATIVE OPERATING EXPENSES STATEMENT WATER SUPPLY EXPENSES Maintenance - well pumps and equipment . $ Well power .............................. Well house signals....................... River intake power. . . . . , . . . . . . . . . . . . . . . . . Maintenance - building and grounds. . . . . . . Maintenance - river basin ................ DECEMBER 31 1974 1973 131.98 6,938.37 2,297.39 1,178.22 22.90 2,208.02 $ 12,776.88 SOFTENING AND TREATMENT EXPENSES Supervision.............................. $ 32,065.20 Salaries................................. 47,449.30 Electric power ........................... 16,191.91 Gas service. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 3,851.75 Building operating supplies . . . . . . . . . . . . . . . 76.48 Chemicals............................... 147,500.96 Maintenance - equipment. . . . . . . . . . . . . . . . . 13,425.52 Maintenance - buildings. . . . . . . . . . . . . . . . . . 3,801.61 Electricity - calcium plant. . . . . . . . . . . . . . . . 3,657.44 Gas - calcium plant...................... 9,065.03 Supplies - calcium plant. . . . . . . . . . . . . . . . . . 3,672.93 $280,758.13 PUMPING EXPENSES Supervision. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ Salaries. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . Electric Power........................... Gas service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lubricants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Building operating supplies . . . . . . . . . . . . . . . Maintenance - electrical equipment & pumps Maintenance - station building and grounds Wearing apparel......................... 14 15,852.73 36,622.35 7,494.60 352.08 108.00 545.15 433.73 131.61 1,441.99 $ 62,982.24 $ 23,099.50 43,438.97 15,214.76 2,373.77 39.95 102,467.40 6,723.76 343.23 2,808.96 5,949.90 1,549.48 $204,009.68 $ 14,818.89 29,075.92 7,046.72 351.17 105.70 756.50 90.84 247.89 0.00 $ 52,493.63 I I I I I I I I I I I I I I I I I I I DECEMBER 31 1974 1973 DISTRIBUTION EXPENSES Supervision. . . .. . . . . . .. . . . . . . . . . . . . . . .... $ Salaries ................................. Meter maintenance salaries. . . . . . . . . . . . . . . Meter maintenance supplies .............. Vehicle and equipment expense........... Tapping supplies . . . . . . . . . . . . . . . .. . . . . . . . . Maintenance - distribution mains ......... Maintenance - storage tanks . . . . . . . . . . . . . . Maintenance - reservoirs ................. Maintenance - hydrants .................. Miscellaneous materials and labor ........ 14,260.15 44,654.84 8,094.27 1,306.99 7,837.16 6,906.84 8,554.10 840.04 0.00 1,311.51 2,437.56 $ 96,203.46 $ 8,517.22 38,123.36 13,338.83 3,576.64 5,167.23 5,429.32 7,967.63 17,982.89 0.00 1,642.90 1,869.64 $103,615.66 CUSTOMERS' ACCOUNTING AND COLLECTION EXPENSES Office salaries .......................... $ 61,493.46 $ 51,659.33 Servicemen and meter readers salaries. . . 57,403.96 49,031.59 Servicemen and meter readers supplies. . . 854.52 521.90 Collection stations. . . . . . .. . . .. . . ... . . . . . 1,852.10 1,806.70 Maintenance - office equipment. . . . . . . . . . 2,176.90 2,357.53 Office supplies. . . . . . . . . . . . . . . . . . . . . . . . . . 4,213.92 4,564.00 Vehicle expense. . . . . .. . . . . .. . . .. . . . . . .. . 5,123.60 4,247.87 Postage ................................ 15,970.27 13,880.04 Lease data processing equipment. . . . . . . . . 11,353.72 0.00 Wearing apparel........................ 178.91 0.00 $160,621.36 $128,068.96 ADMINISTRATIVE AND GENERAL EXPENSES Supervision............................. $ 15,840.80 Salaries................................ 7,338.04 Telephone expense ...................... 3,964.57 Office supplies. . . . . . . . . .. . . .. . . .. . . . . . . . 1,682.92 Special engineering ..................... 2,384.00 Social security.......................... 26,168.79 Insurance .............................. 7,213.05 Sales tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,331.84 Property taxes. . . . . . . . . . . . . .. . . . . . . . . . . . 40,000.00 Accounts charged off . . . . .. . . .. . . . . . . . . . . 2,107.20 Long and short cash. . . . . . . . . . . . . . . . . . . . . 20.61 Employees' retirement .................. 26,607.97 Accident insurance. . . . . . . . . . . . . . . . . . . . . . 21,975.93 Auditing expense ....................... 7,700.00 Contracting service ..................... 7,277.13 Organizational dues and memberships. . . . 570.42 Office maintenance and utilities ......... 6,900.00 Service performed - other departments .., 18,265.00 Car mileage and travel expenses . . . . . . . . . 2,229.70 $199,577.97 15 $ 14,358.00 5,869.25 3,723.78 321.10 681.38 21,656.20 7,516.03 704.69 35,000.00 408.48 80.84 20,423.04 19,666.35 3,550.00 1,612.25 918.72 6,900.00 16,650.00 1,202.17 $161,242.28 $ 25,278.58 84,389.03 27,738.67 4,406.58 995.77 13,204.54 9,065.41 10,010.91 10,415.65 10,997.27 0.00 $196,502.41 $856,153.29 I I I I I I I I I I I I I I I I I I I DECEMBER 31 1974 1973 SEW AGE TREATMENT AND. COLLECTION EXPENSES Supervision. . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 28,988.40 Salaries. . . . . . . . . . .. . . . . . . . . .. . . . . . .... . 104,667.11 Electric power.. . . . . . . . . . . . . . . . .. . . . . . . . 28,714.47 Gas service .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,276.54 Plant operating supplies. . . . . . . . . . . . . . . . . 1,284.79 Maintenance - equipment. . . . . . . . . . . . . . . . 13,654.21 Maintenance - buildings and grounds. .. . . 1,773.43 Maintenance - pumping stations ......... 8,305.23 Maintenance - sanitary sewers. . . . . . . . . . . 2,380.23 Vehicle expense. . . .. . . .. . . . . .. . . . . .. .. .. 12,648.99 Wearing apparel. . .. . . . . . . . . .. . . . . .. . . . . 332.00 $ 207,025.40 TOTAL OPERATING EXPENSES. $1,019,945.44 16 I I I I I I I I I I I I I I I I I I I CITY OF SALINA, KANSAS - WATER AND SEWERAGE DEPARTMENT PROFIT AND LOSS STATEMENT FOR THE YEAR ENDING DECEMBER 31, 1975 REVENUE Water Revenue. . . . . . . . . . . . . . . . . . . . . . .. $1,041,120.65 Sewerage Revenue. . . . . . .. .. . . . . . . . . . .. 399,484.57 Miscellaneous Income. . . . . . . . . . . . . . . . . . 20,354.16 Front Footage and Tapping Charges .... 13,250.57 Service Charge - Sanitation Department 5,734.05 TOTAL INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,479,944.00 WATER SUPPLY EXPENSES Maintenance - Well Pumps and Equipment .. .. .. .. .. .. .. .. .. .. .. .... $ Well Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Well House Signals. . . . . . . .. . . .. . . . . .. . River Intake Power. . . . . . ... . . .. . . . .... Maintenance - Buildings and Grounds. . . Maintenance - River Basin ............. 5,170.80 10,602.50 2,402.38 2,411.30 32.86 725.10 $ 21,344.94 SOFl'ENING AND TREATMENT EXPENSES Supervision ........................... $ 35,188.00 Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,709.10 Electric Power......................... 27,535.47 Gas Service ........................... 5,316.08 Building Operating Supplies. . . . . . . . . . . . 66.89 Chemicals. . . . .... . . . . . . . .. . . ... . . ... . . 152,614.78 Maintenance - Equipment . . . . . . . . . . . . . . 