United States
Environmental Protection
Agency
Region 4
345 Courtland Street, NE
Atlanta, GA 30365
EPA 904/10-84 127
November 1984
xvEPA
Environmental
Assessment
Mountain Communities
Wastewater Management
Alternatives Report
Volume IV - Financial Alternatives
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION IV - ATLANTA
MOUNTAIN COMMUNITIES WASTEWATER
MANAGEMENT ASSESSMENT
ALTERNATIVES REPORT
VOLUME IV
NOVEMBER 1984
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VOLUME IV
TABLE OF CONTENTS
LIST OF TABLES i
LIST OF FIGURES ii
INTRODUCTION iii
Chapter 5 FINANCIAL ALTERNATIVES 5-1
5.1 Introduction 5-1
5.2 Alternative Approaches To Finances 5-4
5.2.1 Federal Funding Sources 5-4
5.2.2 State Funding Sources 5-14
5.2.3 Local Funding Sources 5-21
5.2.4 Private Funding Sources 5-26
5.3 Evaluation of Alternative Financing 5-30
Techniques
FACT SHEETS
BIBLIOGRAPHY
APPENDIX IV-A State 201 Construction Grant and FmHA Contacts
IV-B Financial Planning Handbook For Wastewater
Management, EPA
IV-C A Guide to Financial Management For Small
Utilities, National Demonstration Water
Project.
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VOLUME IV
LIST OF TABLES
No. Title Page
5-1 Phases of Rural Wastewater Projects For Which Available Grant 5-3
and Loan Monies May Be Utilized
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VOLUME IV
LIST OF FIGURES
No. Title
5-1 Fact Sheet — EPA Construction Grants
5-2 Basis For Determining Grant Eligibility As An Innovative/
Alternative (I/A) Technique
5-3 Fact Sheet — Farmers Home Administration Grants and Loans
5-4 Fact Sheet — Appalachian Regional Commission Grants
5-5 Fact Sheet — Federal Economic Development Grants
5-6 Fact Sheet — Georgia Emergency Grants
5-6 Fact Sheet — Georgia Economic and Environmental Grants
5-8 Fact Sheet — Georgia Environmental Facilities Loans
5-9 Fact Sheet — Kentucky Wastewater Loans
5-10 Fact Sheet — North Carolina Clean Water Bonds
5-11 Fact Sheet — North Carolina One-Half Cent Sales Tax
5-12 Fact Sheet — South Carolina Facilities Development
Grants
5-13 Fact Sheet — South Carolina Rural Water-Sewer Grants
5-14 Fact Sheet — Tennessee Wastewater Loans
5-15 Fact Sheet — Community Development Block Grants
5-16 Fact Sheet — General Obligation Bonds
5-17 Fact Sheet — Revenue Bonds
5-18 Fact Sheet — Bond Anticipation Notes
5-19 Fact Sheet — Short-Term Loans
5-20 Fact Sheet — Special Assessment Bonds
5-21 Fact Sheet — user Charges
5-22 Evaluation of Financing Techniques
Following
5-36
5-8
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
5-36
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5-31
(Fact Sheets located at back of Chapter 5)
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VOLUME IV
INTRODUCTION
This is the final volume of the Mountain Communities Wastewater
Management Assessment's Alternatives Development Report. This volume
contains Chapter 5 which identifies federal, state, local and private
funding sources available to mountain communities and presents a fact sheet
summarizing key characteristics of each applicable financial technique.
Financing considerations for innovative and alternative systems are dis-
cussed, and a method for selecting the most appropriate financing technique
in a given situation is presented.
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VOLUME IV
CHAPTER 5
FINANCIAL ALTERNATIVES
5.1 Introduction
This chapter of the Alternatives Development Report is intended to
identify the variety of financial alternatives which are available to
mountain communities and develop a method for selecting the most appro-
priate set of financial techniques for a specific community.
Small, rural communities all suffer from the same problems in
obtaining funds for relief of their wastewater problems: their problems
are often not of a large enough scale to qualify for Construction Grant
Funds from EPA; and they do not have the financial resources to undertake
their own facilities or participate in some of the loan programs which are
available.
The financial setting for the study area includes:
• low per capita incomes
• low tax base
• little financial or management expertise
• decreasing federal funds.
Based upon this setting the following financial issues need to be
addressed:
• identification and promotion of appropriate low cost, low
maintenance technologies for rural areas,
• promotion of wastewater systems with affordable user charges,
• guidance and assistance to states in managing set-aside programs
that could benefit rural areas,
5-1
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• identification of ways to increase priority of small community
projects within overall state/EPA water quality objectives,
• identification of available funding sources and guidance in
obtaining funds from these sources.
• identification of techniques available to finance the local
share of construction funding and various payment techniques
for monthly user costs.
The following sections identify the federal, state, local and private
financial resources which are available to small communities. Table 5-1
provides a summary of those funding sources and the various phases of a
project on which they can be utilized.
5-2
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TABLE 5-1
PHASES OP RURAL WASTEWATER PROJECTS FOR WHICH
AVAILABLE GRANT AND LOAN MONIES MAY BE UTILIZED
01
I
LJ
Funding Source
Federal
EPA Construction Grants
Farmers Home Adminis-
tration Grants and
Loans
Federal Economic
Development Grants
Regional
Appalachian Regional
Commission Grants*
States
Georgia Emergency Grants
Georgia Econ. and
Enviro. Grants*
Georgia Enviro.
Facilities Loans
Kentucky Wastewater
Loans
North Carolina Clean
Water Bonds
North Carolina One-half
Cent Sales Tax
South Carolina Facili-
ties Devel. Grants2
South Carolina Rural
Water-Sewer Grants
Tennessee Wastewater
Loans
Community Development
Block Grants1
Phase of Project
Planning and
Permitting
X
X
X
X
X
X
Engineering and
Legal Fees
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Installation/ Operation and
Construction Maintenance
X
X
X
X
X
X
X
X
X
X X
X
X
X
X
Administration
X
X
X
X
X
X
X
X
These sources of funding are provided primarily to promote economic development.
2 Funds can also be utilized to help rural residents afford connection to a sewer system.
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5.2 Alternative Approaches to Funding
5.2.1 Federal Funding Sources
U.S. Environmental Protection Agency
The Federal government has traditionally been the major source of
funds for wastewater management projects. EPA, through its massive
construction grants program has been the major source of federal funds. The
EPA grant program is summarized on Figure 5-1.
