Sewage Disposal & Waterworks System Imp Financial Feasability Report
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t Financial
I Feasibility
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Sewage Disposal Plant Improvements
And
Waterworks System Improvements
For
City of Salina, Kansas
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FmST SECURlDES CoMPANY
SCHWEITER BLDG. ~ WICHITA. KANSAS
OF KANSAS
INCORPORATED
WICHITA OFFICE
200 SCHWEITER BLDG.
TEL. AMHERST 2-4411
KANSAS CITY OFFICE
1000 INS. EXCHANGE BLDG.
TEL.. HARRISON 1-3870
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CITY OF SALINA
KA NSAS
WATER AND SEWER
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FINANCIAL FEASIBILITY REPORT
R. W. BULL, Commissioner
DON McCUNE, Commissioner
LELAND SRACK, City Manager
HAROLD PETERSON, City Clerk
CARL RAMSEY, Mayor
RALPH EXLlN E, Commissioner
HAROLD JAEGER, Commissioner
RUDOLPH BARTA, City Attorney
HAROLD HARPER, City Engineer
FIRST SECURITI ES COMPANY
WICHITA, KANSAS
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INDEX
PAGE
I. Preface
II. Scope 2
III. Allocation of Costs 3
IV. Effect of General Obligation Bond Financing 4
V. Methods Determ i n i ng Sewer Charges . 7
Method "1" - Percentage of Water Bill ing 7
Method "2" - Winter Water Consumption 7
Method "3" - Flat Fee. . . 7
VI.
Debt Servi ce Requ irements. . .
. . . . . . . . . 8
(1)
$1,650,000 Sewer Revenue Bond
Issue Requirements.
8
(2)
$3,600,000 Water and Sewer Revenue Bond
Issue Requirements. . . . . .
8
VII.
Sewer Service Charges Computed Under Method "2"
(Winter Water Consumption) . . . . . . . .. ... 10
Schedule "A" (Analysis of Sewer Rates based on
30 Year Maturity Schedules). . . . . . . 11
Schedule "B" (Analysis of Sewer Rates based on
25 Year Maturity Schedules) . .... 12
VIII.
Sewer Service Charges Based on Method "3"
(Flat Fee). . . . . . . . . .
Flat Fee Schedule (Method "3")
13
13
List of Customers Using in Excess of
20,000 Cubic Feet Per Month . . . . . . 14
(Continued on Next Page)
IX.
X.
XI.
INDEX (continued)
PAGE
Revenue Bond Maturity Schedules . . . . . . . . .
. 15
Exhibit "1" ($1,650,000,30 Year Maturity Schedule,
Sewers Only) . . . . . . . . 17
Exhibit "11" ($1,650,000,25 Year Maturity Schedule,
Sewers Only) ........ 18
Exhibit 1111"($3,60C,000, 30 Year Maturity Schedule,
Water and Sewer). . . . . . . 19
Exhibit IIV"($3,600,000, 25 Year Maturity Schedule,
Water and Sewer). . . . . . . 20
Refunding of Present Waterworks Revenue Bond Debt
for Inclusion in $3,600,000 Water and Sewer
Revenue Bond Issue . . . . . . . . . .
21
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Exhibit "V" - Estimate of Refunding Costs.
Summary and Recommendations . . . . . .
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I.
PREFACE
In determining the financial feasibil ity of bond issuance for the proposed Sewage Disposal System
Improvements, it is important to examine every possible avenue of fiscal procedure in order to as-
certain which type of program is best suited to the City of Salina. For this reason, we have in-
cluded not only a study of Revenue and General Obligation Bond financing for the Sewage System
Improvements, but also an analysis of the advantages of combining the Water and Sewer Depart-
ments of the City, and issuing Water and Sewage ,System Revenue Bonds to finance improvements
for both systems and refund the two outstanding issues of Waterworks Revenue Bonds.
Several basic facts should be emphasized in setting up fiscal procedures for bond programming:
A.
Revenue Bonds will constitute a I ien on the revenues of the entire Sewage System (or Water
and Sewer System, if combined) of the City and will not be a general obi igation tax I iabil-
ity of the City. By statute, such bonds and the interest thereon are to be paid solely from
the rates, fees, and charges for sanitary sewer services (or water and sewer services, if
combined), and not from any other fund or source.
B.
Revenue bond procedures require that the service charge shall be sufficient to pay the costs
of operation, improvement, and maintenance of the Util ity System financed, provide ade-
quate depreciation reserves, and pay the principal of and interest on outstanding Utility
System Revenue Bonds. It should be emphasized that the costs of maintenance and operation
of the Sewage Disposal System are presently being provided in the City's Budget from gen-
eral ad valorem taxation, and such costs of maintenance and operation will henceforth be
financed from the rates, fees, and charges of sewer system services. Revenue bond issuance
will therefore eliminate this budgetary item as a property tax obligation.
c.
Revenue Bonds establ ish the burden of payment for sewer service on the actual user of such
service rather than upon the assessed valuation of properties lying within the corporate I im-
its of the City. Revenue Bonds are not and cannot become general obi igations of the City,
and revenue bond financing is expressly a "self-liquidating" financial vehicle.
D.
Revenue Bonds, through procedures establ ished at the time of issuance, create a businessl ike
cl imate in the operation and maintenance of the Util ity System financed. This is a result
of Kansas statutory requirements, the continuing financial interest of bond holders and bond
underwriters, and the necessity for maintaining adequate net earnings and efficient and
businessl ike operational procedures. Excessive operational 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 sewer con-
nections, and emphasize the necessity that all properties afforded sewer service shall be
fairly and equitably charged for the availability of such service. Thus, the cost per cus-
tomer is kept at ami n imum.
F.
General Obligation Bond issuance provides no reserves of any kind for future plant expan.-
sion, enlargement, improvements, maintenance and repairs.
G.
Salina's issuance of General Obligation Sewage Disposal System Bonds in the amount of
$1,650,000 would create a substantial increase in the ratio between the City's indebtedness
and the total tangible assessed valuation of property in the City, resulting in a possible in-
crease in interest rates on all future General Obi igation Bond Issues.
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II.
SCOPE
In developing schedules of sewer rates, fees, and charges, a statistical study of the water billing
records of the City's Water Department was made by the First Securities Company. These studies
developed and summarized the name, address, meter size, water consumption, and water billing
of each connection for the months of January, February, and March, of 1960. These months of
usage were employed since the residual of water consumption during this period of the year will
be a sewer discharge and little, if any, of the water metered would be used for lawn watering,
air conditioning, or similar purposes. The Water Department Office provided valuable assistance,
time, and help in computing these figures, and the Engineering Department identified water cus-
tomers who are not and might never become connected to the City's Sanitary Sewer System. The
results of this statistical survey and the summaries developed are submitted as basic information
from which the City can determine the most practical and feasible method of establishing sewer
serv ice rates, fees, and charges.
Basic procedures, as set forth in the Preface, necessitate a sewer service charge to be established
which will yield net revenues, after the payment of operation and maintenance expenses, which
will be sufficient to determine a net operational income factor adequate to retire Sewer Revenue
Bonds in a manner that will be financially feasible. In determining such feasibility, two consid-
erations are of prime importance: (1) the bond principal maturity schedule, and (2) the sewer
charges to be employed. It is obvious mathematically that the shorter the time establ ished in the
bond principal repayment schedule, the greater will be the annual requirement for debt service
and, as a consequence, the higher will be the sewer service charge schedule. Studies indicate
that a 20 year revenue bond principal maturity schedule would require a system of sewer charges
which might be considered excessive. This Report, therefore, principally concerns itself with
the programming of 25 and 30 year revenue bond principal maturity schedules. Sewer System rate
schedules for each of these repayment programs are set forth.
It will be noted that maturity schedules for both a $1,650,000 Sewer System Revenue Bond Issue
and a $3,600,000 Water and Sewer System Revenue Bond Issue have been included in order that
the merits of both types of Revenue Bond issuance can be evaluated. The analysis of a fiscal pro-
gram combining the two utilities is submitted for several reasons. The City Manager and the City
Engineer recommended needed improvements for the Waterworks System. A more efficient and
economical operation can be real ized through the establ ishment of one Water and Sewer Util ity
Department. Manpower can be more readily and economically utilized by operating the two util-
ities as one Department, and bill ing procedures would be simpl ified in that a "Water and Sewage
Fund" would be created, and all revenues collected for Water and Sewer Utility Service would
be credited to the one Fund for the use of the combined Water and Sewer Department. Thus, it
would not be necessary to independently program the money collected for water and sewer service
and maintain separate accounts, both income and expense, for the two utilities.
We have also included an analysis of the financial effect of the issuance of General Obi igation
Bonds for financing Sewage System Improvements, and we have invited attention to the problems
connected t-herewith, particularly when considered in relation to the present indebtedness of the
City itself, along with the overlapping indebtedness of the Board of Education.
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II \.
ALLOCATION OF COSTS
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The City has employed Wilson & Company, Consulting Engineers of Sal ina, Kansas, in the design
and preparation of cost estimates in its Sewage Disposal System Improvement Program. The Engi-
neering Report indicates a total project cost for each of the various portions of work to be as
follows:
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TOTAL.
$ 570,000
60,000
990,000
30,000
$1,650,000
$ 640,000
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Sanitary Sewer Mains
Grit Removal Facilities. . .