8,954.63 Maintenance - Buildings............... 45.79 Electric Power - Calcining Plant . . . . . . . . 5,840.68 Gas Service - Calcining Plant. .. . . .... . . 11,544.16 Supplies - Calcining Plant.............. 3,828.78 $299,644.36 PUMPING EXPENSES Supervision ........................... $ Salaries.. . . . . .. . . . . . . . . .. . . . .. . . .. . . . . Electric Power.......... ......... ...... Gas Service ........................... Lubricants ............................ Building Operating Supplies. . . . . . . . . . . . Maintenance - Electric Equipment & Pumps. . . . . . . . . Maintenance - Station Building & Grounds .......................... Wearing Apparel...................... 21,192.93 44,205.10 13,158.07 391.02 193.55 643.97 43.56 238.15 1,351.98 $ 81,418.33 17 DISTRIBUTION EXPENSES Supervision ........................... $ 19,048.13 Salaries. . . . . . .. . . . . . . . . . . . . . . . .. . . . . . . 53,099.07 Meter Maintenance - Salaries. . . . . . . . . . . 8,872.69 Meter Maintenance - Supplies .......... 1,683.29 Vehicles - Equipment Expenses......... 7,035.92 Tapping Supplies ...................... 9,899.16 Maintenance - Distribution Mains...... 10,247.36 Maintenance - Storage Tanks. . . . . . . . . . . 3,241.13 Maintenance - Hydrants ............... 2,349.41 Miscellaneous Materials and Labor ..... 1,070.31 $116,546.47 CUSTOMER ACCOUNTING AND COLLECTION EXPENSES Office Salaries......................... $ 58,697.37 Servicemen and Meter Readers Salaries . 63,267.17 Servicemen and Meter Readers Supplies. 167.60 Collection Stations. . . . . . . . . . . . . . . . . . . . . 1,841.35 Maintenance - Office Equipment........ 2,335.18 Office Supplies ........................ 5,253.80 Vehicle Expenses...................... 6,176.47 Lease Electronic Data Processing Equipment ............... Postage ............................... Wearing Apparel...................... 13,806.00 17,058.67 363.04 I I I I I I I I I I I I I I I I I I I $168,966.65 ADMINISTRATIVE AND GENERAL EXPENSES Supervision........................... $ Salaries. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . Telephone Expenses................... Office Supplies ........................ Special Engineering ................... Social Security ........................ Insurance - Buildings. . . .. . . . . . . . . . . . . . Sales Tax. . . . . . . . . . . . . . . . . . . .. . . . . . . . . Property Taxes. . . . . . . . . .. . . . .. . . . . . . . . Accounts Charged Off . . . . . . . . . . . . . . . . . . Long and Short Cash .................. Employees Retirement ................ . Accident Insurance .................... Auditing Expense...................... Contracting Services . . . . . . . . . . . . . . . . . . . Organizational Dues - Membership ..... Maintenance - Government Center. . . . . . Services Performed - Other Departments .................. Car Mileage and Travel Expenses. . . . . . . 17,392.80 7,690.89 3,936.70 990.22 675.00 29,640.89 6,008.35 783.72 45,000.00 769.44 1,346.35 33,970.34 28,108.63 1,100.00 3,247.50 274.12 9,381.00 20,977.50 1,605.55 $212,899.00 18 I I I I I I I I I I I I I I I I I I I I SEWAGE TREATMENT AND COLLECTION EXPENSES Supervision ........................... $ 32,415.43 Operating Salaries. . . . . . . . . . . . . . . . . . . . . 119,397.86 Electric Power. . . . . . . . . . . ... . . .. . . . . . . . 47,284.68 Gas Service ........................... 4,667.52 Plant Operating Supplies. . . . . . . . . . . . . . . 1,905.96 Maintenance - Equipment.............. 23,007.39 Maintenance - Building and Grounds ... 1,413.60 Maintenance - Pumping Stations. . . . . . . . 10,060.98 Maintenance - Sanitary Sewer. . . . . . . . . . 4,489.04 Vehicle Expenses. . . . . . . . . . ... . . ... . . . . 16,162.21 Wearing Apparel ...............:...... 632.53 Q's TV Expenses.. .. . . . . . . . . .. . . . .. . . . . 88.37 Pump Station Monitor ................. 0.00 $261,525.57 TOTAL OPERATING EXPENSES.. . . . . . ... . . . . . . . . . . . . . . . . . . . . ... . ... . . . .$1,162,345.32 NET INCOME AVAILABLE FOR DEBT SERVICE.........................$ 317,598.68 19 $867,805.58 311,591.46 9,476.53 I I I I I I I I I I I I I I I I I I I CITY OF SALINA, KANSAS WATER AND SEWERAGE DEPARTMENT PROFIT AND LOSS STATEMENT FOR THE FIRST NINE MONTHS OF 1976 REVENUE Water Revenue........................ Sewerage Revenue. . . . . . . . . . . . . . . . . . . . . Miscellaneous Income .. . . . . . .. . . . .. . . . . Front Footage and Tapping Charges. . . . . . . . . . . . . . .. . . . .. . . . . . . . . 12,563.99 Service Charge - Sanitation Department......................... 3,890.93 TOTAL INCOME.. . . . ... . . . . .. . . . . . . . . . . ... . . . . . . . . . .. . . . . .. . . . . .$1,205,328.49 WATER SUPPLY EXPENSES Maintenance - Well Pumps and Equipment.......................... $ Well Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . Well House Signals.................... River Intake Power . . . . . . . . . . . . . . . . . . . . Maintenance - Buildings and Grounds. . . Maintenance - River Basin ............. 577.21 8,770.00 2,575.56 3,455.03 18.47 419.92 $ 15,816.19 SOFTENING AND TREATMENT EXPENSES Supervision........................... $ 28,026.80 Salaries............................... 42,536.26 Electric Power. . . . . . . . . . . . . . . . . . . . . . . . . 27,873.00 Gas Service........................... 5,314.65 Building Operating Supplies. . . . . . . . . . . . 113.81 Chemicals............................. 104,925.88 Maintenance - Equipment.............. 4,766.54 Maintenance - Buildings............... 264.47 Electric Power - Calcining Plant. . . . . . . . 6,154.22 Gas Service - Calcining Plant. . . . . . . . . . . 20,584.91 Supplies - Calcining Plant. . . . . . . . . . . . . . 1,232.49 $241,793.03 PUMPING EXPENSES Supervision ........................... $ Salaries. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . Electric Power. . . . . . . . . . . . . . . . . . . . . . . . . Gas Service ........................... Lubricants........................... . Building Operating Supplies. . . . . . . . . . . . Maintenance - Electric Equipment & Pumps............................ Maintenance - Station Building & Grounds. . . . . . . . . . . . . . .. . . . . . . . . . . Wearing Apparel ...................... 16,665.77 31,407.23 17,016.53 286.78 144.60 584.74 0.00 190.00 133.59 $ 66,429.24 20 h ~.. I I I I I I I I I I I I I I I I I I I DISTRIBUTION EXPENSES Supervision ...........:............... $ Salaries. .. .. . . . . . . . . . . . . . . . . . . . . . . .. .. Meter Maintenance - Salaries .......... Meter Maintenance - Supplies .......... Vehicles - Equipment Expenses. . . . . . . . . Tapping Supplies. . . . ... . . . .. . . .. . . . . . . Maintenance - Distribution Mains ...... Maintenance - Storage Tanks. . . . . . . . . . . Maintenance - Hydrants ............... Miscellaneous Materials and Labor ..... 11,089:01 36,564.18 7,063.99 4,593.39 6,436.22 5,874.42 3,233.58 847.22 3,535.53 762.93 $ 80,000.47 CUSTOMER ACCOUNTING AND COlLECTION EXPENSES Office Salaries. . . . . . .. . . . . . . . . . . . . . . . .. $ 44,067.02 Servicemen and Meter Readers Salaries . 