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sold $39 million in bond anticipation notes secured by the <br />promise of the County to issue permanent bonds. The <br />permanent bonds are to -be secured by a $13 per month <br />surcharge on the residents of the former North Beach Water <br />Co. franchise territory. <br />The attached ordinance adopts this surcharge as part of our <br />rate structure. <br />Staff recommends approval. <br />Attorney Vitunac explained that this ordinance establishes a <br />rate which is necessary to fund the purchase of the North Beach <br />Water Company. State law requires a public hearing to be held <br />for the residents of that area, and that public hearing was held <br />when the County considered buying the whole company. This <br />ordinance states that for 5 years there will be no more than a <br />$13.00 per month surcharge to residents of that former franchise <br />territory. The 5 -year period was picked because we sold bond <br />anticipation notes, and by the end of the 5 years, the County <br />will get permanent financing. After 5 years the County can <br />adjust the rate on the surcharge to as high as necessary to fund <br />the permanent financing of the acquisition. Therefore, what the <br />developers and the owners of the franchised territory bought is a <br />5 -year cap on a surcharge of no more than $13.00 per month, which <br />will allow them to sell out their project and get real customers <br />in there paying money into the utility system. Then, if the rate <br />has to go higher, and it should not have to go much higher, the <br />County will be able to raise the surcharge after December, 1993. <br />Commissioner Scurlock explained that the $13 surcharge <br />doesn't cover the cost of the acquisition. They arrived at the <br />$13.00 amount after looking at their existing rate structure. <br />This was a negotiated purchase, and the developer wanted to have <br />enough opportunity to sell additional units, while we wanted to <br />keep the rate approximately the same. With regard to the bond <br />anticipation notes, their recommendation at some point will be to <br />refinance as soon as FmHA agrees to loan us the money and offers <br />us a discount. <br />JAN 3 la;J <br />41 BOOK 75 M1485 <br />