New Sewage Treatment Plant
Preliminary Engineering Study Expense
Separation of Storm and Sanitary Sewers
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It was pointed out by the Consulting Engineers that the $60,000 item for grit removal facilities
could be eliminated in the event the City might undertake the construction of facilities to sepa-
rate the discharge of Storm and Sanitary Sewers at the same time as it commenced the construction
of the Sewage Disposal Plant and Sanitary Sewer Mains. However, it is our understanding that
this $640,000 portion of the work will probably not be undertaken until later, and therefore the
$60,000 item for grit removal facilities is included in the $1,650,000 figure for purposes of this
fiscal study. The $640,000 storm sewer work is omitted from this analysis of revenue bond finan-
cing, since it could only be included under special laws which require an election, which the
City is not contemplating in connection with this project. We therefore assume that the Storm
Sewer Program will ultimately be financed by General Obligation Bonds, as have all Storm Sewer
Improvements in the past. Under present financial conditions, the Storm Sewer Project would re-
sult in an average annual levy of approximately .83 mills to finance a 20 year general obligation
bond maturity schedule on a $640,000 issue.
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An appl ication should be made to the Federal Government for a construction grant on the new Sew-
age Treatment Plant. Under present law, this grant could not exceed 30% of the cost of the plant
itself, or $250,000, whichever is less. It is not known at this time whether such Federal assistance
will be received, and therefore our fiscal scheduling is based on a bond issue of $1,650,000 for
Sanitary Sewage System Improvements.
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The City's Engineer1s estimate of the cost of capital improvements required for the Waterworks
System is $654,500. Due to the present fiscal status of Waterworks Reserve Funds and the pro-
visions and restrictive covenants of the Bond Ordinances under which outstanding Waterworks
Revenue Bonds were issued, additional Waterworks Revenue Bonds are not feasible until the Re-
serve Funds in the total amount of $180,000 are restored. On the other hand, it is possible to
refund the two outstanding Revenue Bond Issues in order to immediately finance Waterworks Im-
provements by means of additional Revenue Bonds. If refunding procedures are employed, the
City could then combine its Water and Sewer Departments and issue Water and Sewer System Rev-
enue Bonds in the amount of approximately $3,600,000. The following summaries indicate the
gross estimated principal amount of revenue bond requirements when all outstanding Waterworks
Revenue Bonds are refunded and included in a Waterworks and Sewer System Bond Issue, Series
1961. Principal and interest responsibilities for 1961 of both Series B and Series C Waterworks
Revenue Bonds will be satisfied from waterworks operational incomes:
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A.
Refunding of principal of Series B Waterworks Revenue
Bonds maturing in the years 1962/1973 . . . . . . .
$
748,000.00
B.
Refunding of principal of Series C Waterworks Revenue
Bonds maturing in the years 1962/1970 . . . . . . .
434,000.00
C.
New money requirements for construction of Waterworks
Improvements and Extens ions. . . . . . . . . . . .
654,500.00
D. New money requirements for construction of new Sanitary
Sewage Disposal Fac iI ities:
Sanitary Sewer Mains. . .
Sewage Treatment Plant. .
Grit Removal Facilities. .
Prel iminary Engineering Study Costs.
$570,000.00
990,000.00
60,000.00
30,000.00
1 ,650,000. 00
E.
Miscellaneous cost estimate for additional Water Line
Extensions in 1962 and 1963. . . . . . . . . . .
113,500.00
TOTAL ESTIMATED PRINCIPAL AMOUNT OF WATER
AND SEWER REVENUE BOND ISSUE - SERIES 1961. .
$3,600,000.00
IV.
EFFECT OF GENERAL OBLIGATION BOND FINANCING
The issuance of General Obi igation Bonds for Sewage System Improvements must be authorized at
an election held for that purpose, whereas no election is normally required for the issuance of
Revenue Bonds. In the event the voters rejected a General Obi igation Bond Proposal, the Gov-
erning Body might then be placed in the untenable position of having a mandate from the voters
not to proceed with a project essential to the City's welfare and which the Kansas State Board of
Health will require to be undertaken. The necessity for Sewage System Improvements is empha-
sized in the Sewerage Study submitted by your Consulting Engineers, which states that the City
has outgrown portions of the Sanitary Sewer System serving the southern areas, and that a number
of mainline sewers are deficient in volume capacity. With respect to the Sewage Treatment Plant,
the Engineering Report establishes the fact that certain designated improvements are required, and
that additional improvements should be incorporated into facil ities of adequate size to provide for
better operation and control of the treatment processes. It is therefore essential to the present
welfare and future growth and expansion of the City that Sewage System Improvements be con-
structed as soon as possible.
The City's population has increased from 25,406 to 42,178 in the last ten years, and many factors
indicate that this population growth will 'Continue at even a more rapid rate. These growth factors
not only mean that this Sewage System Improvement Program is immediately essential, but that
more and more public improvements of all kinds will be needed in the next ten years. Additional
street paving, storm sewers, sanitary lateral sewers, and other internal improvements will be nec-
essary and must be financed by General Obligation Bonds. The City must look ahead to the issu-
ance of increased amounts of General Obi igation Bonds and must recognize the responsibil ity of
determining a fiscal program that will maintain the best possible future market for all general
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obi igation bonded indebtedness. It is essential that the City employ revenue bond procedures
whenever possible in the financing of its municipal improvements, and thus keep its fiscal struc-
ture in good order in anticipation of improvement programs which must, by law, be financed by
General Obi igation Bonds. At the present time, the City has $7,262,914 outstanding General
Obligation Bonds and $2,003,454 Temporary Notes, making a total general obligation debt re-
sponsibility of $9,266,368. This amount is 17.60% of the City's 1960 tangible property valuation
of $52,626,598 and indicates a debt ratio of consequence. It is, of course, to the City's finan-
cial advantage to keep its general obi igation indebtedness as low as possible. Should the Sewage
Disposal Improvements be financed by $1,650,000 General Obligation Bonds, the City's General
Obligation Bond indebtedness would increase to $10,916,368, and develop a bonded debt ratio
of 20.73% of tangible assessed valuation. The City Manager has indicated that approximately
$1,650,000 flood control financing will be required in addition to the $667,000 Flood Control
Temporary Notes now outstanding. This would increase the debt ratio an additional 3.13% to a
23.90% total. These increases in the City's debt ratio statement could have a costly effect on
interest rates of future General Obligation Bonds, and must be considered in maintaining the
City's "A" financial rating given by National Bond Rating Services.
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In addition to the City's direct bonded debt, property in the City is subject to the indebtedness of
the Board of Education. Salina Board of Education presently has a total indebtedness of $3,884,000,
of which $3,744,176 is applicable to the City (computed on a pro rata comparison of the City's
valuation to the Board of Education's valuation of $54,589,058). Salina's composite General
Obi igation debt status projection is therefore summarized as follows:
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General Obi igation Bond Indebtedness
(Direct and Overlapping Debt)
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Assessed
Valuation
Bonded
Indebtedness
Bonded Debt
Applicable
to City
Debt Ratio Percentage
of City's Assessed
Valuation
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Salina
Board of Education
$52,626,598 $7,262,914(A)
2,003,454(B)
$9,266,368 $9,266,368
$1,650,000(C) $1,650,000
$ 640,000(D) $ 640,000
$1,650,000(~ $1,650,000
$54,589,058 $3,884,000 $3,744,176
17.60%
City of Sal ina:
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3.13%
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1.21%
3.13%
7.11%
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TOTAL.
32.18%
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(A)
(B)
(C)
(D)
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Includes $1,430,000 authorized but un issued Off-Street Park ing Bonds.
Temporary Notes outstand ing.
Flood Control Bonds to be issued in addition to $667,000 Flood Control Improvements
included in Temporary Notes.
Storm Sewer construction cost estimate included in present Sewerage Study.
Sewage Disposal Plant Bonds, if General Obi igation Debt.
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Thus, the direct and overlapping debt ratio will be 32.18% of the total taxable, tangible assessed
valuation of property in the City if all the projects shown in the table above are financed by Gen-
eral Obligation Bonds. Any reduction possible by means of Revenue Bond financing will allow
the City to experience a more favorable position relative to future General Obi igation Bond issu-
ance, since Revenue Bonds are not reflected in municipal debt ratio statements.
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Another factor of importance in considering the comparative merits of General Obi igation Bond
and Revenue Bond financing is the City's historic record of increases in general obligation bonded
indebtedness, increases in the Board of Education indebtedness, and the accompanying tax millage
levy increases. The following comparison of population, valuation, bonded debt, and tax levy
increase is revealing:
% of
1950 1960 Increase Increase
City of Sal ina: $36,083,032 $52,626,598 A
Assessed Valuation $16,543,566 45.8%
Bonded Indebtedness 1,398,901 7,262,914 5,864,013 419.1%
Population 25,406 42, 178 16,772 66.0%
City Millage Levy 13.50 Mills 24.08 Mills 10.58 Mills 78.3%
Salina Board of Education:
Assessed Valuation $37,437,223 $54,589,058 $17,151,835 45.8%
Bonded Indebtedness 2,070,000 3,884,000 1,814,000 87.6%
School Millage Levy 16.60 Mills 30. 84 Mill s 14.24 Mills 85.7%
A- Does not include $2,003,454 Temporary Notes outstanding for Sewer, Street, and Flood Con-
trol purposes; but does include $1,430,000 Off-Street Parking Bonds authorized but un issued.
With a high ratio of General Obligation debt and substantial tax levy increases, it would seem
advisable to reduce these two factors wherever possible. Salina's position is similar to other grow-
ing midwestern municipalities which are employing Revenue Bond financing whenever and wherever
possible.
It is estimated that the financing of $1,650,000 Sanitary Sewage System Improvements by General
Obligation Bonds maturing over a 20 year period would result in a tax levy of about 2.66 mills
the first year based on the present assessed valuation, or a cost of approximately $9.30 for an
average residence assessed at $3,500.