50,549.82 Servicemen and Meter Readers Supplies. 280.48 Collection Stations. . . . . . . . . . . . . . . . . . . . . 1,466.20 Maintenance - Office Equipment. . . . . . . . 1,949.02 Office Supplies ........................ 3,328.56 Vehicle Expenses...................... 4,265.07 Lease Electronic Data Processing Equipment ............... Postage ............................... Wearing Apparel ...................... 10,345.10 16,532.78 201.43 $132,985.48 ADMINISTRATIVE. GENERAL EXPENSES Supervision ........................... $ 13,814.40 Salaries. . . . . . .. . . . . . . . .. . . . .. . . .. . . . . . 6,468.17 Telephone Expenses ................... 2,441.11 Office Supplies ........................ 754.97 Special Engineering ................... 675.00 Social Security ........................ 32,367.95 Insurance - Buildings .................. 0.00 Sales Tax ............................. 399.47 Property Taxes ........................ 37,502.00 Accounts Charged Off .. . . . . .. . .. . . . . . .. 0.00 Long and Short Cash .................. 29.16 Employees Retirement ................. 36,945.27 Accident Insurance .................... 33,515.81 Auditing Expenses. . . . . . . .. . . . . . .. . . . . . 3,565.00 Contracting Services . . . . . . . . . . . . . . . . . . . 2,198.22 Organizational Dues - Membership ..... 115.30 Maintenance - Government Center...... 10,734.00 Services Performed - Other Departments.................. 17,027.00 Car Mileage and Travel Expenses. . . . . . . 4,003.37 $202,556.20 21 22 I I I I I I I I I I I I I I I I I I I SEW AGE TREATMENT AND COLLECTION EXPENSES Supervision ........................... $ 20,761.07 Operating Salaries. . . . . . . . . . . . . . . . . . . . . 101,832.84 Electric Power. . . . . . . . . . . . . . . . . . . . . . . . . 43,593.20 Gas Service........................... 5,277.04 Plant Operating Supplies... . . ... . . . . ... 1,263.73 Maintenance - Equipment. . . . . . . . . . . . . . 11,662.19 Maintenance - Building and Grounds .,. 1,214.40 Maintenance - Pumping Stations ....... 4,351.56 Maintenance - Sanitary Sewer.......... 1,534.78 Vehicle Expenses. . . . . ... . . . ... . . .... . . 14,357.21 Wearing Apparel ...................... 715.01 Q's TV Expenses. . . . . . . . . . . . . . .. . . . . . . . 1,242.42 Pump Station Monitor................. 0.00 $207,805.45 TOTAL OPERATING EXPENSES.........................................$ 947,386.06 NET INCOME AVAILABLE FOR DEBT SERVICE.........................$ 257,942.43 I I I I I I I I I I I I I I I I I I I CITY OF SALINA, KANSAS WATER AND SEWERAGE DEPARTMENT BALANCE SHEET (AS OF SEPTEMBER 30, 1976) ASSETS Accounts Receivable ................... $ Operating Store ....................... Operating Store - Inventory ............ Meter Parts.. . . .. . . . . . . .. . . . . .. . . . . .. . Meter Parts - Inventory ..... . . . . . . . . . . . Jobs in Process ........................ Cash.. . . .. . . . . . . .. . . . . . . ... . . . . .. . . ... Furniture and Fixtures. . . . . . . . . . . . . . . . . Plants, Mains, Equipment, etc. ......... Water and Sewerage Treasury.......... Operating Treasury. ... . . . .. . . . . .. .. . . . Bond and Interest. . . . . . . . . . . . . . . . .. . . . . Bond Reserve. . . . . ... . . . . . .. . . . . .. . . . . . Bond Reserve - Investments ............ Depreciation and Emergency ........... Depreciation and Emergency - Investments. . . . . . . . . . . . . . . . . . . . . . . . . 122,000.00 Extension Bond Retirement ............ 0.00 Extension Bond Retirement - Investments. . . . . . . . . . . . . . . . . . . . . . . . . 0.00 TOTAL ASSETS. .. . . . . .. . . . . . .. . . . . . . . .. . . . . . . . . .$11,315,961.32 140,309.78 0.00 88,532.93 2,376.76 12,463.30 0.00 8,802.12 .88,129.38 9,787,568.46 272,145.23 180,462.45 51,507.85 44.69 545,000.00 16,618.57 LIABILITIES Accounts Payable Engs. ............... $ 181,508.77 Sanitation Fees Collected. . . . . . . . . . . . . . . Bond Indebtedness. . .. . . . . . . . . . . .. . . . . . Reserve for Services Performed ......... Reserve for Auditing. . . . . . . . . . . . . . . . . . . Meter Deposits ........................ Reserve for Property Taxes . . . . . . . . . . . . . Reserve for Bond Principal ............. Reserve for Bond Interest .............. Reserve for Bond Reserve .............. Reserve for Depreciation and Emergency. . . . .. . . . . .. . . . . . . . . . . . . . . 138,618.57 Reserve for Extension and Bond Retirement .................... 0.00 TOTAL LIABILITIES .............................$ 2,844,695.85 357.17 1,820,000.00 17,027.00 15,231.00 49,565.00 37,502.00 3,164.00 43,005.65 545,044.69 PROFIT & LOSS Net Worth ............................ $8,371,867.48 Net Profit. . ... .. . . . ... . . . .. . . ... . . . ... 99,398.01 $ 8,471,265.47 TOTAL LIABILITIES AND NET WORTH. . . . . .. .. .$11,315,961.32 23 TOTAL GALWNS PURCHASED 1975 99,801,152 '-- 59,444,720 28,278,888 21,991,200 19,271,400 . 18,336,472 14,464,824 13,092,992 11,522,940 11,509,476 I I I I I I I I I I I I I I I I I I I SALINA, KANSAS WATERWORKS PROJECT AVERAGE NUMBER OF WATER AND SEWER CONNECTIONS 1972 13,336 1973 13,581 1974 13,016' 1975 14,154 1976 14,406 'The City of Salina was converted to the computer system in 1974 which gave an actual count of customers. 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N ~~~ -..........N__.......... ":. '" OOOOOgOOOOOO 0 00000 000000 0 00000 000000 ~ '" ............... ...... .... ZQ :D$~::gg~;~r;;~~~ N 0'" en -'Ii: r--:"i"i~"i"?~qq";,~~ "':. ~~ co I.l'l 1.0 0"0 O'l NOC\J Or-.. :;;: VMo::t"LOO'lCOC\JO'lOOOOl.no;;t -----_MN__,....,.... N N 0 O.~ .~... ..... ..'" '" Q> ... ~ en .~ aJ s.:s.: ~.. ~s.. . . . .. ..c So. CLI CU 0'" :;~..c..... t:!n~~.o -'c Q> :::11-0.... aJ>t::J~ocvlD Q>U :;.g; ~~5'; g~t ~:rl c.. .- Q> '"':lLL.:::E:ct:::&:'"':l'"':lct(/')OZ:C -' Q. 29 ~ 30 I I I I I I I I I I I I I I I I I I I VI. WATER AND SEWER RATE SCHEDULES There are 14,406 water customers and sewer connections in the City of Salina, Kansas. The present water rates, effective January 1, 1973 and the present sewer rates, effective January 31, 1962, are as follows: BASED ON MONTHLY USE EXCEPT FOR THE MINIMUM AMOUNTS ALLOWED ACCORDING TO THE SIZE OF METER RESIDENTIAL AND COMMERCIAL CONSUMERS INSIDE CITY: * First 2,000 Cu. Ft. @ 39\l per 100 Cubic Feet Next 28,000 Cu. Ft. @ 27\l per 100 Cubic Feet All over 30,000 Cu. Ft. @ 24\l per 100 Cubic Feet Monthly minimum charges are as follows, based on size of meter installed: . Size of Minimum Cu. Ft. meter Charge allowed O/S" $ 2.00 300 %" 3.10 500 1" 3.90 600 lW' 6.50 1,000 2" 7.95 1,100 3" 14.75 2,000 4" 77.00 25,000 6" 110.00 30,000 8" 125.00 30,000 *Multiple consumers served by a master meter are charged at 39\l per 100 cubic feet for all water consumed in excess of the minimum. Approximately 7th gallons per cubic foot I I I I I I I I I I I I I I I I I I I '~:'d1t. BASED ON MONTHLY USE EXCEPT FOR THE MINIMUM AMOUNTS ALLOWED ACCORDING TO THE SIZE METER RESIDENTIAL AND COMMERCIAL CONSUMERS OUTSIDE CITY: * First 2,000 Cu. Ft. @ 48.75lt per 100 Cu. Ft. Next 28,000 Cu. Ft. @ 33.75lt per 100 Cu. Ft. All over 30,000 Cu. Ft. @ 30.00lt per 100 Cu. Ft. Monthly minimum charges** Size of Minimum Cu. Ft. Meter Charge Allowed %" $ 4.00 300 %" 6.20 500 1" 7.80 600 lIh" 13.00 1,000 2" 15.90 1,100 3" 29.50 2,000 4" 154.00 25,000 6" 220.00 30,000 8" 250.00 30,000 *Multiple consumers served by a master meter are charged at 48.75lt per 100 cubic feet for all water consumed in excess of the minimum. **Minimum charge for Rural Water Districts is 125% of the inside city minimum. 