The first step in the construction grants process includes facility
planning activities. This is traditionally referred to as Step 1. The
facility plan consists of the development and evaluation (cost effec-
tiveness evaluation) of alternative approaches that could be used to
achieve the necessary degree of pollution control, and a discussion of the
economic, social and environmental costs of the alternatives. The
recommended alternative must be cost-effective, environmentally sound and
implementable. Following completion of the facility plan, it is submitted
to the state for approval. If the plan is accepted and approved the state
then certifies that the project is ready for a Step 2 grant amendment. If
a Step 2 grant is awarded, the consultant proceeds with preparation of
detailed engineering plans and specifications for the approved facility
plan. When the plans and specifications are completed the jurisdiction
submits the package to the state regulatory agency and EPA for review. If
the engineering designs and specifications are accepted, the project then
goes on the state's priority list for construction funds. Based on the
status of available funds, construction of the facility may be months or
even years away. When the project approaches the construction stage, a
formal grant agreement is signed and the project is advertised for bids.
Following a review of the bidding documents a contractor is selected and
awarded the project.
The normal sequence of events for an EPA-funded project follows the
above three-step process, though significant changes have resulted from
5-4
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the 1981 Clean Water Act Amendments. The major revisions resulting from
the Act are:
• Grants for Steps 1 and 2 are no longer given separately;
instead, allowances are included in Step 3 grants for
facilities planning and design activities.
• Step 3 grant advances are possible
from the state environmental agency.
Construction grants are now available only for secondary
or more stringent treatment, new interceptors and connecting
sewers and infiltration/inflow corrections.
• After October 1, 1984, grants will
for small communities
be made to handle
current needs, not to exceed year 3990 needs.
Engineering services are required and fundable for one
year after construction completion.
Secondary treatment definition has
include oxidation ponds, lagoons, c
filters.
The 1981 amendments authorized $2.4
construction to municipalities for fiscal
receives a proportional share of this aathorization for funding all
projects throughout the state. The total EPA fundable portion of elligible
project costs is 75 percent. Beginning in
been expanded to
itches and trickling
billion for sewage facility
years 1982-1985. Each state
fiscal year 1985 (October 1,
1984) this share will decrease to 55 percent. An additional 20% is allowed
for innovative and alternative projects. Since grants do not cover needs
beyond 1990 and most communities will elect to build-in some excess
capacity for future growth, the actual EPA share of total project costs
will even be below 55 percent.
The Clean Water Act also specified certain reserve funding amounts
which further define the utilization of funds. Four to 7.5 percent must be
reserved for I/A projects. In addition, states with a rural population of
25 percent or more must reserve at least four percent of its allotment for
5-5
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small communities to implement alternatives to conventional wastewater
systems; governors of non-rural states may reserve up to four percent of
its allotment for the same uses.
Federal regulations specify that establishment of priority water
quality areas is left to each state, as long as federal guidelines for
priority setting and water quality standards are followed. States
annually develop a project priority list with one section indicating
projects to be funded from the current annual allotment and a second
portion listing other projects anticipated to be funded from future fund
allotments. Each state submits its priority list to EPA by August 31 of
each year to allow the Regional Administrator sufficient time for review
prior to the beginning of the next fiscal year on October 1.
In most states similar priority rating schemes are used for large and
small communities. However, the rating procedures are changing to better
address those small communities without any centralized collection and
treatment facilities. In Tennessee, for example, where there is a serious
public health problem due to failing septic systems, priority points are
determined by the following criteria:
Percentage of Septic Tanks Project Priority Point
Failing Value
50 percent or more 1.0 x HP*
30 to 49.99 percent 0.75 x HP*
0 to 29.99 percent percentage x HP*
*HP will be the highest project priority point value shown on the 1983
fiscal year priority list of the State of Tennessee. HP shall be 83.600
PPV and will not change for this or any subsequent Fiscal Year (Tennessee
Department of Health and Environment, 1983).
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Following the priority rating of a particular project, the states
then assemble a priority ranking list of all applicants for construction
grants under the Federal Construction Grants Program. This listing is then
used to allocate monies available from each state's general grant fund. In
many states, only the top five or so projects are fundable in any one fiscal
year. Although some added preference in rating is now being given to small
community or I/A projects, as the above example from Tennessee shows, the
top-ranked projects typically are not in either of these categories.
Therefore, most states carry out a further prioritization for I/A and small
community projects.
In most states the procedures for allocating the I/A and small
community set-aside monies still rely heavily on the states' overall
priority lists. In Kentucky and Georgia separate listings of I/A or small
community projects are compiled but the project rankings in each list are
based on the project's order on the overall priority list. North and South
Carolina also base the priority order for I/A and small community projects
on the overall list, but have never established actual separate listings in
each category. Alabama is moving toward this approach but up to now has
awarded I/A and small community funds on a largely first-come, first-
served basis, though the process also considered the relative merits of the
project applications being reviewed.
Priority water quality areas as specified in annual reports to
Congress, called 305(b) Reports, tend to be surface waters adjacent to
developed areas where most water quality monitoring activities have taken
place. Water quality degradation in rural areas can continue unnoticed,
particularly if groundwater, rather than surface waters, is being de-
graded. In addition, rural wastewater systems primarily utilize land
disposal; malfunctions of land disposal techniques would tend to result
first in public health rather than water quality problems.
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One further factor which may limit a community's eligibility for EPA
funding is the application of EPA Affordability Criteria. The 201
Affordability Analysis, as discussed in detail in Chapter 4 of the Survey
of Existing Conditions Report, is included as part of the 201 Construction
Grant planning process and is intended to analyze in detail the financial
constraints which limit the ability of a community to finance, operate and
maintain a facility. Strict applicability of these criteria may limit a
community's eligibility for 201 funding.
Eligibility for Funding as an Innovative or Alternative (I/A) Technique
More Federal Construction Grant funds can be available for innovative
and alternative techniques than for conventional wastewater management
techniques. As much as 20 percent additional grant monies for eligible
project costs can be available for I/A techniques (Federal Register,
February 17, 1984).
Figure 5-2 outlines the process for determining whether a technique
qualifies as innovative and/or alternative. Many of the basic types of
alternative techniques listed in federal regulations and shown in Figure
5-2 are presented in Chapter 3 of this report as suitable techniques for
small systems. Federal guidelines list alternative on-site techniques
such as septic tank-soil absorption, aerobic treatment-soil absorption,
mounds, evapotranspiration beds and recycle systems. Eligible on-site
units may be publicly or privately owned. Alternative collection systems
include small diameter gravity, pressure and vacuum sewers for small
communities or dispersed sections of large communities. If any altern-
ative system is publicly-owned, it can be eligible for funding even if
costs are as much as 15 percent greater than costs for the "cost-effective"
system. Determination of cost effectiveness is based on costs, impacts,
operation and implementation, as discussed in Section 3.6 of this report.