The average annual levy over the 20 year period would be about 2. 15 mills, or $7.50 per average
residence. This tax cost will be less than the average residential sewer service charge required
to finance a Revenue Bond Issue, but it must be emphasized that such millage cost does not pro-
vide reserves of any kind (as does a Revenue Bond Issue) for future plant expansion, enlargement,
improvements, maintenance and repair, or for the regular annual operating expense of the Sewage
Department, which is estimated by the Consulting Engineer to be $135,000 by 1963. A tax levy
of 2.51 mills will then be required to pay for the expenses of the operation and maintenance of
the Sewage Disposal System, or an additional cost of approximately $8.78 per year for the aver-
age residence. Adding this to the $7.50 average annual debt service shown above, an annual
gross tax cost of $16. 28 resu I ts, or vi rtua II y the same an nua I cost for more tha n 50% of a II the
residences as would be required under Revenue Bond financing. In addition, as pointed out pre-
viously, the City's present General Obi igation Bond debt ratio, along with the foreseeable future
General Obligation Bond requirements, emphasize the benefits of Revenue Bond financing, par-
ticularly since the annual cost under either financing method is at a similar level for more than
one-half of all sewer connections in the City.
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V.
METHODS DETERM I N I NG SEWER CHARGES
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In arriving at a specific procedure through which proper charges may be established to provide
adequate sewer revenues to meet the fiscal requirements of a Revenue Bond Indenture, three pos-
sible methods may be considered. We submit our comments pertaining to each method, and rec-
ommendations as to the most fair, reasonable, and workable procedure.
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Method 1.
Percentage of Water Bill ing:
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One method employed by many municipalities determines a system of rates, fees, and
charges which incorporate a sewer charge based upon the existing water bill ing of each
sewer customer. This appears to have merit in its ease of computation, but results in an
inequitable situation due to the fact that gross water volume is not necessarily an indica-
tion of gross sewage volume. An unfair sewer charge burden is therefore imposed on heavy
summer water users, since water for air conditioning, lawn watering, etc., does not go
into the sanitary sewers. The City of Warrensburg, Missouri has established a straight sewer
charge of 150% of the monthly water billing.
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Method 2.
Winter Water Consumption:
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A similar method of sewer rate establishment is the procedure of computing sewer charges
based on the average monthly winter water consumption of each customer. This procedure
appears to be much more equitable, as it does not discriminate against heavy water users
or summer water users not discharging water into the sewer facil ities. The Water Survey
prepared on all residences and business establ ishments provides a means of classifying sewer
users according to winter water consumption. These classifications are defined and ex-
plained herein. An analysis of Salina water users indicates that residences using less than
1,000 cubic feet of water per month during the months of January, February, and March,
comprise the vast majority of sewer connections, and this classification will necessarily
produce the largest amount of net operating sewer income.
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Method 3.
Flat Fee:
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A third method of establ ishing sewer rates, fees, and charges is the procedure of determin-
ing a flat fee per month for all sewer connections. This method of rate determination does
not establish customer sewer rates on the basis of usage as is customary in utility procedures.
We, therefore, do not feel that a flat rate procedure is as fair and equitable as Method "2"
above. However, a flat rate sewer charge is used in many cities, and we submit schedules
based upon gross income production based upon a flat charge.
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Since a 20 year maturity debt schedule would require high sewer rates, and since a sewer rate
charge computed in accordance with Method "1" above appears inequitable, we have establ ished
gross revenue requirements for 25 year and 30 year bond maturity schedules. We have computed
sewer rates for both Method "2" and Method "3" above that will meet the requirements for both
a $1,650,000 Sewer Revenue Bond Issue and a $3,600,000 Water and Sewer Revenue Bond Issue.
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VI.
DEBT SERV I CE REQU I REMENTS
Under accepted practices of Revenue Bond finance, conditions must be established to guarantee
marketabil ity of the issue. Net revenues, after payment of operations, should be 150% of
maximum annual principal and interest requirements. In addition, it is preferable that such
"coverage factor" substantially exceed 150% of averaqe annual principal and interest require-
ments to establish prime security of the issue. We have therefore computed our schedules on the
basis of at least a 150% coverage factor of average annual principal and interest requirements.
The Consulting Engineer has estimated annual disposal plant operating expense to be $135,000
for the first full year of operation. Therefore, in developing net revenues, a gross operational
cost of $135,000 has been employed.
Exhibit "I", as attached, develops pro-forma bond procedures resulting from the issuance of
$1,650,000 principal amount of Sewer Revenue Bonds maturing on a 30 year payment schedule,
and Exhibit "II" develops procedures based on a 25 year payment schedule. Exhibit "III" de-
velops pro-forma bond procedures resulting from the issuance of $3,600,000 principal amount of
Water and Sewer Revenue Bonds maturing on a 30 year payment schedule, and Exhibit "IV" de-
velops procedures based on a 25 year payment schedule.
(1) $1,650,000 Sewer Revenue Bond Issue Requirements
In Exhibit "I", average annual principal and interest requirements are $101,060.
In Exhibit "II", average annual principal and interest requirements are $112,071.
In developing adequate coverage factors, the following gross sewer incomes must
be available to provide for operational expenses and debt service requirements:
Gross Annual
Bill ing Requirement
Debt Service
Coverage
Bond Retirement Program
$1,650,000 @ 30 Year
Maturity Schedule
$297,600
160%
$1,650,000 @ 25 Year
Maturity Schedule
$312,528
158%
(2) $3,600,000 Water and Sewer Revenue Bond Issue Requirements
In Exhibit "III", average annual principal and interest requirements are $202,288.78.
In Exhibit "IV", average annual principal and interest requirements are $234,370. 50.
In developing adequate coverage factors, the following gross waterworks and sewer
incomes must be available for the payment of operational expenses ($135,000 for
sewer and $297,358 for waterworks), and debt service requirements:
Gross Annual
Billing Requirement
Debt Service
Coverage
Bond Retirement Program
$3,600,000 @ 30 Year
Maturity Schedule
$795,380
179%
$3,600,000 @ 25 Year
Maturity Schedule
$810,308
161%
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The gross annual income in Exhibits "I" and "II" is based on sewer rates indicated under Schedules
"A" and "B" which follow.
The gross annual incomes in Exhibits "III" and "IV" include both water and sewer billings and are
based upon present water rates plus sewer rates established by Schedules "A" and "B". The present
water rates produced gross incomes of $497,780 in 1959. Actual operational expenses were
$297,358.80, leaving a balance for debt service of $200,421.23 and these figures have been em-
ployed in programming the combined Water and Sewer Revenue Bond Issues. The waterworks in-
come of $497,780, when added to anticipated incomes to be derived from sewer service charges
under Schedule "A" ($297,600) and Schedule "B" ($312,528), will develop gross annual income
from water and sewer combined operations of $795,380 under Exhibit "III" and $810,308 under
Exhibit "IV".
It should be mentioned that in the 1959 waterworks income, billings during the first six months of
the year were based on the old water rate schedule, since the water rate increase was not effec-
tive until June, 1959. The use of actual 1959 water incomes in the fiscal programming is there-
fore conservative, inasmuch as 1959 income would have been considerably greater had water rate
increases been in effect during the entire year. For purposes of comparison, it is interesting to
note waterworks incomes before and after the rate increase:
A B
Actual Water Revenue
Actual Water Revenue for Same Month of ACTUAL %OF
after Preceding Year REVENUE ACTUAL
Water Rate Increase before Increase INCREASE INCREASE
July, 1959 $ 55,684.53 July, 1958 $ 39,032.77 $16,651. 76 42.6%
Aug., 1959 58,226. 16 Aug. , 1958 45,538.72 12,687.44 27.8%
Sept. , 1959 59,827.87 Sept. , 1958 41,933.73 17,894. 14 42.6%
Oct. , 1959 43,465.41 Oct. , 1958 35,547.78 7,917.63 22.2%
Nov., 1959 37,752.31 Nov. , 1958 32,796.78 4,955.53 15.1%
Dec. , 1959 35,150.28 Dec. , 1958 29,844.70 5,305.58 17.7%
Jan. , 1960 36,881. 25 Jan. , 1959 31,111.41 5,769.84 18.5%
Feb. , 1960 32,121. 14 Feb. , 1959 30,352.75 1,768.39 5.8%
Mar., 1960 36,730. 14 Mar., 1959 31,053. 18 5,676.96 18.2%
Apr. , 1960 37,920.29 Apr. , 1959 31,809.87 6,110.42 19.2%
May, 1960 41,024.70 May, 1959 34,862.23 6,162.47 17.6%
June, 1960 45,484.26 June, 1959 40,773.46 4,710.80 11.5%
$520,268.34 $424,657.38 $95,610.96
Total Revenue per Column A $520,268.34
Total Revenue per Column B 424,657.38
NET REVENUE INCREASE. $ 95,610.96
Percentage of Increase per Column B 22.5%
From these summaries, it can be assumed that gross water revenue should be substantially increased
in 1961.
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VII.
SEWER SERVICE CHARGES COMPUTED UNDER METHOD "211
(WINTER WATER CONSUMPTION)
Water Department studies conducted by First Securities Company indicate that in the months of
January, February, and March, 1960, there were 12,381 Water Department customers whose
premises were connected to the City's Sanitary Sewer Facilities. In addition, there were 318
properties which were vacant, and 50 sewer customers who have private water wells and are not
served by the Water Department. Our studies indicate that 6,389 water connections, (51% of
the water customers), consumed less than the minimum of 500 cubic feet of water per month, and
that 10,558 connections, (85% of the water customers), consumed less than 1,000 cubic feet of
water per month. These customers will therefore produce the major portion of the revenue de-
rived from the service charges of the SaniTary Sewer System. It should be mentioned that the in-
comes developed under Method "2" will vary somewhat on industrial customers, since special
contracts will have to be worked out with industrial users discharging abnormal types and amounts
of sewage.