31 32 I I I I I I I I I I I I I I I I I I I PROCEDURE OF DETERMINING FEES The sewer use fee is refigured annually and remains constant starting with the July billing through the following June. RESIDENTIAL: For each residence ofless than four units served by a master water meter and discharging waste to the sanitary sewer system, the sewer use fee is based on the average monthly water consumption according to the meter reading of January, February, and March. The sliding scale of the attached rate schedule applies. MULTIPLE DWELLINGS SERVED BY MASTER WATER METER: The sewer use fee for licensed Apartment Houses and Mobile Home Courts of four or more units, served by a master water meter or meters, is based on the average monthly water consumption according to the meter readings of January, February, and March. RESIDENCES NOT CONSUMING CITY WATER: Residences not consuming city water, but which are served by the sanitary sewer system are charged a flat monthly fee of $1.50. COMMERCIAL AND INDUSTRIAL: The sewer use fee for Commercial and Industrial water consumers served by the sanitary sewer system is based on the average monthly water consumption of the previous calendar year. The sliding scale of the attached rate schedule applies. COMMERCIAL AND INDUSTRIAL CONCERNS NOT CON- SUMING CITY WATER: Engineering surveys determine the sewer use fee for commercial and industrial concerns served by the sanitary sewer but using water from a source other than the city. SPECIAL ALLOWANCES: For consumers where at least 25% of the water consumed does not eventually reach the sanitary sewer system, allowance is made in determining the sewer use fee. COMMERCIAL AND INDUSTRIAL CONCERNS CONSUMING WATER IN ADDITION TO CITY WATER: Engineering surveys determine the sewer use fee in cases where water consumed from other sources exceed water purchased.irom the city by at least 25%. I I I I I I I I I I I I I I I I I II I ,y,i:'-,"; If the quantity or type and character of such sewage discharged into such system shall render it difficult to establish a fair and equitable sewage service charge, the customer shall at his sole cost and expense install and maintain in good operating condition suitable meters or measuring and sampling devices of standard type and design as required to determine the characteristics of the sewage, at the appropriate point or points as are necessary to properly measure the customers' sewage discharges and shall permit the City to read meters, measuring or sampling devices, and sewage charges for such customer shall be established in accordance with such metering records and/or sampling devices. OUTSIDE CITY RATES: Outside city rates, except in cases of a special contract, are double the minimum plus 25% additional for all in excess of the minimum. 33 34 I I I I I I I I I I I I I I I I I I I CITY OF SALINA WATER AND SEWERAGE DEPARTMENT Sewer Use Rates Effective Jan. 31,1962 * Inside city rates except for multiple living units offour or more in number served by a master water meter: First 500 Cu. Ft. or 3,750 Gals. $1.35 per month minimum. (i1)27~ per C Cu. Ft. or 36~ per M Gals. Next 500 Cu. Ft. or 3,750 Gals. ((122~ per C Cu. Ft. or 29.33~ per M Gals. = $1.10 Next 1,000 Cu. Ft. or 7,500 Gals. @20~ per C Cu. Ft. or 26.66~ per M Gals. = $2.00 Next 3,000 Cu. Ft. or 22,500 Gals. ((t16~ per C Cu. Ft. or 21.33~ per M Gals. = $4.80 Next 15,000 Cu. Ft. or 112,500 Gals. (il 12~ per C Cu. Ft. or 16~ per M Gals. = $18.00 Next 20,000 Cu. Ft. or 150,000 Gals. ((I 8~ per C Cu. Ft. or 10.66~ per M Gals. = $16.00 Next 40,000 Cu. Ft. or 300,000 Gals. ((I 6~ per C Cu. Ft. or 8~ per M Gals. = $24.00 Next 70,000 Cu. Ft. or 525,000 Gals. (i14~ per C Cu. Ft. or 5.33~ per M Gals. = $28.00 All over 150,000 Cu. Ft. or 1,125,000 Gals. (il 2~ per C Cu Ft. or 2.66~ per M Gals. *Multiple living units of four or more units, served by a master water meter, effective July 1, 1963: First 500 Cu. Ft. or 3,750 Gals. $1.35 per month minimum. (i127~ per C Cu. Ft. or 36~ per M Gals. All over 500 Cu. Ft. or 3,750 Gals. (il 22~ per C Cu. Ft. or 29.33~ per M Gals. Outside city rates, except in cases of a special contract, are double the minimum plus 25% additional for all in excess of the minimum. I I I I I I I I I I I I I I I I I I I '.,,>M:" The Gross Revenues produced from the water and sewer rates at Salina, Kansas for the past five years are as follows: WATER SEWER COMBINED WATER' YEAR REVENUE REVENUE SEWER REVENUE 1971 $ 651,739 $372,516 $1,024,255 . 1972 630,858 384,634 1,015,492 1973 965,012 390,624 1,355,636 1974 1,003,236 366,817 1,370,530 1975 1,041,120 399,484 1,440,604 The gross water revenue has increased 6.26% since the water rate increase on January 1, 1973. The gross sewer revenue has increased 7.2% over the past five years. The gross water and sewer revenue combined has increased 6.26% since the water rate in- crease 1:1 1973. Operational expenses for the combined water and sewerage system (exclusive of bond retirement payments) for the past five years are as follows: YEAR OPERATIONAL EXPENSES 1971 $ 769,142 1972 758,226 1973 856,149 1974 1,019,942 1975 1,162,342 The operational expenses have increased 51.12% over the past five years for a 10.2% per year increase, and 13.96% from 1974 to 1975. Sewer Rates Based upon the gross revenue generated from sewer charges in 1975 in the amount of $399,484, the additional income from sewer rate increases indicated would produce the following gross 1ncome: Sewer Rate increased - 35% ($1.85 minimum) ....... .$539,303 Sewer Rate increased - 40% ($1.90 minimum) ........ 559,277 Sewer Rate increased - 50% ($2.00 minimum) ........ 599,226 Sewer Rate increased - 60% ($2.15 minimum) ........ 639,174 Sewer Rate increased - 70% ($2.30 minimum) ........ 679,122 Sewer Rate increased - 80% ($2.40 minimum) ........ 719,071 Sewer Rate increased - 90% ($2.55 minimum) ........ 759,019 Sewer Rate increased - 100% ($2.70 minimum) ....... 798,978 35 36 I I I I I I I I I I I I I I I I I I I Increase in sewer rates over the present rates would result in the following rates: Present Water Sewer Increase Consumption Rates 35% 40% 50% 60% 70% 80% 90% 100% -- --- 0/500 $1.35 $1.85 $1.90 $2.00 $2.15 $2.30 $2.40 $2.44 $2.70 500/1,000 .22 .30 .31 .33 .35 .37 .39 .40 .44 1,000/2,000 .20 .27 .28 .30 .32 .34 .36 .38 .40 2,000/5,000 .16 .22 .23 .24 .25 .27 .29 .30 .32 5,000/20,000 .12 .17 .18 .18 .19 .20 .22 .23 .24 20,000/40,000 .08 .11 .12 .12 .13 .14 .15 .15 .16 40,000/80,000 .06 .08 .09 .09 .10 .11 .11 .12 .12 80,000/150,000 .04 .06 .06 .06 .07 .07 .08 .08 .08 All over 150,000 .02 .03 .03 .03 .04 .04 .04 .04 .04 Water Rates Based upon the gross water revenue for the year 1975 in the amount of$1,041,120, the additional income from water rate increases indicated would produce the following gross income: , Water Rate increased - 35% ........................... .