Innovative techniques may not necessarily be fully proven, but the
risk of their use is considered acceptable. Generally, innovative
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FIGURE 5-2
BASIS FOR DETERMINING GRANT ELIGIBILITY
AS AN INNOVATIVE / ALTERNATIVE (I/A) TECHNIQUE
Fully Proven Meet Innovative Classification and
ALTERNATIVE TECHNOLOGY
Specifically identified forms
processes
Effluent Treatment
- land treatment
- aquifer recharge
- aquaculture
- silviculture
- direct reuse
(non potable)
- horticulture
- revegetation of
disturbed land
- treatment and storage
prior to land
application
- preapplication treat-
ment
Sludge
- land application
- composting prior to
land application
- drying prior to
land application
of treatment and unit
Energy Recovery
- co-disposal of
sludge and refuse
- anaerobic digestion
with 90% methane
recovery
Individual and On-
Site Systems
- on-site treatment
- septage treatment
- alternative col-
lection systems
for small com-
munities
YES
NO
YES
NO
> A ~ YES
1 - 1
YES 1
., _A p
- I
115% cost pre-
i ference for
publicly owned
115% cost pre-
^ ference for
publicly owned
fundable as
an alternative
technique
not fundable
fundable as
an innovative
technique
not fundable
Source: U.S. Environmental Protection Agency, 1980 (MCD-53)
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techniques have been field-tested or demonstrated in a full-scale testing
facility. An alternative technique is considered innovative if it meets at
least one of the following six qualifications when compared to other
techniques:
• improved operational reliability,
• additional environmental benefits,
• improved management of toxic wastes,
• improved treatment potential,
• 15 percent minimum cost savings, or
• 20 percent minimum energy savings.
In addition, a project can be considered innovative by the EPA Regional
Administrator if the project either: a) incorporates unique design and
operation based on local geography or climate, or b) public benefit is
achievable due to technology advancement. The EPA Regional office in
Atlanta, GA is willing to assist any grant applicant in determining whether
a project can be classified as innovative and/or alternative.
Municipalities and agencies throughout the study area have received
grants for centralized systems. Grants for small communities and other
small systems are made to a lesser extent currently than for centralized
systems. Examples of grants allocated in the study area include:
• Madison County, North Carolina Clean Waters Project
Mr. Mike Bradley
Madison County Health Department
(704)649-3531 or
Mr. F.R. Schutz (Consultant)
(704)258-2384
• City of Vienna, Georgia
(Stanley Gambrell, City Administrator)
Lagoon, Spray irrigation: Construction phase
Mr. David Battson
Tribble & Richardson (Consultant)
(912)742-7395
5-9
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State 201 contacts are listed in Appendix IV-A.
U. S. Farmers Home Administration
The Farmers Home Administration (FmHA) program for water and waste-
water disposal systems is targeted for rural areas. Under this program
both grants and loans are available. However the grant program has
relatively strict eligilitity criteria and only had $90 million available
nationwide during fiscal year 1984.
FmHA's loan program is much more attractive since the eligibility
requirements are not as strict as for FmHA grants, and there are more funds
available ($270 million - FY 84). However, these loans must generally be
repaid over a forty year period. Current interest rates for these loans
(May 1984) are 9.625%. There is a 5 percent interest rate available if the
community can qualify.
For both the grant and loan program, FmHA allocates money to each
individual state. The amount to each state varies, based on population
and number of households below the poverty level. Each community must
apply for a grant or loan at the state level (See Appendix IV-A for a list
of State FmHA contacts). The state prioritizes applications based on a
priority ranking system set forth in federal guidelines. The priority
system has three major categories:
• population
• existence of present health hazard (and extent)
• income
Points awarded vary within each category, e.g. the smaller the community,
the greater the number of points awarded; the same holds true for
communities with low median family incomes.
Other factors for which points are awarded include:
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• merging of two or more small facilities,
• enlargement or extension of existing facility,
• public body, Indian tribe or truly rural area,
• private sector financing.
FmHA loan and grant monies are available to solve wastewater problems
of both on-site systems and centralized systems.
Funding for FY-84 Water and Sewer projects in study area states was:
Loan Grants
AL $ 6,921,000 $ 2,261,000
GA 8,631,000 2,785,000
KY 8,078,000 2,615,000
NC 11,926,000 3,794,000
SC 6,015,000 1,984,000
TN 7,816,000 2,535,000
Total $49,387,000 $15,974,000
One example of an FmHA loan (for sewer work) recipient is:
City of Barbourville
Knox County, Kentucky
Charlie Buchanan, Mayor
(606)546-4171
Appendix IV-A lists State FmHA loan/grant contacts.
Figure 5-3 presents a summary of further information on this program.
Appalachian Regional Commission
The Appalachian Regional Commission (ARC) provides supplemental grant
funds for infrastructure projects. However, all of their grants are tied
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into job creation. Simply stated, if a project does not create jobs, it
will not be funded. This generally rules out residential projects unless
the potential grantee can demonstrate that the wastewater facilities could
result in economic growth. Furthermore, ARC will not participate until
another federal program is involved such as EPA or FmHA. Therefore, the
EPA or FmHA grant would need to be in place before any ARC funding was
available. ARC funding is also limited. The allocation to the six states
in this mountain communities study area totals only $16,869,000 in FY 84
for all infrastructure projects.
ARC allocates funds to the 13 Appalachian states (including study
area states) based on a formula which, in turn, is based on the following
(among other considerations):
• population
• housing
• income.
Each state receives grant applications and submits an investment package
outlining each project once a year (generally in the fall) to ARC. ARC then
determines whether or not federal rules and regulations are met and assures
that state and federal priorities are met. Each individual state makes the
final grant determination based on their own guidelines.
One ARC grant recipient in 1982 was Stanford, Kentucky. Stanford
received the funds for sewage system improvements. A contact is:
James Harris, Mayor
Stanford, Kentucky 40484
(502)365-7322
The ARC funding program is summarized on Figure 5-4.
U. S. Economic Development Administration
The Economic Development Administration (EDA) in the Department of
Commerce also provides wastewater funding, but again, it is related only to
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economic development projects. The goal of the program is to assist
economically-distressed areas through provision of funds for a project
which will result in job creation and economic development. Funds are not
intended for residential use. With regards to sewage systems, EDA
participates only (with few exceptions) on those projects related to
industrial/commercial sewage facilities, and these are generally cen-
tralized systems.
An EDA representative is located in each study area state. An
applicant must first approach their representative to discuss a potential
project. A "profile", which includes preliminary project information, is
forwarded to the respective regional office (for the study area, this
office is in Atlanta) . The package is studied by a Review Committee which
bases a recommendation on various criteria set forth in federal regula-
tions. The grantee must then submit a formal application to EDA, Washington
D.C. Authorization for funding is made in Washington. The amount of the
grant is dependent on a number of factors, including (but not limited to) :
• extent of area distress,
• unemployment
• income.
Funds are allocated on a project-by-project basis. For FY 84 (ends
September 30, 1984) $170 million was allocated; $34.4 million of this was
allocated to the Atlanta Regional Office.