We are attaching hereto Analysis Schedules of proposed Sal ina sewer rates based on a sewer serv-
ice charge under Method "2". These analyses summarize the proposed Salina sewer rates, the
number of customers in each rate classification, and the monthly income to be expected from each
classification. In addition, these analyses show the actual number of water customers based on
our study of the Water Department records, the monthly consumption, and the maximum sewer
service charge for various customers under each rate schedule.
The sewer rates proposed for Salina under procedures of Method "2" (winter water consumption),
are identified as follows:
Sewer Rate Schedule "A" - $1,650,000 Sewer Revenue Bond Issue at
30 Year Maturity Schedule
$3,600,000 Water and Sewer Revenue Bond Issue at
30 Year Maturity Schedule
Sewer Rate Schedule "B" - $1,650,000 Sewer Revenue Bond Issue at
25 Year Maturity Schedule
$3,600,000 Water and Sewer Revenue Bond Issue at
25 Year Maturity Schedule
Since the gross income required under 25 year maturity schedules is greater than requirements
under 30 year maturity schedules, it will be seen that the proposed sewer rates under Schedule
"B" (25 year maturity schedules) are slightly higher than those for Schedule "A" (30 year matu-
rity schedules). The City Commission must decide which schedule is more desirable when the
total interest costs of 25 year and 30 year bond maturities are compared.
The analyses of the proposed Salina sewer rates, set forth in Schedule "A" and Schedule "B"
follow:
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Please Tu rn Page
for Schedu les
SCHEDULE "A"
ANAL YS I S OF PROPOSED SEWER RATES
I. $1,650,000 Sewer Revenue Bond Issue per Exhibit I.
$297,600 - Gross AnniJal Income Required for 30 Year Maturity Schedule.
24,800 - Monthly Income Required.
II. $3,600,000 Water and Sewage System Revenue Bond Issue per Exhibit III.
$795,380 - Gross Annual Income Required from Water and Sewer Operations for 30 Year Maturity Schedule.
24,800 - Monthly Sewer Income.
41.482 - Monthly Water Income.
$ 66,282 - Total Monthly Income Required.
PROPOSED SEWER RATES
COST
WATER
CONSUMPTION SEWER RATES
SUM OF COST
0/500 $1.25
500/1,000 .22
1,000/2,000 .20
2,000/5,000 . 16
5,000/20,000 . 12
Over 20,000 .08
COMPILATION OF WATER SYSTEM CUSTOMERS SHOWING AVERAGE MONTHLY
WATER CONSUMPTION FOR QUARTERS ENDING JANUARY, FEBRUARY, AND MARCH, 1960
AND MAXIMUM SEWER BILLINGS UNDER PROPOSED RATES
$ 1.25
1. 10
2.00
4.80
18.00
$ 1.25
2.35
4.35
9.15
27.15
MAXIMUM MAXIMUM
WATER NO. OF SEWER SERVICE WATER NO, OF SEWER SERVICE
CONSUMPTION CUSTOMERS CHARGE CONSUMPTION CUSTOM ERS CHARGE
0/500 6,389 $ 1.25 5,000/6,000 15 $ 10.35
500/600 1,198 1.47 6,000/7,000 24 11.55
600/700 1,053 1. 69 7,000/8,000 12 12.75
700/800 806 1. 91 8,000/9,000 9 13.95
800/900 659 2.13 9,000/10 ,000 6 15.15
900/1,000 453 2.35 10 ,000/15 ,000 38 21. 15
1,000/1,100 334 2.55 15,000/20,000 17 27.15
1 , 1 00/1 ,200 287 2.75 20,000/30,000 15 35.15
1,200/1,300 189 2.95 30,000/40,000 7 43.15
1,300/1,400 118 3.15 40,000/50,000 5 51.15
1,400/1,500 137 3.35 50,000/60,000 2 59.15
1,500/2,000 285 4.35 60,000/70,000 3 67.15
2,000/2,500 127 5.15 70,000/80,000 1 75.15
2,500/3,000 61 5.95 80,000/90,000 2 83.15
3,000/4,000 85 7.55 110,000/120,000 1 107.15
4,000/5,000 41 9.15 160,000 --.1. 139.15
Total 12,381
Vacant Meters 318
Sewer Service Not Available 68
Grand Total 12,767
WATER
CONSUMPTION
CUSTOMER AND INCOME SCHEDULE
TOTAL
MONTHLY
INCOME
SEWER RATES
0/500
500/1,000
1,000/2,000
2,000/5,000
5,000/20,000
Over 20,000
$1.25
.22
.20
.16
.12
.08
NO. OF
CUSTOMERS
6,389
4,169
1,350
314
121
38
Total 12,381
GRAND TOTAL
$ 7,986
7,087
4,018
1,890
1,859
1,885
$24,725
75*
$24,800
$1.25 monthly minimum for each residence or residential dwelling unit.
GROSS ANNUAL SEWER INCOME - - - - - - $297,600
GROSS ANNUAL WATER INCOME - - - - - - 497,780
TOTAL ANNUAL WATER & SEWER INCOME - - $795,380
*50 Sewer customers not using City water - $1.50 Ea.
Note: All consumption figures are in cubic feet. Rates shown are for each 100 cu. ft. of water used, and are
computed on a monthly basis.
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SCHEDULE IIB"
ANALYSIS OF PROPOSED SEWER RATES
I. $1,650,000 Sewer Revenue Bond Issue per Exhibit II.
$312,528 - Gross Annual Income Required for 25 Year Maturity Schedule.
26,044 - Monthly Income Required.
II. $3,600,000 Water and Sewage System Revenue Bond Issue per Exhibit IV.
$810,308 - Gross Annual Income Required from Water and Sewer Operations for 25 Year Maturity Schedule.
26,044 - Monthly Sewer Income.
41,482 - Monthly Water Income.
$67,526 - Total Monthly Income Required.
PROPOSED SEWER RATES
0/500 $1.35
500/1,000 .22
1,000/2,000 .20
2,000/5,000 .16
5,000/20,000 .12
Over 20,000 .08
COMPILATION OF WATER SYSTEM CUSTOMERS SHOWING AVERAGE MONTHLY
WATER CONSUMPTION FOR QUARTERS ENDING JANUARY, FEBRUARY, AND MARCH, 1960
AND MAXIMUM SEWER BILLINGS UNDER PROPOSED RATES
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WATER
CONSUMPTION
SEWER RATES
COST
I
$ 1.35
1. 10
2.00
4.80
19.00
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SUM OF COST
$ 1.35
2.45
4.45
9.25
28.25
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MAXIMUM
WATER NO. OF SEWER SERViCE
CONSUMPTION CUSTOMERS CHARGE
0/500 6,389 $ 1. 35
500/600 1,198 1. 57
600;700 1,053 1. 79
700/800 806 2.01
800/900 659 2.23
900/1,000 453 2.45
1,000/1,100 334 2.65
1,100/1,200 287 2.75
1,200/1,300 189 3.05
1,300/1,400 118 3.25
1,400/1,500 137 3.45
1,500/2,000 285 4.45
2,000/2,500 127 5.25
2,500/3,000 61 6.05
3,000/4,000 85 7.65
4,000/5,000 41 9.25
WATER
CONSUMPTION
5,000/6,000
6,000;7,000
7,000/8,000
8,000/9,000
9,000/10,000
10,000/15,000
15,000/20,000
20,000/30,000
30,000/40,000
40,000/50,000
50,000/60,000
60,000;70,000
70,000/80,000
80,000/90,000
110,000/120,000
160,000
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Total
Vacant Meters
Sewer Service Not Available
Grand Total
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CUSTOMER AND INCOME SCHEDULE
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WATER
CONSUMPTION
NO. OF
CUSTOM ERS
SEWER RATES
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0/500
500/1,000
1,000/2,000
2,000/5,000
5,000/20,000
Over 20,000
$1.35
.22
.20
.16
.12
.08
6,389
4, 169
1,350
314
121
38
Total 12,381
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GRAND TOTAL
$1. 35 monthly minimum for each residence or residential dwelling unit.
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TOTAL
MONTHLY
INCOME
$ 8,625
7,506
4,152
1,922
1,874
1,890
$25,969
75*
$26,044
GROSS ANNUAL SEWER INCOME - - - - - - $312,528
GROSS ANNUAL WATER INCOME - - - - - 497,780
TOTAL ANNUAL WATER & SEWER INCOME - - $810,308
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NO. OF
CUSTOMERS
15
24
12
9
6
38
17
15
7
5
2
3
1
2
1
2
12,381
~
68
12,767
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MAXIMUM
SEwER SERVICE
CHARGE
$ 10.45
11.65
12.85
14.05
15.25
21.25
28.25
35.25
43.25
51.25
59.25
67.25
75.25
83.25
107.25
139.25
(Li \1' (
br
j.1"/
( ,}
Note:
*50 Sewer customers not using City water - $1.50 Ea.
All consumption fugures are in cubic feet. Rates shown are for each 100 cu. ft. of water used, and are
computed on a monthly basis.
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V III.
SEWER SERVICE CHARGES BASED ON METHOD "311 (FLAT FEE)
There are 12/381 Water Department customers whose premises are connected to the Sanitary Sewer
Facilities, and 50 other premises with private water wells. A flat fee sewer service charge
(Method "3") would apply to all sewer customers/ although a maximum usage factor should be es-
tablished above which an increased sewer charge would become effective. This analysis arbi-
trarily has assumed that all sewer connections using in excess of 20/000 cubic feet of water per
month might be charged more than the flat fee sewer charge. Attached is the I ist of the 38 Water
Department connections which consume in excess of 20/000 cubic feet of water per month. The
name/ address, and consumption of each such water customer is shown. By applying the same
system of sewer rates and charges to these 38 high usage customers as is set forth in Schedules "A"
and "B" above, monthly incomes of $1/885 under Schedule "A" and $1/890 under Schedule "B"
wou Id resul t.