$1,405,512 Water Rate increased - 40% ............................ 1,457,568 Water Rate increased - 50% ............................ 1,561,680 Water Rate increased - 60% ............................ 1,665,792 Water Rate increased -70% ............................ 1,769,904 Water Rate increased - 80% ............................ 1,874,016 Water Rate increased - 90% ............................ 1,978,120 Water Rate increased -100% ...........................2,082,240 Increase in water rates, inside and outside the city limits of Salina, Kansas over the present rates would result in the following rates: Residential and Commercial Inside City Increases Present Rates 35% 40% 50% 60% 70% 80% 90% 100% -- First 7,000 cu. ft. @39l1 per 100 cu. ft. ........... 5311 5411 5811 6211 6611 701l 7411 7811 Next. 28,000 cu. ft. @2711 per 100 cu. ft. . . . . 3611 3711 401l 4311 4611 4911 5111 5411 All over 30,000 cu. ft. @2411 per 3411 lOll cu. ft. ....... 3211 3611 3911 4111 4311 4611 4811 I I I 'I I I I I I I I I I I I I I I I I "Monthly Minimum Based on Size of Meter Installed" Present Rates Size of Minimum Cu. Ft. Increases Present Rates 35% First 2,000 cu. ft. @48.75~ per 100 cu. ft. ................. 65.80~ Meter 'ill" %." I" 1W' 2" 3" 4" 6" 8" Charge $ 2.00 3.10 3.90 6.50 7.95 14.75 77.00 110.00 125.00 Allowed 35% 40% 300 $ 2.70 $ 2.80 $ 500 4.20 4.35 600 5.25 5.45 1,000 8.75 9.lO 1,lOO lO.75 11.15 2,000 19.90 20.65 25,000 103.95 107.80 30,000 148.50 154.00 30,000 168.75 175.00 50% 60% 70% 80% 90% 100% 3.00 $ 3.20 $ 3.40 $ 3.60 $ 3.80 $ 4.00 4.65 4.95 5.30 5.60 5.90 6.20 5.85 6.25 6.65 7.00 7.40 7.80 9.75 10.40 11.05 11.70 12.35 13.00 11.90 12.70 13.50 14.30 15.10 15.90 22.12 23.60 25.07 26.55 28.02 29.50 115.50 123.20 130.90 138.60 146.30 154.00 165.00 176.00 187.00 198.00 209.00 220.00 187.50 200.00 212.50 225.00 237.50 250.00 Residential and Commercial Outside City Increases 40% 50% 60% 70% 80% 90% 100% 68.25~ 73.10~ 78.00~ 82.85~ 87.75~ 92.65~ 97.50~ Next 28,000 cu. ft. @33.75~ per 100 cu. ft. ................. 45.55~ " 47.2M 50.60~ 54.00~ 57.35~ 60.75~ 64.lO~ 67.50~ All over 30,000 cu. ft. @ 30.00~ per lOO cu. ft. ............. 40.50~ 42.00~ 45.00~ 48.00~ 51.00~ 54.00~ 57.00~ 60.00~ 37 (Based on 2,000 gallons) Independence Minimum ............. Coffeyville Minimum. . . . . . . . . . . . . . . . Newton Minimum.................. Pittsburg Minimum (Proposed) . . . . . . . Water $4.20 4.00 2.80 2.50 Sewer $2.50 2.25 4.00 3.40 Total $6.70 6.25 6.80 5.90 I I I I I I I I I I I I I I I I I I I VII. COMPARATIVE WATER AND SEWER RATES FOR CITIES IN KANSAS The following table shows a complete breakdown of water and sewer rates for Independence, and Coffeyville, and proposed rates for Pittsburg, Kansas. Also shown are the minimum water and sewer rates for the City of Newton, Kansas, and sewer rates for Emporia, Kansas. These comparative rates are being illustrated as Independence has a Water and Sewer Revenue Bond indebted- ness of $2,030,000, Coffeyville has a Water Revenue Bond in- debtedness of $3,060,000, and Newton has a Water and Sewer Revenue Bond indebtedness of $2,310,000. Emporia is issuing $2,500,000 in Sewer Revenue Bonds. Independence Water Rates (In Gallons) First 1,000 @ $3.30 = $ 3.30 .........................$ 3.30 minimum Next 9,000 @ .90 = 8.10. . . . . . . . . '" . . . . . . . . . . ... . . . . 11.40 Next 15,000 @ .75 = 11.25 .......................... 22.65 Next 75,000 @ .70 = 52.50 .......................... 75.15 Next 900,000 @ .55 = 495.00 ........................ 570.15 All over 1,000,000 @ .50 = $500.00. . . . . . . . . . . . . . . . . . .. 1,070.15 Minimum ............ First 2,000 gallons. . . . Next 5,000 gallons. . . . Next 10,000 gallons .. Next 50,000 gallons .. Next 100,000 gallons . Next 500,000 gallons . Next 1,000,000 gallons Coffeyville Water Rates (In Gallons) First 1,000 @ $2.00 = $2.00 ..........................$ 2.00 minimum Next 1,000 @ 2.00 = 2.00. .. . . . ... . . . . . . . . . . . . . . . . . . . . 4.00 Next 8,000 @ 1.50 = 12.00............................ 16.00 Next 40,000 @ 1.35 = 54.00 .......................... 70.00 Next 50,000 @ 1.00 = 50.00 .......................... 120.00 Next 400,000 @ .90 = 360.00 ........................ 480.00 Next 500,000 @ .75 = 375.00 ........................ 855.00 Next 1,000,000 @ .40 = 400.00 . . . . . . . . . . . . . . . . . . . . . . .. 1,255.00 Pittsburg Water Rates (In Gallons) Present Proposed CoffeyviIle Independence $ 2.35 $ 2.50 $ 2.00 $ 3.30 2.35 2.50 4.00 4.20 4.75 5.80 8.50 6.90 8.75 11.30 16.00 11.40 38.85 51.40 70.00 28.90 72.55 97.60 120.00 75.15 281.35 391.40 480.00 295.15 523.25 741.40 855.00 570.15 38 II I I I I I I I I I I I I I I I I I I Emporia Sewer Rates Effective January 1, 1977, the following schedule of sewer charges will be implemented at Emporia, Kansas: (a) A monthly minimum service charge for all metered users in- cluding the first two thousand (2,000) gallons of water use is established as follows: Meter Size Inside City Outside City '*''' $ 3.30 $ 6.60 %," 5.50 11.00 1" 8.75 17.50 1 \4" 11.00 22.00 1 'h" 13.00 26.00 2" 19.00 38.00 3" 42.00 84.00 ~ ~M ~M 6" 138.00 276.00 8" 205.00 410.00 Exception: Those single family residences with meters larger than one (1) inch will be charged at the one (1) inch rate. (b) Residential Metered Quantity Charge: Additional charges for residential and educational, religious, public, and charitable classification as defined in 19-304 above shall be based on eighty-five per cent (85%) of metered water in excess of 2,000 gallons at the following rates: Inside City $0.35/1,000 gallons Outside City $0.70/1,000 gallons (c) Commercial-Industrial Metered Quantity Charge: Additional charges for all those not included above shall be based on one hundred per cent (100%) of metered water in excess of 2,000 gallons at the following rates: Inside City Outside City $0.35/1,000 gallons $0.70/1,000 gallons (d) Flat Rate Residential: All single family residence users as defined in 19-304 above not having an approved water meter- ing system will be charged a flat rate of$6.60 per month for use of the wastewater collection and treatment system. (e) Flat Rate Commercial-Industrial Users: All commercial- industrial users as defined in 19-304 above not having an approved water metering system will be charged a minimum flat rate of$19.80 per month with a quantity charge based on 100% of estimated usage over 2,000 gallons as approved by the City Manager at a rate of $0.35/1,000 gallons. 39 Cost! Cost! Cost! Cost! Charge Gallons Cost!Gal. 5M Gal. 10M Gal. 25M Gal. 50M Gal. $3.82 2,000 $0.0019 $7.19 $12.82 $28.65 $51.59 2.50 3,000 0.0008 3.70 6.50 12.50 22.40 2.00 2,500 0.0008 3.56 5.90 12.14 16.73 1.85 1,500 0.0012 4.00 6.55 14.37 26.37 2.00 2,250 0.0009 3.92 6.80 13.93 23.50 1.50 2,000 0.0008 3.00 5.50 13.00 21.75 2.35 2,000 0.0012 4.75 8.75 20.10 38.85 4.55 7.13 10.80 21.83 39.11 2.30 1,500 0.0015 5.56 9.36 18.16 32.83 2.50 3,000 0.0008 3.76 6.28 14.38 22.06 I I I I I I I I I I I I I I I I I I I WATER RATES The following indicates water rates only for the ten largest cities in Kansas, other than Kansas City, and also three graphs indicating both water and sewer rates for cities in Kansas. City Lawrence .......... Hutchinson....... . Salina ............. Leavenworth ...... Manhattan ........ Emporia . . . . . . . . . . . Pittsburg . . . .. .. .. . Junction City . . . . . . Topeka ............ 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'~l; .... .:::::;: <. +:~ ~'r~ =i~ rl ~.t j . ;-i~~ifE!; ; 4-J: 1-7:':::;:' .. ~'r. . ~ ..i-t:1Wo I : . l-; 'I'" "'U.W'O .l., l~'.H" :'f" 1.1. !.; . - :L , ., , ,- , , i.. i f 1- , 'j: .., , , -i 1-' T i c 4 ~ . . !--.,. .. !! r" I of t, ., .., I ~ l' ~:' ..\ .p + ~ ,} f ' ,:-> ! j.i + -t ~ ~. T... ./.. i .+ ! 1 t, ..., .~ + i 1 , , , I I lot Ii; , , .,- 43 44 I I I I I I I I I I I I I I I I I I I VIII. ADDITIONAL INDEBTEDNESS REQUIREMENTS To determine annual net operating income for pro forma computation, the following tables have been computed for Series 1961 Bonds outstanding plus additional Water and Sewerage Bonded Indebtedness. Preliminary pro formas have been computed for the following amounts and maturity years: EXHIBITS AMOUNT MATURITY Exhibit I $1,500,000 20 years Exhibit II 2,000,000 25 years Exhibit III 2,250,000 25 years Exhibit IV 2,500,000 25 years Exhibit V 2,750,000 25 years Exhibit VI 3,000,000 25 years 1. Total Gross Interest Cost for Series 1961 and New Bonds: Exhibit I Series 1961 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..$ 357,567.50 Series 1977 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1.514.175.00 Total Interest Cost............................. .$1,871,742.50 Exhibit II Series 1961 Bonds...............................$ 357,567.50 Series 1977 Bonds............................... 2.619.400.00 Total Interest Cost............................. .$2,976,967.50 Exhibit III Series 1961 Bonds...............................$ 357,567.50 Series 1977 Bonds............................... 2.619.400.00 Total Interest Cost............................. .$3,331,867.50 Exhibit IV Series 1961 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..$ 357,567.50 Series 1977 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3.308.550.00 Total Interest Cost............................. .$3,666,117.50 Exhibit V Series 1961 Bonds. . . . . .. . . . . . . . . . . . . . . . . . . . . . . ..$ 357,567.50 Series 1977 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3.661.000.00 Total Interest Cost............................. .$4,345,167.50 Exhibit VI Series 1961 Bonds............ .... ...... ...... ...$ 357,567.50 Series 1977 Bonds............................... 3.987.600.00 Total Interest Cost............................. .$4,345,167.50 I I I I I I I I I I I I I I I I I I I ,.,., 2. Average Annual Principal Requirements: Series 1961 Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$182,000.00 Exhibit I - $1,500,000 ............................. 76,000.00 Exhibit II - $2,000,000 ............................ 80,000.00 Exhibit III - $2,250,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000.00 Exhibit IV - $2,500,000 . . . . . . . . . . . . . . . . . . . . . . . . . . .. 100,000.00 Exhibit V - $2,750,000 ............................ 110,000.00 Exhibit VI - $3,000,000 . . . . . . . . . . . . . . . . . . . . . . . . . . .. 120,000.00 3. Average Annual Interest Requirements: Series 1961 Bonds. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . ...$ 35,765.75 Exhibit I - $1,500,000 ............................. 75,708.75 Exhibit II - $2,000,000 ............................ 104,776.00 Exhibit III - $2,250,000 .. . .. . .. . .. .. . .. .. .. .. .. .... 118,972.00 Exhibit IV - $2,500,000 . . . . . . . . . . . . . . . . . . . . . . . . . . .. 132,342.00 Exhibit V - $2,750,000 ............................ 146,440.00 Exhibit VI - $3,000,000 . . . . . . . . . . . . . . . . . . . . . . . . . . .. 159,504.00 4. Average Annual Principal Requirements for Series 1962 and Series 1977 Bonds: Exhibit I ........................................ .$259,587.00 Exhibit II ........................................ 271,878.00 Exhibit III........................................ 296,074.00 Exhibit IV........................................ 319,444.00 Exhibit V ........................................ 343,543.00 Exhibit VI........................................ 366,607.00 5. Coverage Requirements for Average Annual Principal and Interest Requirements for Series 1961 and Series 1977 Bonds: Exhibit I Net Income Required for a 1.60 Times Coverage...... .$415,794.00 Net Income Required for a 1.50 Times Coverage. . . . . .. 389,806.00 Net Income Required for a 1.40 Times Coverage. . . . . .. 363,819.00 Net Income Required for a 1.30 Times Coverage....... 337,832.00 Net Income Required for a 1.25 Times Coverage. . . . . .. 324,838.00 Exhibit II Net Income Required for a 1.60 Times Coverage. . . . . . .$435,004.00 Net Income Required for a 1.50 Times Coverage. . . . . .. 407,817.00 Net Income Required for a 1.40 Times Coverage....... 380,629.00 Net Income Required for a 1.30 Times Coverage. . . . . ., 353,441.00 Net Income Required for a 1.25 Times Coverage. . . . . .. 339,842.00 45 46 I I I I I I I I I I I I I I I I I I I Exhibit III Net Income Required for a 1.60 Times Coverage...... .$473,718.00 Net Income Required for a 1.50 Times Coverage....... 444,110.00 Net Income Required for a 1.40 Times Coverage....... 414.503.00 Net Income Required for a 1.30 Times Coverage. . . . . .. 384,896.00 Net Income Required for a 1.25 Times Coverage. . . . . .. 370,092.00 Exhibit IV Net Income Required for a 1.60 Times Coverage...... .$511,110.00 Net Income Required for a 1.50 Times Coverage. . . . . .. 479,166.00 Net Income Required for a 1.40 Times Coverage....... 447,221.00 Net Income Required for a 1.30 Times Coverage....... 415,277.00 Net Income Required for a 1.25 Times Coverage. . . . . .. 399,305.00 Exhibit V Net Income Required for a 1.60 Times Coverage. . . . . . .$549,668.00 Net Income Required for a 1.50 Times Coverage....... 515,314.00 Net Income Required for a 1.40 Times Coverage. . . . . .. 480,960.00 Net Income Required for a 1.30 Times Coverage. . . . . .. 446,605.00 Net Income Required for a 1.25 Times Coverage. . . . . .. 429,428.00 Exhibit VI Net Income Required for a 1.60 Times Coverage. . . . . . .$586,571.00 Net Income Required for a 1.50 Times Coverage. . . . . .. 549,910.00 Net Income Required for a 1.40 Times Coverage. . . . . .. 513,249.00 Net Income Required for a 1.30 Times Coverage....... 476,891.00 Net Income Required for a 1.25 Times Coverage....... 458,258.00 . ~. -'.' I I I I I , , I II I I I I I I I I I I I I I Under accepted practices of Revenue Bond financing, conditions must be established to guarantee the marketability of additional Water and Sewerage System Indebtedness. Net revenues, after payment of operations, should never be less than 125% of maximum annual principal and interest requirements of both the Series 1961 Water and Sewerage-System Revenue Bonds now outstanding and the additional principal and interest require- ments of any new bonds to be issued. In addition, it is preferable that such "coverage factor" substantially exceed 125% of average annual principal and interest requirements to establish prime security of the bonds out- standing and the bonds to be issued. The following "Net Operating Income" will be required to satisfy maximum "coverage" requirements indicated: 1. Maximum Debt Service for Exhibit I (1986) . . . . . . . . . . . . .