Several communities in the study area have received EDA grant monies
for a portion of a sewage facility project related to the needs of
industry. These include:
» City of Conover,
Catawba County, NC
* City of Lynchburg,
Moore County, SC
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In Thomson, Georgia, McDuffie County, an EDA grant was awarded for
extension of sewer service to an industrial park. All were 1983 grants. A
contact for these projects is:
Mr. William J. Day, Regional Director
Economic Development Administration
1365 Peachtree Street, NE
Suite 750
Atlanta, GA 30309
(707)881-7401
EDA Funding is further described on Figure 5-5.
Funds are available from the Department of Housing and Urban
Development (HUD) through the Community Development Block Grant (CDBG)
program. CDBG funding is allocated to the states for their use and will be
treated under the discussion of state funding sources.
5.2.2 State Funding Sources
All of the states in the study area except Alabama have some type of
grant or loan program for wastewater facilities. Most of these programs
provide funds to cover part of the local costs to communities which have
received a Federal grant for wastewater facilities.
Georgia
Georgia has three different programs. The Emergency Grant Program is
available in instances of emergency rehabilitation or replacement. There
are several eligibility requirements which must be met before a grant can
be awarded. These are:
• facility must be government-(county, city, authority)
owned,
• need for repairs/addition must be immediate due to
failure in system or destruction by natural disaster
(must be documented),
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• failure in system must contribute to actual or potential
public health problem or violate water quality standard.
The state (through the Emergency Grant Program) will provide up to 50
percent of the eligible portion of the engineering and construction costs
for a project. This 50 percent requirement can be waived by the director
of the Georgia Environmental Protection Division and up to 100 percent of
necessary funds can be provided in instances where the maximum contaminant
level for drinking water standards has been violated by a primary
contaminant. A primary contaminant is one which cannot be controlled by
the normal filtering process or by chemical injection (e.g. radiation or
chloride).
Grants are allocated under this program on a priority ranking system
basis. Several areas provide points, including (but not limited to):
• existing public health hazard,
• stream classification,
• engineering plans complete,
• local financing plans complete,
• inadequacy of collection system.
There are no state limitations placed on grant receipt. Funds may be
provided if eligibility requirements are met and as long as the community
provides matching funds (federal) by other than EPA.
The City of Clayton in Rabun County is an example of a community which
received an emergency grant for correction of sewer line problems due to
flooding. A contact is:
• City of Clayton, Georgia
Paul Buchanan, Mayor
(404)782-4512
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Georgia's Economic and Environmental Grant Program is only available
for economic development. This program is managed similarly to the
Emergency Grant Program. Again, the applicant must provide 50 percent of
non-state funds, excluding EPA funds. Also, applications are rated on a
priority point system similar to that described for the Emergency Grant
Program. The priority point system for this program, however, has a few
special points based on industry-committment (e.g. federal facility,
private industry, etc.). Recent grant recipients include:
• St. Mary's, GA
Camden County
Office of the Mayor
(919)882-5516
for: sewer & water improvements due to military base build-up.
• Calhoun, GA
Gordon County
Office of the Mayor
(404)629-0151
for: upgrade treatment plant; sewer & water service to an
industrial park.
On July 1, 1984 the state began an Environmental Facility Financing
Program to provide loans for sewer and water projects. Allocation will be
on a first come-first serve basis. For more information on this program,
contact Mr. Henry M. Huckaby or Mr. W. Ross King at the Georgia Development
Authority in Atlanta, GA (404)894-6044. Fact sheets outlining the
available Georgia funding programs are presented on Figures 5-6 through 5-
8.
Kentucky
Kentucky currently has a Loan Program for wastewater facilities. The
program is targeted for small communities who need financial assistance
with their wastewater projects. Funds from this program are allocated on
a project-by-project basis. The community must verify that their revenue
stream is sufficient for repayment. if applications from small com-
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munities for this type of loan do not accumulate to warrant issuance of a
bond, then only some interim financing is available. Augusta, Albany and
Inez, Kentucky are examples of communities which have received interim
financing.
The following are examples of communities/entities which have re-
ceived a wastewater loan:
• Alexandria, KY
Campbell County
Roger Steffen, Mayor
400 W. Main Street 41001
(502)635-4125 (City Hall)
• Cold Springs, KY
Walter Koch, City Treasurer
29 E. Alexandria Pike 41076
(502)441-9604 (City Hall)
Figure 5-9 summarizes the Loan Program.
North Carolina
North Carolina has a Clean Water Bond which has been very helpful in
providing part of the local share to Federal grant recipients. Never-
theless, the Clean Water Bond program is utilized for construction of
wastewater treatment works and interceptors. The potential recipient must
have a federal grant before applying for a Clean Water Bond. The Bond
program will fund 25 percent of the non-federal share or 1/2 of the non-
federal share, whichever is less.
Communities applying for a Clean Water Bond are rated according to a
priority ranking system. This system assigns points based on a number of
criteria including, but not limited to, the following:
• stream classification,
• sewer use ordinance in effect,
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• water conservation measures in effect,
• continuing I/I Program,
• public education,
• financial need of community based on:
existing debt,
added debt (from facility),
property evaluation.
In the past, although communities were rated, grants were allocated on a
first come-first serve basis because of fund availability. When grant
funds become relatively low, the rating system takes effect.
Grants are considered every quarter (four times per year). One
eligibility limitation is that a community can only receive a grant which
is less than eight percent of its assessed value.
Numerous grants for sewer facility work have been awarded throughout
the state through the Clean Water Bond process. One example is:
Burnsville, N.C.
Ronald Dayton, Mayor
(704)682-2420
Unfortunately, the Clean Water Bond program expired in 1984. It was,
however, replaced by the One-Half Cent Sales Tax program. The recently
enacted sales tax program is administered at the county level and provides
funds for local communities in wastewater construction and operation and
maintenance (among other areas). Forty (40) percent of revenues gained are
slated for sewer work. However, in the mountainous areas of western North
Carolina it is expected that revenues will be very small (due to county
size and relative income) and should have little impact. In addition, it
should be noted that it is each county's prerogative to implement the tax.
Buncombe County recently implemented the sales tax. The Clean Water Bond
and sales tax revenue programs are summarized on Figures 5-10 and 5-11.
South Carolina
South Carolina has a Rural Community Facilities Development Grants
program which is targeted towards the study and construction of wastewater
facilities. Funds are allocated on a first come-first serve basis by the
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Office of the Governor, Division of Rural Improvement. Small towns and
cities, local water companies and non-profit organizations must serve a
population of 5,000 or less to be eligible for a grant. Grants ranging from
$500 to $10,000 are allocated for use in three ways:
• perform engineering/feasibility studies,
• assist lower-income residents in paying tap on fees,
• to leverage financing from other sources (includes cost of
construction).
