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0 <br />To develop the appropriate funding mechanism we had to first compile pertinent data from <br />the Utility Rate Study, the Utility Budget and the Capital Project Schedules. Based on this <br />information we have compiled the attached financial schedules. When reviewing the <br />financial schedules you can see that if our revenue and capital expenditures occur as <br />predicted, we will have to borrow $2,933,073 in 1991/92, $9,058,899 in 1992/93, $16,909,441 <br />in 1993/94, and $23,037,092 in 1994/95, and $23,185,720 in 1995/96. <br />DISCUSSION <br />As a result of these findings, staff recommends a three tier financing approach for non- <br />voluntary assessments. Essentially this would involve moving from one tier to the other as <br />more capital funds are required automatically then the third tier would only be required <br />if the other two options are exhausted. <br />The First Tier <br />The first tier would involve interfund borrowing from our internal special revenue funds <br />(as opposed to governmental). When our capital exceeds approximately $7,500,000 we <br />would then go to the second tier. <br />The Second Tier <br />The second tier would involve pledging the existing assessments for impact fees and <br />distribution lines for a bond issue. <br />The Third Tier <br />In the event that these two financing mechanisms cannot generate sufficient capital funds <br />for the capital projects, we would move to a third tier and do a larger bond issue to create <br />a pool of funds. We would probably have to pledge future impact fees and some other <br />revenue source (Le. franchise fees, half -cent sales tax, sate revenue sharing) to do this type <br />of bond issue. <br />There are many factors that can affect our capital requirements, for example, the <br />comprehensive plan, state laws, and Department of Environmental Regulation rules, as well <br />as changes in service territory, and the local and national economy. As a result, it is nearly <br />impossible to accurately predict our future capital needs for even as short a period as five <br />years. The three tier approach attempts to address this problem, by giving the county the <br />flexibility to change rapidly in response to this uncertain economic environment, yet limit <br />the financial burden to the Utility Department and the taxpayers <br />RECOMMENDATIONS <br />Staff recommends that the Board of County Commissioners approve the following: <br />I. We expand the ten year financing to include county built projects and <br />existing homes. All others have five year financing. <br />2. The three tier financing mechanism mentioned above. <br />30 <br />M M <br />f <br />