$331,090.00 Net Income Coverage Factor Net Operating Income Required at 1.60 coverage ................. .$529,744.00 at 1.50 coverage .................. 496,605.00 at 1.40 coverage .................. 463,526.00 at 1.30 coverage .................. 430,417.00 at 1.25 coverage .................. 413,862.00 2. Maximum Debt Service for Exhibit II (1986) ........... .$373,240.00 Net Income Coverage Factor Net Operating Income Required at 1.60 coverage ................. .$597,184.00 at 1.50 coverage .................. 559,860.00 at 1.40 coverage .................. 522,536.00 at 1.30 coverage .................. 485,212.00 at 1.25 coverage .................. 466,550.00 3. Maximum Debt Service for Exhibit III (1986) .......... .$390,390.00 Net Income Coverage Factor Net Operating Income Required at 1.60 coverage ................. .$624,624.00 at 1.50 coverage .................. 585,585.00 at 1.40 coverage .................. 546,546.00 at 1.30 coverage.................. 507,507.00 at 1.25 coverage.................. 487,987.00 4. Maximum Debt Service for Exhibit IV (1986) .......... .$408,240.00 Net Income Coverage Factor Net Operating Income Required at 1.60 coverage ................. .$653,184.00 at 1.50 coverage .................. 612,360.00 at 1.40 coverage .................. 571,536.00 at 1.30 coverage.................. 530,712.00 at 1.25 coverage .................. 510,300.00 47 48 I I I I I I I I I I I I I I I I I I I 5. Maximum Debt Service for Exhibit V (1986) ........... .$427,140.00 Net Income Coverage Factor Net Operating Income Required at 1.60 coverage ................. .$683,424.00 at 1.50 coverage .................. 640,710.00 at 1.40 coverage .................. 597,996.00 at 1.30 coverage .................. 555,282.00 at 1.25 coverage .................. 533,925.00 6. Maximum Debt Service for Exhibit VI (1986) .......... .$444,640.00 Net Income Coverage Factor Net Operating Income Required at 1.60 coverage ................. .$711,424.00 at 1.50 coverage .................. 666,960.00 at 1.40 coverage .................. 622,960.00 at 1.30 coverage .................. 578,032.00 at 1.25 coverage .................. 555,800.00 i. i. . . . . . . . i I . . . . . . . I . IX. PROJECTION OF FUTURE WATER AND SEWAGE SYSTEM OPERATIONS The following projections of the Water and Sewage System operations have been computed based upon the average increase in gross revenues and operational expenses over the past five years. Projections of increased revenues are based upon a 5% increase each year, although the average has been 6%; but due to suggested rate increases, a conservative figure of 5% is used for pro forma purposes. A 10% increase per year is computed for operational expenses which has been the average increase over the past five years. Projected revenues and operating expenses for the years 1976 through 1981 are as follows: 35% Water and Sewer Rate Increase - Projected Projected Projected Operating Operating Net Operating Year Revenues Expenses Income 1976 $1,612,550 $1,330,865 $281,685 1977 2,177,942. 1,463,951 713,991 1978 2,286,839 1,610,346 676,473 1979 2,401,180 1,771,380 629,800 1980 2,503,239 1,048,518 554,721 1981 2,624,400 2,143,036 485,364 40% Water and Sewer Rate Increase - Projected Projected Projected Operating Operating Net Operating Year Revenues Expenses Income 1976 1977 1978 1979 1980 1981 $1,612,550 2,257,570 2,370,448 2,488,970 2,613,418 2,744,088 $1,330,865 1,463,951 1,610,346 1,771,380 1,048,518 2,143,036 $281,685 793,619 760,102 717,590 664,900 601,052 49 50 I I I I I I I I I I I I I I I I I I I X. FLOW OF FUNDS I Ordinance No. 6546 of the Series 1961 Bonds defines the "Flow of Funds" in the handling of all System incomes and ex- penses. The new indebtedness represents an obligation of imp res- sive proportions and necessitates the drafting of a bond ordinance employing the best possible financial conditions of bond issuance. A few covenants which should be included in the new bond ordi- nance are as follows: a. The City should re-establish the "Water and Sewage Fund" as originally created for the Series 1961 Bonds and all System incomes should be deposited in such Fund; b. First, the City should pay the actual cost of maintenance and operation of the System; c. Next, the City should establish a "Bond and Interest Account for Combined Water and Sewage System Rev- enue Bonds, Series of 1977," and make periodic transfers to anticipate semiannual interest requirements and an- nual principal requirements of all Water and Sewage System indebtedness. Cognizance must be given to the Series 1961 Bonds as such bonds will exist as a prior and junior lien on all of the Combined Water and Sewage System indebtedness with new bonds existing as junior lien indebtedness. d. Next, the City should create a "Reserve Account for Com- bined Water and Sewage System Revenue Bonds, Series of 1977" for the new bond issue. Preliminary analysis of cash and invested funds on hand indicates an immediate transfer of$200,000 for Exhibit I, $225,000 for Exhibit II, and $245,000 for Exhibits III, IV, V, and VI. Bond Reserve for Exhibits IV, V, and VI will be increased by monthly transfers by transferring $25,000 in 1978 for a total Bond Reserve of $270,000 for Exhibit IV; by transferring $25,000 per year in the years 1978 and 1979 and $5,000 in 1980 for a total Bond Reserve of $300,000 for Exhibit V; and by transferring $25,000 per year in the years 1978, 1979, and 1980 until a Bond Reserve of $320,000 is ac- cumulated in Exhibit VI. Section 14 of Ordinance No. 6546 allows for excessive funds in the Bond Reserve Ac- count for the Series 1961 Bonds to be transferred to the Water and Sewage Fund which then can be transferred to the Bond Reserve Account for Series 1977 Bonds, leaving a balance and maximum reserve of $300,000 for the Series 1961 Bonds. <.,. I I I I I I I I I I I I I I I I I I I e. Next, the City should continue the "Combined Water and Sewage System Extension Bond and Retirement Ac- count" into which all residual incomes shall be deposited which are not required for maintenance and operation, debt service, or Bond Reserve transfers. The use of surplus accumulations should be determined in anticipa- tion of payment of enlargements and improvements to the System either in annual amounts or through the accumu- lation of surplus for future major improvements and to exercise bond call authorizations. f. 