There are no state limitations placed on grant receipt. Funds for FY 84
have been exhausted; the administrating agency has applied for a con-
tinuation; a decision is expected by mid-August 1984.
The town of Heath Springs received a grant to conduct a feasibility
study of alternatives to correct a sewer system problem. The town of Heath
Springs is located in Lancaster County, South Carolina. A contact is:
Warren Mackey, Mayor
P.O. Box 68
Heath Springs
South Carolina also has a rural water and sewer program which provides
grants to small communities for sewer and water projects. The program has
only appropriated $130,000 annually and funds have been used primarily for
water supply projects. Figures 5-12 and 5-13 summarize both of these
programs.
Tennessee
Tennessee has a loan program for wastewater projects. This program
provides low interest loans for wastewater projects which are eligible for
Federal grants. There are no limitations on grant receipt. Eligibility is
based strictly on the tax-shared capacity of the community. The loan
amount cannot exceed the amount of state-shared taxes for 30 years at 13
percent. There is no priority ranking system; loans are administered on a
first come-first serve basis.
5-19
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Numerous communities throughout the Tennessee study area have
applied for and received a wastewater loan, including Oakridge, Tennessee
in Anderson County. A contact is:
Ms. Deborah Rosen
(615)483-5671
Mr. David Morris is the City Administrator. Other recipients include:
• Morristown, TN
• Jefferson City, TN
• Johnson City, TN
A fact sheet describing this program is included as Figure 5-14.
Community Development Block Grants (CDBG)
The CDBG program is a HUD-supported program which provides funds for
state governments to utilize for community projects. The so-called non-
entitlement funds are directed toward projects in small communities such
as public facilities, housing and commercial revitalization. Funds are
also available for sewer projects. Each state administers their own grants
within Federal guidelines. Funds are available on an annual basis and are
granted on a competitive basis.
The Town of Heath Springs, South Carolina received a CDBG grant for
(community) revitalization of its sewer system. A contact is:
Warren Mackey, Mayor
P.O. Box 68
Heath Springs, S.C.
Other agencies which have received CDBG funds include:
Madison County, North Carolina Housing Authority
Mr. Sam Parker
(704)649-2788
5-20
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Avery County, North Carolina Housing Department
Mr. Charles VonCannon
County Commissioner
County Court House
Newland, N.C. 28657
(704)733-2900
Figure 5-15 further summarizes the CDBG Program.
5.2.3 Local Funding Sources
Wastewater facilities in mountain communities can be funded in part
or totally by the use of local funding resources. Traditionally, these
types of funding sources have been utilized to either match any federal
grants or to totally finance wastewater facilities if there are no federal
or state funds available.
Several mechanisms exist for financing the capital costs of new
wastewater systems and improvements to existing wastewater systems. The
traditional method of securing capital funds has been to sell a straight
debt obligation with a fixed maturity and fixed rate of interest. With
this approach the borrower (community) has the security and benefit of a
known payment schedule and amount. The lender (bond holder) is repaid for
his investment through scheduled interest payments which compensate for
the use of the money, and for assuming the market risk (changes in interest
rates) and credit risk (possibility of borrower not honoring interest or
principal in full or on time). Conventional municipal securities of this
type are divided into two broad categories, classified by the type of
security—general obligations which are secured by the full faith and
credit (taxing power) of a government, and revenue or special fund
obligations which are secured by revenues or receipts from a special fund
or project.
Municipal securities are further classified by the time extent of the
debt the issuer incurs. Bonds are long-term obligations which mature in
5-21
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one year or longer. Bonds are the primary technique used to finance long-
term capital investment. Notes are short-term obligations with a maximum
maturity of one year or less. Typical notes would include tax or revenue
anticipation notes and bond anticipation notes. As the names imply, these
techniques are used to secure short-term financing to smooth out differ-
ences in cash flow between revenues and expenditures. Various types of
municipal securities which are available to finance the capital cost of
wastewater systems are summarized on Fact Sheets appearing as Figures 5-16
through 5-19.
In some states there are legal limitations and guidelines which
affect the extent of local indebtedness and use of the different types of
securities. Many states impose a ceiling on bonded debt and often require
voter approval prior to issuing bonds. Frequently the total amount of
general obligation bonds that may be issued, for all purposes, is limited
to a stated percentage of total assessed valuation of taxable property.
Often short-term borrowing is restricted to "working capital" needs.
The procedures involved in issuing bonds are fairly complex and
usually require the assistance of a bonding attorney. Typically a new bond
issue is purchased (underwritten) by a bond dealer and then sold to
investors. Most states require general obligation municipal bonds to be
sold for the lowest interest cost at a public competitive bidding. Many
revenue bond issues are sold in the same manner.
The availability of bond funds and the terms of their sale depend on
the supply and demand of the bond market, the size and fiscal security of
the project being funded and the fiscal health of the community. Typically,
higher interest payments will be required when the bond market is poor, or
when the size of a project in relation to a community's fiscal capabilities
is not in proportion. Revenue bonds typically carry a higher interest rate
than general obligation bonds because there is a greater risk of payments
not being met (Peterson and Hough, 1983).
5-22
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When the investment community evaluates a municipality's ability to
meet bond payments, a number of factors are evaluated (Moak and Hillhouse,
1975) :
• net direct and overlapping tax-supported debt per capita,
• percentage of current property tax delinquency,
• percentage of debt service on tax-supported debt to total
revenues of the community's operating budget,
• average life of existing tax-supported debt in terms of
general obligation bonds,
• the ratio of projected revenues to the total annual debt service,
• the ratio of the depreciated value of the community's revenue
producing facilities to the outstanding (remaining) bonded
indebtedness of the facilities.
Other factors can also indicate municipal fiscal capability including
the diversity of income-generating sources in a community and its past
experience with bonded indebtedness. It is more difficult for a community
that has never incurred such debts to secure financing than those
communities whose past performance can be judged. Dependence on one major
industry or company may be a liability because of the possibility of the
plant closing or a labor strike. Favorable growth prospects in terms of
system users and income is viewed as a positive factor. Finally, the
degree of public support after the public is informed of the costs for the
undertaking of a wastewater facilities project can serve as an indicator of
the users' willingness to pay for the facilities once they are constructed
(Moak and Hillhouse, 1975).
Some special purpose districts face more problems in securing
financing than do cities, towns, and counties. Newly established special
purpose districts that do not have property taxing authority will have
difficulty raising funds to meet capital costs. These districts also will
5-23
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not be able to issue general obligation bonds and will have to pay a higher
rate of interest on debt. New districts, whether or not they have taxing
authority, will have no record to prove how reliably they discharge their
debts. New districts are, therefore, likely to face higher interest rates
(U.S. EPA, 1983).
