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