In a 30 year bond principal maturity schedule, a $24/800 gross monthly income from the 12/431
sewer customers is required in order to develop an adequate coverage factor of average principal
and interest. Reducing this amount by $1/885 to be paid by the 38 large sewer users/ a balance
of $22/915 per month is to be paid by 12/393 customers. A flat fee of $1.85 per month per sewer
connection is therefore necessary in order to develop $22/915 from the 12/393 normal use cus-
tomers.
In a 25 year bond principal maturity schedule, a $26/044 gross monthly income from the 12/431
sewer customers is required in order to develop an adequate coverage factor of average principal
and interest. Reducing this amount by $1/890 to be paid by the 38 large sewer users/ a balance
of $24/154 per month is to be paid by the 12/393 customers. A flat fee of $1.95 per month per
sewer connection is therefore necessary in order to develop $24/154 from the 12/393 normal use
customers.
A comparison of flat fee sewer charges required under Method "3" is reflected in the following
summary:
30 Year
Bond Maturity
Schedule
25 Year
Bond Ma tur i ty
Schedule
Monthly Income Required to Provide Coverage
of Average Annual Principal and Interest
Requirement for $1/650/000 Sewer Revenue
Bond Issue or $3/600/000 Water and Sewer
Revenue Bond Issue . . . . . . . . . . .
$24/800
$26/044
Less Income from Special Sewer Rates
Appl icable to 38 Large Water Users
1/885
1 / 890
Total Sewer Charges to be Paid by
12/393 Sewer Connections
Flat Fee Sewer Rate . . . . . . .
$22/915
$ 1 . 85 Per Mo.
$24/154
$1.95PerMo.
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WATER CONSUMPTION IN SALINA, KANSAS
IN EXCES S OF 20,000 CU B I C FEET PER MONTH
I. Consumption between 20,000 and 30,000 cubic feet:
Book No.
16
16
54
66
54
20
15
16
19
54
26
21
2
20
5
Name
Dixie-Ann Sarna
Patio Trailer Court
Talley-Ho Trailer Court
Day & Night Laundry Market
Shangri-La Trailer Park
Elks Lodge
West Cloud Coin Laundry
Patio Trailer Court
Blakely's Trailer City
Talley-Ho, Inc.
Lange Creamery Company
Crown Laundry
Sol ina Nursing Home
Lamer Hotel
Asbury Hospital (4")
Address
260 South Broadway
1200 West Crawford
1411 Winona
705 Cherokee
721 West Cloud
124 North 7th
541 West Cloud
1200 West Crawford
901 West Lincoln
1810 Maple Beach
206 East Walnut
218 North Santa Fe
320 South Santa Fe
114 West Ash
401 South Seventh
II. Consumption between 30,000 and 40,000 cubic feet:
2 United Building 119 West Iron
16 Easy Wash Launderette 417 South Broadway
47 Sol ina High School Crawford & Front
39 Jo-Mar Dairies 109 South Delaware
1 Coca-Cola Company 611 Bishop
23 St. Johns Hospital (5/8") 135 North Penn
15 T raco Enterpr ises 501 West Cloud
III. Consumption between 40,000 and 50,000 cubic feet:
5 Asbury Hospital (1-1/2") 400 South Santa Fe
17 Independent Packing West Elm
8 K. W. U. Gymnasium College Campus 5
23 St. Johns Hospital (4") 135 North Penn
19 Midwest Mobile Homes 420 North Broadway
IV. Consumption between 50,000 and 75,000 cubic feet:
39 Jo-Mar Dairies 109 South Delaware
17 Sa I i no Concrete Products 1100 West Ash
20 Lamer Hote I 201 North Sa nta Fe
33 Pepsi -Cola Botti ing Co. 604 North 9th
21 Swift & Company 302 North 5th
21 Swift & Company 302 North 5th
V. Consumption between 75,000 and 100,000 cubic feet:
25 Model Laundry 211 South Santa Fe
20 Gooch Feed Mi II 438 North 9th
VI. Consumption in excess of 100,000 cubic feet:
21 Swift & Company 302 North 5th
36 U. P. Railway Co.(Round House) North Lincoln
20 Sol ina Steam Laundry 148 North 7th
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Water
Consumption
Cubic Feet
21 , 545
21,836
22,256
22,600
22,616
22,717
23, 138
23,141
23, 193
25,700
26,093
26,430
27,380
27,632
28,663
33, 169
34,650
34,789
35,135
35,661
36, 102
38,898
40, 134
41 ,379
43,587
43,949
44,659
55,234
58,783
60,646
65,300
68,735
74,510
83,230
87, 189
112,474
160,733
160,909
IX.
REVENUE BOND MATUR ITY SCHEDULES
The attached Exhibits develop principal and interest requirements and suggested reserve accumula-
tions for a $1,650,000 Sewer Revenue Bond Issue and a $3,600,000 Water and Sewer Revenue Bond
Issue when such issues are retired at 25 and 30 year maturity schedules. Bond principal payments
have been computed to provide approximately equal annual debt service requirements.
Static net incomes are employed in amounts necessary to provide adequate coverage of average
annual principal and interest requirements. Net income in Exhibit "I" is 160% of average annual
debt service; in Exhibit "II" it is 158%; in Exhibit "III" it is 179%; and in Exhibit "IV" it is 161%.
These net incol:'les are conservatively based on existing sewer connections only and do not take
into consideration future additional incom,=s resulting from added connections and population
growths.
Sewer operational expense is estimated at $135,000 a year in accordance with the City Engineer-
ing Report and water operational expense is estimated at $297,359 (actual 1959 expense). Total
operational expenses employed in the Water and Sewer Revenue Bond Schedules are $432,359.
A 1961 sewer operations expense is omitted since new disposal facilities will not be completed
until 1962 and sewer system maintenance for 1961 has been included in the City's budget.
In Revenue Bond Issues, realistic fiscal programming establishes "Bond Reserves" and "Maintenance
Reserves" to be used for unforeseen and emergency fiscal and operating contingencies. In the
Exhibits, we have arbitrarily employed the following reserve accumulations. The exact total
amounts are subject to variance as final details of the bond issue are established:
Year
Bond Reserve Ma i ntenance Reserve
$ 40,000 $ 10 , 000
40,000 10 , 000
40,000 10,000
40,000 10,000
$160,000 $ 40,000
$ 70,000 $ 30,000
70,000 30,000
70,000 30,000
70,000 30,000
70,000 30,000
$350,000 $150,000
Exhibits "I" and "II" 1962
1963
1964
1965
Exhibits "III" and "IV" 1962
1963
1964
1965
1966
Gross accumulations in Exhibits "I" and "II" total $200,000, and in Exhibits "III" and "IV" total
$500,000. The Bond Ordinance will provide for the investment of reserves and surplus in U. S.
Government Obi igations.
In Exhibit "I", surplus accumulations, after the payment of principal and interest and reserve re-
quirements, amount to $1,646,213 in 30 years. In Exhibit "II", surplus accumulations amount to
$1,436,428 in 25 years. In Exhibit "III", surplus accumulations amount to $4,321,967.50 in 30
years, and in Exhibit "IV", surplus accumulations amount to $3,089,462.50 in 25 years. Bond
Ordinances customarily permit municipalities to use surplus accumulations for the enlargement,
expansion, and improvement of the Util ity System, and thus el iminate the necessity of future
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additional bonds. Also, Utility Bonds are customarily optional, and surplus accumulations may
also be used to call and prepay bond principal prior to maturity. This call factor is of importance
as considerable interest saving will result through the exercising of call provisions. Additional
detailing of surplus usage will be accomplished through Bond Ordinance authorization.
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Comparing the details of the four Exhibits, particular attention is invited to the total gross inter-
est cost shown. The interest cost in Exhibit "I" is $1,381,787, and in Exhibit "II" is $1,151,772,
which permits the City to experience an interest savings of over $230,000 by establishing a 25
year bond maturity schedule in preference to a 30 year schedule. The total interest cost in Exhibit
"III" is $2,468,662.50, and in Exhibit "IV", is $2,259,262.50, which establishes an interest
saving of over $209,000 between the 25 and 30 year maturity schedules. It must be remembered
that the shorter the maturity schedule, the higher are the monthly sewer charges and rates neces-
sary to finance such schedule. Gross interest cost savings must be balanced against equitable
monthly sewer charges in determining the final principal amortization schedule. As shown in all
four Exhibits, surplus accumulations will be available to retire a large portion of outstanding
revenue indebtedness prior to matLrity and substantially reduce the interest cost summaries shown.