Operation and maintenance costs as well as capital costs must be
considered in evaluating the community's ability to pay for wastewater
facilities. Wastewater facilities with high capital costs may strain the
debt-carrying capacity of the community and may prevent the community from
using bonds to pay for other needs such as schools and hospitals. High
operation and maintenance costs associated with other alternatives will
not strain the community's debt capacity but may place an excessive burden
on lower income users and reduce their willingness to pay for the
facilities (U.S. EPA, 1983).
Because of the relative fiscal weakness of many small mountain
communities when evaluated against such factors, few study area small
towns have utilized municipal securities to fund large-scale capital
projects. Another factor may be that rates for loans from other funding
sources such as the Farmers Home Administration may be less than the costs
to raise funds through bond issues. Larger communities with greater
revenue bases are more likely to have made use of municipal bonds for
capital financing.
In addition to conventional sources of funds for capital projects, a
wide range of "creative" capital financing alternatives have also recently
begun to be used. Most of these creative financing approaches represent
methods for altering the traditional relationships between borrower and
lender. Among the alterations which have been used in the effort to
develop new financing instruments are (Petersen and Hough, 1983):
• shifting the interest-rate risk from investor to borrower,
• enhancing the creditworthiness of borrowers by shifting
credit-related risks to third parties (loan guarantees),
5-24
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« increasing the types of returns available to investors
beyond those available from the regular receipt of interest
income payments ,
• designing instruments so that they appeal to the specialized
needs and requirements of certain investor groups.
An important aspect of creative financing has been to enhance the
variety of economic returns to investors, such as the design of trans-
actions in which governments are able to transfer certain tax benefits of
ownership (that they themselves as non-taxpaying entities are not able to
enjoy) to taxpaying entities that can use them for tax shelter purposes.
This is one of the central aspects of most "privatization" techniques
which are discussed in the following section of the report.
Adequate revenue generation is also required for annual operation and
maintenance costs as well as for debt service, replacement and adminis-
trative expenses. Sources of revenue available to authorities and
municipalities include general tax revenue, special assessments, user
charges, connection charges and sewer rentals. The application of user
charges and special assessments are further described on Figures 5-20 and
5-21.
Debt service is provided from the source determined by the type of
bond issue—general tax revenues for general obligation bonds, and special
assessments or service charges for revenue bonds. Operation and main-
tenance costs, however, are typically covered through user charges.
Generally, a community will use taxes to support O&M costs only as a last
resort.
If the project receives EPA Construction Grant funds, O&M costs must
be allocated on the basis of each user's proportionate use of the system.
In the case of on-site technologies, some operation and maintenance costs
may be paid by users directly to private contractors such as septic tank
pumpers and haulers. Operation and maintenance costs which are incurred by
a public agency, however, must be recovered from users. Construction Grant
5-25
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regulations specify two methods for recovering these costs: (1) actual use
and (2) ad valorem taxes. Many rural communities may not utilize ad
valorem taxes, so this choice may not be available. With the actual use
method, each user or user group pays its proportionate share of operation
and maintenance (EPA, 1983) .
Proportionate share as implied by Construction Grant regulations is
based on wastewater loading which would encompass flow and strength.
However, most costs of operating on-site and small scale treatment
facilities are related to services required, therefore, to type of
treatment facilities, site conditions and system age as well as wastewater
loading. A user charge system which keys on allocating costs of services
instead of wastewater characteristics, moreover, would better satisfy the
stated goal of the regulations: "...that each user which discharges
pollutants to the system that cause an increase in the cost of managing the
effluent or sludge from the treatment works shall pay for such increased
cost" (EPA, 1983).
5.2.4 Private Funding Sources
There are few sources of private funding for wastewater facilties. As
mentioned in the previous section, there are short-term loans available
from commercial banks, but these cannot usually be regarded as regular
sources of funds since interest rates may be very high.
The major source of private investment in wastewater systems comes
from the private developers and partnerships who construct extensions to
the existing wastewater system to service their developments. In this
manner, the wastewater collection system is continually expanded at no
construction cost to the local municipality. The system is generally
turned over to the municipality which then becomes responsible for all
operations and maintenance.
Another trend that is slowly starting in the United States is the
private ownership and operation of wastewater treatment facilities, called
5-26
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privatization. Privatization involves private sector investment in
construction and operation of both large and small wastewater management
facilities. In some instances, companies are constructing and operating
new facilities and, in others, taking over existing facilities for
operation purposes.
The advantages of private sector involvement in the funding of
wastewater facilities include:
• investment tax credits,
• accelerated depreciation on facilities,
• establishment of long-term operation and maintenance
contracts.
Private financing of facilities differs substantially from the
traditional municipal approach to facilities financing. Privatization
projects rely on the tax-exempt revenue bond market to raise the debt
necessary for construction of facilities. In the early planning stages of
a privatization package, financial structuring must be studied in order to
determine whether or not equity is required. Present privatization
packages essentially follow one of two concepts:
• lease development
• limited-partnership development.
Small-scale facilities, suqh as those required by small communities, would
probably be fashioned around the limited partnership concept for they are
typically characterized by lower cash payouts and shorter bond terms.
In addition to financing construction of new facilities, the privat-
ization concept involving public/private partnerships appears to have
merit for potential repair, expansion or rehabilitation efforts of older
sewage systems in the larger study area cities. Sewage facilities which
serve major industry provide a good opportunity for the development of
privatization partnerships, assisting both the industrial sector and
5-27
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nearby municipal customers. In fact, many of the early wastewater
treatment facilities in the U.S. were constructed, owned and operated by
industrial groups who would later provide wastewater management services
to nearby residences.
Although privatization is a relatively recent development for pro-
vision of wastewater services, it has been used fairly extensively for
provision of other services. Solid waste management services have been
successfully operated under this concept since 1975. Additionally,
similar arrangements exist in many municipalities for contractual pro-
vision of garbage collection, municipal engineering services, park main-
tenance and street and parking lot cleaning. These examples illustrate
that private/public partnerships frequently result in the lowest cost to
service users as evidenced by more and more municipalities awarding
contracts to the private sector.
Although privatization has not been used to any extent for wastewater
management in the study area, it has been used for that purpose in other
small communities throughout the country. The limited-partnership pri-
vatization concept was recently implemented in a semi-rural community in
southeastern Pennsylvania. In this situation, privatization will allow
for construction of new wastewater collection, conveyance and treatment
facilities specifically tailored to meet the needs of 600 existing, local
customers. The Limerick, Pennsylvania project proposed by BCM Eastern,
Inc. attempted to achieve the following goals:
• A collection system scaled down to serve only the most critical
and most populated areas,
• Use of a pre-engineered wastewater treatment plant with only
essential facilities—no locker rooms, meeting rooms, etc.,
• Use of Modular plant construction,
• The negotiation of construction contracts with qualified
contractors for a fixed, reasonable price (no extras),
• The elimination of "red tape" by avoiding federal programs
{Swavely, 1984).