'Next, a covenant should be established that the new bonds may be refunded, so that at any time these bonds are refunded any new bonds to be issued at a later date would enjoy a parity status with other outstanding Sys- tem indebtedness. g. Next, the City should establish "coverage" covenants guaranteeing to maintain rates, fees, and charges which shall produce net incomes adequate to satisfy coverage factors agreed upon. We are recommending that a 125% coverage factor be maintained for the new bonds. h. Next, the City should establish "earnings tests" which provide conditions under which additional System in- debtedness may be issued as parity indebtedness to the Series 1977 Bonds to be issued; included in the "earnings tests" a section should be added to read "The average annual net income fot two preceding years shall not be less than 125% of the maxi num annual debt service re- quirement for all outstanuing and contemplated addi- tional indebtedness; provided that earnings from rate increases implemented during the past two test years (when certified by consulting engineers) may be employed in determining net income availability." Also included in the test should be the fact that all funds and reserves are at the maximum required amounts. 1. Next, the bond ordinance should require the City to maintain adequate insurance coverage, provide an an- nual audit, provide that Combined Water and Sewage System operations shall be conducted in a businesslike manner, and provide periodic inspection and a report made to the Governing Body as to the general physical condition and operational procedures of the entire Com- bined Water and Sewage System. 51 52 I I I I I I I I I I I I I I I I I I I J. Next, upon adoption of the ordinance, there should be created an account to be designated "Depreciation and Emergency and Replacement Account for Series 1977 Bonds" into which account on August 1, 1986, or as soon thereafter as the Series 1961 Bonds are paid or cash provision made for payment, shall be transferred $125,000. Monies in said "Account" shall be used for the same purposes as provided in Ordinance 6546 for Series 1961 Bonds. I I I I I I I ,I I I I I I I I I I I I XI. REVENUE BOND MATURITY SCHEDULES The attached Schedules develop principal and interest re- quirements and suggested reserve accumulations for the different amount of bonds issued previously mentioned in this Report. Bond principal payments have been computed to provide approximate equal annual debt service requirements for the years 1977 through 1986 until the Series 1961 Bonds have been retired, and then approximate equal annual debt service requirements for the Series 1977 Bonds remaining outstanding from 1987 through 1996. The same applies for Exhibits II, III, IV, V, and VI for approximate equal annual debt service requirements for the years 1987 through 2001. Static incomes are employed in the years 1981 through 1996 for Exhibit I and the years 1981 through 2001 for the remaining five exhibits. Net income in Exhibit I is 199% of average annual debt service; in Exhibit II it is 187%; in Exhibit III it is 172%; in Exhibit IV it is 194%; in Exhibit V itis 181%; and in Exhibit VI it is 170%. In Revenue Bond Issues, realistic financial programming es- tablishes "Bond Reserves" and "Maintenance Reserves" to be used for unforeseen and emergency fiscal and operating contingencies. In the Exhibits, we have arbitrarily employed the reserve accounts previously mentioned; however, we feel that the existing Mainte- nance Reserve is adequate to service the System and one will not be maintained for the Series 1977 Bonds. Bond Ordinances customarily permit municipalities to use surplus accumulations for enlargement, expansion and improve- ments of the Combined Water and Sewage System, and thus eliminate the necessity of future additional bonds whenever possi- ble. The Exhibits have indicated annual surplus which can be used for annual capital improvements, and we are recommending that the Water and Sewer rates be increased to cover not only all System indebtedness, maintenance and operation, a Bond Re- serve, but also to allow for annual surplus to make the particular capital improvements. 53 54 I I I I I I I I I I I I I I I I I I I Utility System Revenue Bonds are customarily optional and surplus accumulations may be used to call and prepay bond princi- pal prior to maturity, in addition to amounts in the Bond Reserve Account. This call factor is of importance as considerable interest saving will result through call provisions. The Series 1961 Bond Ordinance has a 3% call premium, and it is recommended that Series 1977 Bonds additionally have a 3% call or a declining call premium. 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SUMMARY AND RECOMMENDATIONS This Report has been designed to analyze and establish the requirements necessary to service additional Water and Sewage System Revenue Bonds, being cognizant of $1,820,000 Series of 1961 Revenue Bonds now outstanding and of the terms and condi- tions of Bond Ordinance No. 6546 for additional Water and Sewage System Revenue Bond Indebtedness. A test was run to evaluate the issuance of parity or co-equal bonds with the provisions and requirements of Ordinance No. 6546, which required a 135% coverage factor for the two fiscal years next preceding the issuance of additional bonds for the Series 1961 Bonds and any additional indebtedness. The earnings test shows that a 135% coverage factor is not sufficient; therefore, the new bonds to be issued will be junior lien to the Series 1961 Water and Sewage System Revenue Bonds; however, an improvement in today's bond market since August will be an advantage to this program. From this Report, we recommend an alljustment to present water and sewer rates to compensate for the additional debt ser- vice requirements and surplus accumulations. We are rec- ommending a 35% increase in both water and surplus rates for Exhibits I, II, and III, and a 40% increase for Exhibits IV, V, and VI. We are also recommending that the increases in rates be implemented January 1, 1977 or as soon thereafter as possible. We are also recommending that the Notice ofIntent for any additional bonded indebtedness be published during the month of December 1976; and in the meantime, we will assimilate information to submit to Moody's Investors Rating Service for both the Series 1961 Bonds and Series 1977 Bonds. Mr. Norman Gaar of Stinson, Mag, Thomson, McEvers and Fizzell, Kansas City, Missouri, will prepare the necessary Bond Ordinance and any additional ordi- nances, resolutions, and notice ofintent required for this issue ifit is the wish of the City Attorney. Weare recommending a possible bond sale within the next sixty (60) days ofthe writing ofthis Report; however, the amount of bonds to be issued and the water and sewer rate structure will have to be determined by the City Commissioners. 61 _J 62 I I I I I I I I I I I II I I II I I I I We appreciate the patience of the City Commission and City Administration; however, this Report is lengthy and detailed. The improvement of the bond market has made it imperative to recom- pute all six exhibits as the market has had at least a ',2% to %% improvement in interest rates over the past 4 months, which is to the definite advantage of the City of Salina, Kansas for issuing additional junior lien bonds. By thoroughly appraising all ofthese items and studying this Report, the Governing Body must then determine a maturity schedule and amount of bonds to be issued, and utility rates to be increased which best fit the needs ofthe City. Respectfully submitted, FIRST SECURITIES COMPANY OF KANSAS, INC. By ~/llf~ Vice President December, 1976