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Toto I of Issue $ 1,650,000 EXH I BIT" I"
Final Maturity 30 Years SALI NA, KANSAS
Date of Issue - 1961
SEWAGE SYSTEM REVENUE BONDS
BALANCE FOR REVENUE BONDS TOTAL
GROSS LESS DEBT OUTSTANDING INTEREST PRINCIPAL DEBT BOND MAl NTENANCE ANNUAL ACCUMULATED
YEAR REVENUE OPERATIONS SERVICE END OF YEAR COST PAYMENT SERVICE RESERVE RESERVE 5 UR PLuS SURPLUS
1962 $ 297,600 $ 135,000 $ 162,600 $1,650,000 $ 69, 125 $ $ 69,125 $ 40,000 $10,000 $ 43,475 $ 43,475
1963 297,600 135,000 162,600 1,650,000 69,125 69,125 40,000 10,000 43,475 86,950
1964 297,600 135,000 162,600 1,650,000 69,125 69,125 40,000 10 , 000 43,475 130,425
1965 297,600 135,000 162,600 1,650,000 69, 125 69,125 40,000 10,000 43,475 173,900
1966 297,600 135,000 162,600 1 , 6 14,000 69,125 36,000 105,125 57,475 231,375
1967 297,600 135,000 162,600 1,577 ,000 68,595 37,000 105,595 57,005 288,380
1968 297,600 135,000 162,600 1,538,000 67,023 39,000 106,023 56,577 344,957
1969 297,600 135,000 162,600 1,497,000 65,365 41 ,000 106,365 56,235 401,192
1970 297,600 135,000 162,600 1,454,000 63,623 43,000 106,623 55,977 457,169
1971 297,600 135,000 162,600 1,409,000 61,795 45,000 106,795 55,805 512,974
~ 1972 297,600 135,000 162,600 1,362,000 59,883 47,000 106,883 55,717 568,691
'-l 1973 297,600 135,000 162,600 1,314,000 57,885 48,000 105,885 56,715 625,406
I 1974 297,600 135,000 162,600 1,264,000 55,845 50,000 105,845 56,755 682,161
1975 297,600 135,000 162,600 1,212,000 53,720 52,000 105,720 56,880 739,041
1976 297,600 135,000 162,600 1,158,000 51,510 54,000 105,510 57,090 796,131
1977 297,600 135,000 162,600 1,101,000 49,215 57,000 106,215 56,385 852,516
1978 297,600 135,000 162,600 1,041,000 46,799 60,000 106,799 55,801 908,317
1979 297,600 135,000 162,600 979,000 44,243 62,000 106,243 56,357 964,674
1980 297,600 135,000 162,600 915,000 41 , 608 64,000 105,608 56,992 1,021,666
1981 297,600 135,000 162,600 848,000 38,888 67,000 105,888 56,712 1,078,378
1982 297,600 135,000 162,600 778,000 36,040 70,000 106,040 56,560 1,134,938
1983 297,600 135,000 162,600 705,000 33,065 73,000 106,065 56,535 1,191,473
1984 297,600 135,000 162,600 629,000 29,963 76,000 105,963 56,637 1,248,110
1985 297,600 135,000 162,600 549,000 26,733 80,000 106,733 55,867 1 , 303 , 977
1986 297,600 135,000 162,600 466,000 23,333 83,000 106,333 56,267 1,360,244
1987 297,600 135,000 162,600 380,000 19,805 86,000 105,805 56,795 1,417,039
1988 297,600 135,000 162,600 291,000 16,150 89,000 105,150 57,450 1,474,489
1989 297,600 135,000 162,600 198,000 12,368 93,000 105,368 57,232 1 , 531 , 721
1990 297,600 135,000 162,600 101,000 8,415 97,000 105,415 57,185 1 ,588,906
1991 297,600 135,000 162,600 4,293 101,000 105,293 57,307 1 , 646, 213
$8,928,000 $4,050,000 $4,878,000 $1 ,381 ,787 $ 1 ,650,000 $3,031,787 $160,000 $40,000 $1,646,213
Average Annual Principal . . $ 55,000
Average Annual Interest. . 46,060
Average Annual Principal & Interest. . $ 10 1 ,060
Greatest Annual Principal & Interest (1972) 106,883
Coverage of Average Annual Principal & Interest. 1.608 Times
Coverage of Greatest Annual Principal & Interest. 1.52 Times
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T ota I of Issue $1,650,000 EXH I BIT "11"
Final Maturity 25 Years SALI NA, KANSAS
Date of Issue - 1961
SEWAGE SYSTEM REVENUE BONDS
BALANCE FOR REVENUE BONOS TOTAL
GROSS LESS DEBT OUTSTANDING INTEREST PRINCIPAL DEBT BOND MAINTENANCE ANNUAL ACCUMULATED
YEAR REVENUE OPERATIONS SERViCE END OF YEAR COST PAYMENT SERVICE RESERVE RESERVE SURPLUS SURPLUS
1962 S 312,528 $ 135,000 $ 177,528 $1,650,000 $ 69,125 $ $ 69, 125 $ 40,000 $10,000 $ 58,403 $ 58,403
1963 312,528 135,000 177,528 1 ,650,000 69,125 69,125 40,000 10,000 58,403 116,806
1964 312,528 135,000 177,528 1,650,000 69,125 69, 125 40,000 10 , 000 58,403 175,209
1965 312,528 135,000 177,528 1,650,000 69,125 69, 125 40,000 10 , 000 58,403 233,612
1966 312,528 135,000 177,528 1,599,000 69, 125 51,000 120,125 57,403 291,015
1967 312,528 135,000 177,528 1,547,000 67,958 52,000 119,958 57,570 348,585
1968 312,528 135,000 177 ,528 1,492 ,000 65,748 55,000 120,748 56,780 405,365
1969 312,528 135,000 177,528 1,435,000 63,410 57,000 120,410 57,118 462,483
1970 312,528 135,000 177,528 1,376,000 60,988 59,000 119,988 57,540 520,023
1971 312,528 135,000 177,528 1 , 314 , 000 58,480 62,000 120,480 57,048 577,071
1972 312,528 135,000 177,528 1,249,000 55,845 65,000 120,845 56,683 633,754
~ 1973 312,528 135,000 177,528 1,182,000 53,083 67,000 120,083 57,445 691,199
00 1974 312,528 135,000 177,528 1,112,000 50,235 70,000 120,235 57,293 748,492
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1975 312,528 135,000 177 ,528 1,039,000 47,260 73,000 120,260 57,268 805,760
1976 312,528 135,000 177 ,528 963,000 44, 158 76,000 120, 158 57,370 863,130
1977 312,528 135,000 177,528 884,000 40,928 79,000 119,928 57,600 920,730
1978 312,528 135,000 177,528 801,000 37,570 83,000 120,570 56,958 977,688
1979 312,528 135,000 177,528 715,000 34,043 86,000 120,043 57,485 1,035,173
1980 312,528 135,000 177 ,528 625,000 30,388 90,000 120,388 57,140 1,092,313
1081 312,528 135,000 177,528 531,000 26,563 94,000 120,563 56,965 1,149,278
1982 312,528 135,000 177,528 433,000 22,568 98,000 120,568 56,960 1,206,238
1983 312,528 135,000 177,528 331,000 18,403 102,000 120,403 57,125 1,263,363
1984 312,528 135,000 177 ,528 225,000 14,068 106,000 120,068 57,460 1,320,823
1985 312,528 135,000 177,528 115,000 9,563 110,000 119,563 57,965 1,378,788
1986 312,528 135,000 177 ,528 4,888 115,000 119,888 57,640 1,436,428
$7,813,200 $3,375,000 $4,438,200 $1,151,772 $1,650,000 $2,801,772 $160,000 $40,000 $1,436,428
Average Annual Principal. . $ 66,000
Average Annual Interest. 46,071
Average Annual Principal & Interest . $112,071
Greatest Annual Principal & Interest (1972) 120,845
Coverage of Average Annual Principal & Interest. 1.584 Times
Coverage of Greatest Annual Principal & Interest. 1.469 Times
EX H I BIT I1III11
Total af Issue $3,600,000 SALI NA, KANSAS
Final Maturity 30 Years Date of Issue - 1961
WATER AND SEWAGE SYSTEM REVENUE BONDS
BALANCE FOR REVENUE BONDS TOTAL
GROSS LESS DEBT OUTSTANDING INTEREST PRINCIPAL DEBT BOND MAl NTENANCE ANNuAL ACCUMULATED
~ REVENUE OPERATIONS SERVICE END OF YEAR COST PAYMENT SERVICE RESERVE RESERVE SURPLUS SURPLUS
1962 $ 795,380 $ 432,359 $ 363,021 $3,497,000 $ 149,300.00 $ 103,000 $ 252,300.00 $ 70,000 $ 30,000 $ 10 , 721 . 00 $ 10,721. 00
1963 795,380 432,359 363,021 3,392,000 145,437.50 105,000 250,437.50 70,000 30,000 12,583.50 23,304.50
1964 795,380 432,359 363,021 3,285,000 141,500.00 107,000 248,500.00 70,000 30,000 14, 521 . 00 37,825.50
1965 795,380 432,359 363,021 3,175,000 137,487.50 110 , 000 247,487.50 70,000 30,000 15,533.50 53,359.00
1966 795,380 432,359 363,021 3,065,000 133,362.50 110 , 000 243,362.50 70,000 30,000 19,658.50 73,017.50
1967 795,380 432,359 363,021 2,950,000 129,237.50 115,000 244,237.50 118,783. 50 191,801.00
1968 795,380 432,359 363,021 2,835,000 124,925.00 115,000 239,925.00 123,096.00 314,897.00
1969 795,380 432,359 363,021 2,715,000 120,612.50 120,000 240,612.50 122,408.50 437,305.50
1970 795,380 432,359 363,021 2,595,000 116, 112. 50 120,000 236,112.50 126,908.50 564,214.00
1971 795,380 432,359 363,021 2,475,000 111,612.50 120,000 231,612.50 131,408.50 695,622.50
1972 795,380 432,359 363,021 2,355,000 107,112.50 120,000 227, 112. 50 135,908.50 831,531. 00
~ 1973 795,380 432,359 363,021 2,235,000 102,612.50 120,000 222,612.50 140,408.50 971,939.50
'0 1974 795,380 432,359 363,021 2,115,000 98,112.50 120,000 218,112.50 144,908.50 1,116,848.00
1 1975 795,380 432,359 363,021 1,995,000 93,012.50 120,000 213,012.50 150,008.50 1,266,856.50
1976 795,380 432,359 363,021 1,875,000 87,912.50 120,000 207,912.50 155,108.50 1,421,965.00