5-28
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This project is slated for a July 1984 construction start.
Privatization of wastewater management services is also currently
occurring to some extent in large vacation/resort areas where developers
have constructed utilities for their facilities. Similar projects exist
with other, smaller developers such as mobile home parks. Here the
developer is responsible for the construction, operation and maintenance
of sewage facilities according to conditions specified in the NPDES
Permit.
Although most of the preceding discussion has focused on privati-
zation as a means of funding a centralized facility, privatization of on-
site systems should not be overlooked. Ownership, operation and main-
tenance of on-site systems by a septic tank installation company, for
instance, may be possible. Recent evaluations show that it may be a
profitable undertaking under certain conditions. Research in the study
area has not identified any such approach as having been implemented to-
date. It is considered a feasible, yet relatively complex, privatization
approach.
It remains to be seen if privatization of wastewater facilities,
whether centralized or on-site, will become a widespread trend throughout
the country.
5-29
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5.3 Evaluation of Alternative Financing Techniques
Based upon the federal and state funds which are available, each local
community, district or authority (hereafter called a community), must
evaluate which funding source(s) is best for its needs. This financial
evaluation process basically determines the community's eligibility for
funds, availability of funds and the community's overall financial health.
A flow diagram (Figure 5-22) has been developed which documents the
steps required to evaluate the available source(s) of funds for a
community. They include the following steps:
• determine type and cost of project,
• determine financial capability of community,
• review federal/state grant and loan options,
• review local financing options,
• select loan or grant program,
Criteria: Eligibility
Debt requirements
Type of Project
Local financing requirements
Local revenue requirements
• review costs/benefits of project with loans or grants,
• scale down project or maintain original project,
• design and construct project.
To assist in the evaluation process, worksheets have been developed.
The process of completing the worksheets should provide a good under-
standing of the funds which are available, a community's eligibility for
funds and a community's financial status. An evaluation of the completed
worksheets; should reveal the direction in which the community can move to
obtain funding for their particular project. The worksheets are divided
into the following components:
5-30
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• Applicant Information
• Description of Proposed Facility,
• Projected Facility Costs,
• Community Debt History,
• Community Financial Conditions,
• Available Grant or Loan (Federal) programs,
• Available Grant or Loan (State) programs,
• Local Financing Requirements,
• Revenue Generation.
This chapter has identified a number of alternatives available to
small mountain communities for financing a wastewater collection/treat-
ment/ disposal system. These include finances at the federal, state, local
and private level.
The U.S. Environmental Protection Agency at the federal level has
been the major source of funds for wastewater projects through its
construction grants program. The Farmers Home Administration, the
Appalachian Regional Commission and the U.S. Economic Development Admin-
istration also have federal funds available for small community wastewater
projects.
All of the study area states (except Alabama) have either a grant or
loan program (or both) for wastewater facilities. For the most part, these
programs provide funds to cover part of the local costs to communities
which have received a federal grant for wastewater facilities.
Traditionally, funding sources at the local level have been used to
either match a federal grant or to totally finance a wastewater facility.
Mechanisms which exist for financing new systems or improving existing
systems include:
• general obligation bonds,
• revenue bonds,
• bond anticipation notes,
• short-term bank loans.
5-31
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EVALUATION OF FINANCING
TECHNIQUES
DETERMINE FINANCIAL
CAPABILITY OF
COMMUNITY
•FACILITY COSTS
• COSTS/HOUSEHOLD
• COMMUNITY DEBT HISTORY
• COMMUNITY FINANCIAL
CONDITIONS
SELECT LOAN OR 3RANT
PROGRAM(S) FOR WHICH
TO APPLY
• ELIGIBILITY
• AVAIUIBILITY OF FUNDS
DEBT REQUIREMENT
• TYPE OF PROJECT
• LOCAL FINANCING REOMTS
• REVENUE REQUIREMENTS
o
c
;o
m
O)
ro
ro
-------
Additionally, a community will also need to generate revenue for
annual system operation and maintenance costs as well as for debt service,
replacement and administrative costs. Sources of revenue can include:
• special assessments,
• connection charges,
• tapping fees,
« sewer rentals,
• taxes.
Private funding sources available include:
• short-term loans,
• private developers,
• private ownership and operation.
Since none of these mechanisms (possibly with the exception of short-term
loans) has been implemented to any degree in the study area, it remains to
be seen whether they can be successfully utilized.
The selection of the type of financial alternative most suited to a
particular community will depend upon a number of factors including the
community's financial health or capability, the availability of federal/
state/local funds, and the community's eligibility for such funds. Once an
evaluation of these considerations is made, the community can then proceed
to obtain funds in the method revealed as most suitable to its situation.
Appendices IV-B and IV-C contain a Financial Planning Handbook for
Wastewater Management (EPA) and A Guide to Financial Management for Small
Utilities (National Demonstration Water Project), respectively. These
documents are intended as samples of community guides for selection of an
appropriate financial alternative.
5-32
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FINANCING TECHNIQUES EVALUATION WORKSHEET
APPLICANT INFORMATION
Name
Address
City
Zip
Contact Person
Telephone
DESCRIPTION OF PROPOSED FACILITY
Type of Facility
New Q Expansion Q Upgrade
[]Conventional f~| Innovative/flltC4"f\a"iN€.
Briefly Describe Proposed Facility
Service Area
County Q Municipality
Sewer District or Authority Q Other
Design Population
Corresponding Year
PROJECTED FACILITY COSTS
(1) Construction Costs
(2) Engineering, Contingency
and Any Other Non-
Construction Project
Costs
(3) Anticipated Annual Debt
Service
(4) Annual Operation, Main-
tenance and Replace-
ment Costs
Total Annual Costs
(3) + (4)
$
$"
Interest Rate
Years of Payback
5-33
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FINANCING TECHNIQUES EVALUATION WORKSHEET, PAGE 2
COMMUNITY DEBT HISTORY
Bond Ratings General Obligation Bonds
Revenue Bonds
Existing Debt Type Project
Debt Limit Percent of Total Limitation
COMMUNITY FINANCIAL CONDITION
Population
Average Per Capita Income
Property Taxes Collected
Market Value of Real Property
Existing Debt
AVAILABLE GRANT OR LOAN PROGRAM(S)
Federal
Agency (ies)
Program(s)
Contact (s)
Name
Address
Phone No.
1)
2)
1)
2)
1)
1)
1)
r~l Grant [""] Loan
2)
2)
2)
5-34
-------
FINANCING TECHNIQUES EVALUATION WORKSHEET, PAGE 3
Eligibility Requirements
1)
2)
Funds and/or Interest Rate Available
1)
2)
AVAILABLE GRANT OR LOAN PROGRAM(S)
State
Agency(ies) 1) Q Grant If] Loan
Program(s)
Contact (s)
Name
Address
Phone No.