1977 795,380 432,359 363,021 1,750,000 82,812.50 125,000 207,812.50 155,208.50 1,577, 173. 50
1978 795,380 432,359 363,021 1,625,000 77,500.00 125,000 202,500.00 160,521.00 1,737,694.50
1979 795,380 432,359 363,021 1, 500,000 72, 187. 50 125,000 197,187.50 165,833.50 1,903,528.00
1980 795,380 432,359 363,021 1,375,000 66,875.00 125,000 191,875.00 171,146.00 2,074,674.00
1981 795,380 432,359 363,021 1,250,000 6 I, 562 . 50 125,000 186,562.50 176,458.50 2,251,132.50
1982 795,380 432,359 363,021 1,125,000 56,250.00 125,000 181,250.00 181, 771 . 00 2,432,903.50
1983 795,380 432,359 363,021 1,000,000 50,625.00 125,000 175,625.00 187,396.00 2,620,299.50
1984 795,380 432,359 363,021 875,000 45,000.00 125,000 170,000.00 193,021 . 00 2,813,320.50
1985 795,380 432,359 363,021 750,000 39,375.00 125,000 164,375.00 198,646.00 3,011,966. 50
1986 795,380 432,359 363,021 625,000 33,750.00 125,000 158,750.00 204,271. 00 3,216,237.50
1987 795,380 432,359 363,021 500,000 28,125.00 125,000 153,125.00 209,896.00 3,426,133.50
1988 795,380 432,359 363,021 375,000 22,500.00 125,000 147,500.00 215, 521. 00 3,641,654.50
1989 795,380 432,359 363,021 250,000 16,875.00 125,000 141,875.00 221,146,00 3,862,800.50
1990 795,380 432,359 363,021 125,000 11,250.00 125,000 136,250.00 226,771.00 4,089,571.50
1991 795.380 432.359 363.021 5.625.00 125.000 130.625.00 232.396.00 4,321,967.50
$23,861,400 $12,970,770 $10,890,630 $2,468,662.50 $3,600,000 $6,068,662.50 $350,000 $150,000 $4,321,967.50
Average Annual Principal. . $120,000.00
Average Annual Interest. 82.288.75
Average Annual Principal & Interest . $202,288.75
Greatest Annual Principal & Interest (1962) . .252,300.00
Coverage of Average Annual Principal & Interest. . 1.79 Times
Coverage af Greatest Annual Principal & Interest. . 1. 4388 Times
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EX H I B IT III V II
Toto I of Issue $3,600,000 SALI NA, KANSAS
Final Maturity 25 years Date of Issue - 1961
WATER AND SEWAGE SYSTEM REVENUE BONDS
BALANCE FOR REVENUE BONDS TOTAL
GROSS LlE55 DEBT OUTSTANDI NG INTEREST PRINCIPAL DEBT BOND MAINTENANCE ANNUAL ACCUMULATED
~ REVENUE OPERATIONS SERVICE END OF YEAR COST PAYMENT SERVICE RESERVE RESERVE SURPLUS SURPLUS
1962 $ 810,308 $ 432,359 $ 377,949 $3,497,000 $ 148,650.00 $ 103,000 $ 251,650.00 $ 70,000 $ 30,000 $ 26,299.00 $ 26,299.00
1963 810 , 308 432,359 377,949 3,392,000 144,787.50 105,000 249,787.50 70,000 30,000 28,161.50 54,460.50
1964 810,308 432,359 377,949 3,285,000 140,850.00 107,000 247,850.00 70,000 30,000 30,099.00 84,559.50
1965 810,308 432,359 377,949 3,175,000 136,837.50 110,000 246,837.50 70,000 30,000 31,111.50 115,671.00
1966 810,308 432,359 377,949 3,065,000 132,712.50 110,000 242,712.50 70,000 30,000 35,236.50 150,907.50
1967 810,308 432,359 377,949 2,950,000 128,587.50 115,000 243,587.50 134,361.50 285,269.00
1968 810 , 308 432,359 377,949 2,835,000 124,275.00 115,000 239,275.00 138,674.00 423,943.00
1969 810,308 432,359 377,949 2,715,000 119,962.50 120,000 239,962.50 137,986.50 561 ,929. 50
1970 810,308 432,359 377,949 2,595,000 115,462.50 120,000 235,462.50 142,486.50 704,416.00
1971 810 , 308 432,359 377,949 2,475,000 110,962.50 120,000 230,962.50 146,986.50 851,402.50
1972 810,308 432,359 377,949 2,350,000 106,462.50 125,000 231,462.50 146,486.50 997,889.00
I 1973 810,308 432,359 377,949 2,225,000 101,775.00 125,000 226,775.00 151,174.00 1,149,063.00
t>,) 1974 810,308 432,359 377,949 2,095,000 97,087.50 130,000 227,087.50 150, 86 1 . 50 1,299,924.50
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1976 810,308 432,359 377,949 1,820,000 85,825.00 140,000 225,825.00 152,124.00 1,603,435.00
1977 810 , 308 432,359 377,949 1,670,000 79,875.00 150,000 229,875.00 148,074.00 1,751,509.00
1978 810,308 432,359 377,949 1,515,000 73,500.00 155,000 228,500.00 149,449.00 1,900,958.00
1979 810,308 432,359 377,949 1,355,000 66,912.50 160,000 226,912.50 151,036.50 2,051,994.50
1980 810,308 432,359 377,949 1,185,000 60, 112. 50 170,000 230, 112.50 147,836.50 2,199,831.00
1981 810,308 432,359 377,949 1,010,000 52,887.50 175,000 227,887.50 150,061 . 50 2,349,892.50
1982 810,308 432,359 377,949 825,000 45,450.00 185,000 230,450.00 147,499.00 2,497,391.50
1983 810,308 432,359 377,949 630,000 37,125.00 195,000 232,125.00 145,824.00 2,643,215.50
1984 810,308 432,359 377,949 430,000 28,350.00 200,000 228,350.00 149,599.00 2,792,814.50
1985 810,308 432,359 377,949 220,000 19,350.00 210 ,000 229,350.00 148,599.00 2,941,413.50
1986 8103.08 432.359 377 , 949 9.900.00 220 , 000 229.900.00 148.049.00 3,089,462.50
$20,257,700 $10,808,975 $9,448,725 $2,259,262.50 $3,600,000 $5,859,262.50 $350,000 $150,000 $3,089,462.50
Average Annual Principal. . $144,000.00
Average Annual Interest 90,370.50
Average Annual Principal & Interest . $234,370.50
Greatest Annual Principal & Interest (1962) . 251,650.00
Coverage of Average Annual Principal & Interest. .1.6126 Times
Coverage of Greatest Annual Principal & Interest. . 1.50 Times
X.
REFUND I NG OF PRESENT WATERWORKS REVENUE BOND DEBT
FOR I NCLUS ION IN $3,600, 000 WATER AND SEWER REVENUE BOND ISSUE
The City's Revenue Bond indebtedness for the Waterworks System consists of an original amount of
$1,000,000 Series B Bonds, dated August 1, 1953, and authorized under Ordinance No. 5798,
and an original amount of $600,000 Series C Bonds, dated October 1, 1955, and authorized under
Ordinance No. 6011. The present outstanding principal of the Series B Issue is $811,000, of
which $63,000 will be retired August 1,1961, and the outstanding principal of the Series C Issue
is $472,000, of which $38,000 will be retired August 1, 1961. A total of $1,182,000 in Water-
works Revenue Bond Indebtedness will remain outstanding after August 1, 1961 payments.
Additional waterworks capital improvements estimated to cost $654,500 are needed in the imme-
diate future, and another Waterworks Revenue Bond Issue to provide the necessary funds would be
a third lien on waterworks incomes, with the result that interest rates of such an issue would suffer
accordingly. An item of even greater concern than excessive interest rates on new money Water-
works Bonds, is the inability of the City to authorize an additional Waterworks Revenue Bond Issue
at this time because of the depleted fiscal condition of its Waterworks Reserve Funds. Annual
Auditor's Reports indicate that investments of Waterworks Department Reserves totaled $300,000
at the end of 1957. By the end of 1959, the Audits show that reserves had been reduced to
$50,000, and the City Clerk's office advises that this $50,000 has now been dissipated. No bal-
ances remain in either the Reserve Fund or Waterworks Replacement and Extension Fund, as pro-
vided under Bond Ordinances No. 5798 and No. 6011. The City is technically in default under
the covenants contained in the Bond Ordinances, since Ordinance No. 5798 provides for the
maintenance of a $100,000 "Reserve Fund for Waterworks Revenue Bonds, Series B", and a
$50,000 "Waterworks Replacement and Extension Fund". Ordinance No. 6011 provides for the
maintenance of a $30,000 "Reserve Fund for Waterworks Revenue Bonds, Series C". A total of
$180,000 in bond and maintenance reserves should be on hand today. These accumulations were
on hand at the end of 1957. All required reserve accumulations have been expended for capital
improvements, and while such expenditures were timely and urgently needed, such action was
contradictory to the provisions of the two Bond Ordinances, which state that only after the City
has accumulated reserve funds to their maximum requirements, may it then use additional net
surpluses for the purpose of improving, extending, or enlarging the Waterworks Utility. In addi-
tion, such reserve funds can only be used for certain specified purposes, none of which include
expenditure thereof for capital improvements.
Since the City has completely depleted the reserve fund required under both Bond Ordinances, it
is not feasible to issue third lien Waterworks Revenue Bonds for improvements to the Waterworks
System until maximum reserve funds have been restored. Relative to the conditions prescribed for
additional Revenue Bond Issues, Section 12 contained in both Bond Ordinances reads substantially
as follows:
"Nothing contained in this Section 12 or in this ordinance shall prohibit or restrict the right
of the City to issue additional revenue bonds for the purpose of altering, repairing, improv-
ing, extending or enlarging the City's waterworks util ity and to provide that the interest on
and principal of said additional revenue bonds shall be payable out of the net revenues of
said utility contained in the "Waterworks Department Fund" referred-to in Section 8 of this
ordinance provided at the time of the issuance of such additional revenue bonds the City
shall not be in default in the performance of any covenant or aQreement herein contained,
and provided further that such additional revenue bonds shall be junior and subordinate to
the Waterworks Revenue Bonds, Series B, herein authorized, so that if at any time the City
shall be in default in paying either interest on or principal of the Waterworks Revenue Bonds,
Series B, herein authorized, or if the City shall be in default in making any payments required
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to be made by the provisions of this ordinance, the City shall make no payments of either in-
terest on or principal of said junior and subordinate bonds until said default or defaults be
cured and no default shall exist on the part of the City under the covenants, agreements,
and conditions contained in this ordinance. II
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Thus it would appear that the best procedure of Waterworks Revenue Bond financing presently
available to provide for Waterworks System Improvements is through the financial vehicle of re-
funding outstanding Waterworks Revenue indebtedness. This process will entail considerable time
and some expense. However, more than adequate time is available to consider and process a
possible Waterworks Revenue Bond Refunding prior to the August 1, 1961 option date. The over-
all results achieved should more than justify the time required in programming such a refunding,
and the cost can be well offset in more favorable interest rates resulting from a combined Water
and Sewer Revenue Bond Issue enjoying greater financial stabil ity. Of more importance, a pro-
gram of refunding present debt into a Water and Sewer Revenue Bond Issue will permit the City to
proceed immediately with needed improvements in the Waterworks System.
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The expense of programming a refunding procedure is indicated in the following Summary:
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City of Salina, Kansas
Estimate of Refunding Costs
EXH I BIT "V"
OUTSTANDING WATERWORKS REVENUE BONDS
SERIES B
DATED AUGUST 1, 1953
ANNUAL ANNUAL
PRINCIPAL RATE INTEREST
1962 S 63,000 3-1/2% $ 26,878.75
1963 63,000 3-1/2% 24,673.75
1964 63,000 3-1/2% 22,468.75
1965 63,000 3-5/8% 20,263.75
1966 62,000 3-5/8% 17,980.00
1967 62,000 3-5/8% 15,732.50
1968 62,000 3-5/8% 13,485.00
I 1969 62,000 3-5/8% 11,237. 50
N 1970 62,000 3-5/8% 8,990.00
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I 1971 62,000 3-5/8% 6,742.50
1972 62,000 3-5/8% 4,495.00
1973 62,000 3-5/8% 2,247.50
$748,000 $175,195.00
SERI ES C
DATED OCTOBER 1, 1955
ANNUAL
PRINCIPAL
RATE
$ 40,000
42,000
44,000
46,000
48,000
50,000
52,000
55,000
57,000
2-3/4%
3%
3%
3%
3%
3%
3%
3%
3%
$434,000
The following summaries indicate interest costs if presently outstanding waterworks bonds were refunded:
$68,810.00
ANNUAL
INTEREST
$12,920.00
11,820.00
10 , 560 . 00
9,240.00
7,860.00
6,420.00
4,920.00
3,360.00
1,710.00
1) Total interest cost of $1,182,000 Waterworks Bonds @ 3-3/4% (1962/1973) ----------- $267,862.50
Total interest cost of $1,182,000 Waterworks Bonds@ present rates and maturities:
Series B Bonds -------------------------------- $175, 195.00
Series C Bonds -------------------------------- 68,810.00 244,005.00
Net Difference--------------------------------------______ $ 23,857.50
2) Call premium expense if $1,182,000 outstanding bonds called in 1961:
Series B Bonds - $748,000 (1962/1973) @ 3% call premium ------------------ $ 22,440.00
Series C Bonds - $434,000 (1962/1970) @ 1-1/2% call premium -------------- 6,510.00
TOTAL------------------------------------------_______ $ 28,950.00
WATERWORKS REFUNDING BONDS, IF ISSUED
TOTAL ESTIMATED
PRESENT INTEREST
MATURITIES RATE COST
$ 103,000 3-3/4% $ 44,325.00
105,000 3-3/4% 40,462.50
107,000 3-3/4% 36,525.00
109,000 3-3/4% 32,512.50
110 ,000 3-3/4% 28,425.00
112,000 3-3/4% 24,300.00
114,000 3-3/4% 20,100.00
117,000 3-3/4% 15,825.00
119,000 3-3/4% 11,437.50
62,000 3-3/4% 6,975.00
62,000 3-3/4% 4,650.00
62,000 3-3/4% 2,325.00
$1,182,000 $267,862.50
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The merits and financial advantages of refunding should be thoroughly analyzed and considered.
By combining the Water and Sewer Departments and authorizing a Water and Sewer Revenue Bond
Issue for new money and refunding purposes, the resulting "System" would be permitted to issue
revenue obligations of a first lien status and enjoy substantial interest cost savings. These savings
may be emphasized when compared with the interest cost penalties which would be experienced
on third lien Waterworks Revenue Bonds when issued at some future date when the City's fiscal
condition would permit such issuance.
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A combined Water and Sewer Revenue Bond Issue would permit the development of a more permis-
sive Bond Ordinance providing for future bond issues of the Water and Sewer System as co-equal
indebtedness once financial stabil ity was determined. While it is not anticipated that additional
Revenue Bonds might be required for either water or sewer expansions, the authorization at this
time would preclude any future financial e'mbarrassment should the City's growth factors substan-
tially increase, and expansion require additional capital improvement financing. Present Water-
works Revenue Bond Ordinances have been well prepared but do not provide for the issuance of
co-equal first 1 ien bonds under an)' conditions.
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The combining of the two uti I ity operations into one financial procedure not only develops better
security for bond issuance, but enables mechanical and fiscal savings to be experienced in actual
system operations. The realistic accumulation of surplus earnings in anticipation of growth factors
should create funds for normal and anticipated Water and Sewer System enlargements, expansions,
and extensions.
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XI.
SUMMARY AND RECOMMENDATIONS
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The establ ishment of sewer service charges under any method may result in possible inequities and
administrative problems, but it has been the experience of most midwestern cities that a system of
sewer rates based on the procedures of Method "2" is fair and reasonable. Sewer charge costs
computed from monthly water consumption establ ish a sewer fiscal operation on an actual use basis
as is customary in most utilities, and this procedure will result in lower service charges to those
customers using I ittle water, and higher sewer charges for those using more water. Equitable ex-
ceptions must be made for sewer customers using large quantities of water not actually discharged
into the Sanitary Sewer System, (bottling plants, wash racks at filling stations, etc.).
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It should be noted that 9,145 customers, or 73% of the possible 12,431 sewer connections, will
experience a smaller monthly sewer charge if sewer rates are based on winter water usage than if
the flat fee sewer rate procedure is used. In order to equal the income required under Schedule
"A", a flat fee of $1.85 per month would be required. Similarly, a flat fee of $1.95 per month
would be required to produce the incomes of Schedule "B". This percentage should be considered
by the City Commission in determining which method of sewer rates is to be established.
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This Report has been designed to analyze the effect of a $1,650,000 General Obligation Sewer
Bond Issue, and to establish the requirements necessary to service a $1,650,000 Sewer Revenue
Bond Issue and a $3,600,000 Water and Sewer Revenue Bond Issue. The Water and Sewer Revenue
Bond Issue will, in addition to $1,650,000 for Sewage System Improvements, provide $654,500
for capital improvements to the Waterworks System, and will finance the refunding of $1,182,000
of Waterworks Revenue Bonds. An issue of Water and Sewer System Revenue Bonds could be issued
without suffering penalties resulting from an inferior lien status, as would be the case with a third
I ien Waterworks Revenue Bond Issue.
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This Report further provides an explanation of the various methods of applying a system of sewer
service charges and establishes a factual basis for analyzing maturity schedules. Debt service re-
quirements have been established for 25 and 30 year maturity schedules for both a $1,650,000
and a $3,600,000 Revenue Bond Issue. Tentative sewer rates computed on both a winter water
consumption basis and a flat fee basis have been outlined. The present direct and overlapping
general obligation debt status is shown in order that the City may design its fiscal program for
Sewer Improvements in anticipation of increased General Obi igation Bond indebtedness in the
future. In addition, the probable annual cost for the average residence of a Sewer Improvement
and Maintenance Program financed by a tax levy has been shown.
The Governing Body should analyze the various methods of financing outlined in this Report and
establish a method most suitable for the objectives sought by the Cily. In addition, it will be
necessary to decide the scope of the project and resolve whether the most efficient and desirable
results can be obtained from a Sewer Improvement Program alone or from a combined water and
sewer operation and the refunding of the present Waterworks Revenue indebtedness. The two
principal methods of determining sewer charges and the four comparative bond maturity schedules
should be carefully considered. The Governing Body may then establ ish an overall program which
is most equitable and best suited to the majority of the people of Salina.
Respectfully submitted,
FIRST SECURITI ES COMPANY OF KANSAS, INC.
By
December 15, 1960
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FiRST SECUaS CoMPANY
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SCHWEITER BLDG. ~ WICHITA. KANSAS
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OF KANSAS
INCORPORATED
WICHITA OFFICE
200 SCHWEITER BLDG.
TEL. AMHERST 2-4411
KANSAS CITY OFFICE
1000 INS. EXCHANGE BLDG.
TEL. HARRISON 1-3870
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