2)
1)
2)
1)
1)
1)
2).
2).
2)
Eligibility Requirements
1)
2)
Funds and/or Interest Rate Available
1)
2)
5-35
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FINANCING TECHNIQUES EVALUATION WORKSHEET, PAGE
LOCAL FINANCING REQUIREMENTS
Amount of Financing Required $
Annual Debt
Interest Terms of Service
Sources of Financing: Amount Rate Maturity Payment
General Obligation Bond
Revenue Bond
Loan
REVENUE GENERATION
Annual Revenue Requirements
Sources of Revenues:
Sewer Rentals
Tapping Fees
Connection Charges
Special Assessment
5-36
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MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-1
EPA Construction Grants
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Construction Grants for Wastewater Treatment Works
Office of Water I1 retrain Operations
U.S. Environmental Protection Agency
Washington, DC 20460
For planning, design and construction of
municipal wastewater treatment works, 75% fund-
ing of eligible project costs for conventional
technologies and 85% funding for innovative or
alternative technologies is available until
October 1, 1984.
PROGRAM OBJECTIVES
To assist and serve as an incentive in construction of municipal waste-
water treatment works.
LIMITING FACTORS
Effective October 1, 1984, the Federal share
may decrease to 55% of eligible project costs
at the discretion of each State. Planning and
design will be funded as a percentage allow-
ance based on total construction cost.
ELIGIBILITY REQUIREMENTS
EXAMPLES
Any municipality, intermunicipal agency, state, or interstate agency or
Federally recognized Indian tribal government having jurisdiction over
waste disposal is potentially eligible.
Grant-eligible costs are those to correct existing problems. Privatily-
owned systems must have been in existence as of December 27, 1977 to be
eligible. Financial capability, adequate OMR budget and an approved user
charge system are other requirements.
ADMINISTRATIVE REQUIREMENTS
Madison County, N.C. Clean Waters Project
Mr. Mike Bradley
Madison County Health Department
(704)649-3531 or
Mr. F. R. Schutz (Consultant)
(704)258-2384
City of Vienna, GA (Stanley Gambrell, City
Administrator)
Lagoon, spray irrigation: Construction phase
David Battson
Tribble & Richardson (Consultant)
^(9121742-7395
CONTACTS
Certified copy of authorization from applicants governing body
Current description of project
Consideration of other Federal funds which may be used to finance the
project
Applicant assurance that discharge permit has been or will be obtained
Program #66.418 - Construction Grants for
Wastewater Treatment Works, 1983 Catalogue of
Federal Domestic Assistance, OMB, Washington,
D.C.
Mr. William Kramer, U.S. EPA, Office of Water
Program Operations, Washington, D.C. (phone:
(202) 382-7277)
Water Division, U.S. EPA, Atlanta, CA
For State 201 contacts. See Appendix IV-A.
GRANT
LOAN
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-3
Farmers Home Administration Grants and Loans
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Water and Waste Disposal Systems for Rural Communities
Farmers Home Administration
U.S. Department of Agriculture
Washington, DC
Installation, repair, improvement or expan-
sion of rural waste disposal facilities in-
cluding collection and treatment of sanitary
wastes.
PROGRAM OBJECTIVES
LIMITING FACTORS
To alleviate health hazards and promote the orderly growth of rural
areas.
Population
Median family income
ELIGIBILITY REQUIREMENTS
Municipalities, counties, districts and authorities, associations,
cooperatives, corporations operated on a not-for-profit basis, and Indian
tribes are potentially eligible. Service area should not include an area
with greater than 10,000 inhabitants.
Grants available only to communities with incomes below 85% of the non-
metropolitan state median family income. Loan available to other appli-
cants not qualifying for a grant.
EXAMPLES
Loan for sewer work:
City of Barbourville
Knox County, Kentucky
Charlie Buchanan, Mayor
(606)546-4171
ADMINISTRATIVE REQUIREMENTS
/ Grants available up to
up to 75% of eligible costs
Loans available for 100% of project costs
Terms - 9.625 percent Market Rate Interest (May, 1984) based on 40-year
financing, useful life of the project or state requirements. 5% interest
rates are available to communities below poverty level that need correc-
tion of a serious public health problem.
GRANT
LOAN
CONTACTS
f Program 810.418 Water and Waste Disposal ^\
Systems for Rural Communities, 1983 Catalogue
Syste _
of Federal Domestic Assistance,
DC
OMB, Washington,
Mr. Larry Bowman and Ms. Donna Roderick
Loan Specialists
Water and Waste Disposal Division
U.S. Department of Agriculture
Farmers Home Administration
Washington, DC 20250
(202)382-9583
See Appendix IV-A for individual state contacts.
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET A
FINANCIAL
ALTERNATIVES
Figure 5-4
Appalachian Regional
Commission Grants
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Appalachian Supplements to Federal Crant-In-Aid (Community Development)
Appalachian Regional Commission
Provide supplemental funds to any Federal
grant-in-aid program.
PROGRAM OBJECTIVES
LIMITING FACTORS
Assist in creation of jobs and other private sector involvement.
Limited to economic development related pro-
jects.
ELIGIBILITY REQUIREMENTS
State and, through the states, their subdivisions and private nonprofit
agencies. Supplemental grants are limited to that amount needed to
increase the Federal share to 80% of total eligible project costs.
EXAMPLES
Stanford Sewage System Improvements (1982)
Stanford, Kentucky 40484
James Harris, Mayor
(502)365-7322
ADMINISTRATIVE REQUIREMENTS
CONTACTS
Applicants must first have a federal grant or loan.
Funding for FY-84
Alabama
Georgia
Kentucky
North Carolina
South Carolina
Tennessee
Total
GRANT
$ 3,650,000
2,567,000
2,864,000
2,163,000
2,578,000
3.047,000
516,869,000
Program #23.002 - Appalachian Supplements to
Federal Grant-In-Aid (Community Development)
Supplemental Grants, 1983 Catalogue of Federal
Domestic Assistance, OMB, Washington, DC
Ms. Judy Powell
Appalachian Regional Commission
Washington, DC
(202) 673-7893
LOAN
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-5
Federal Economic Development Grants
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Kcouomic Development Crants for Public Works and Development Facilities
Economic I>evelop:ntEiC Administration
U.S. Department of Commerce
Grants for water and sewer systems which
benefit economic deveJopment. Grants vary
from 50% to 10Qi£ depending upon economic
conditions and applicant.
PROGRAM OBJECTIVES
LIMITING FACTORS
To assist in the construction of public facilities needed to initiate and
encourage long-term economic growth.
Only used for economic development. Required
income and unemployment conditions.
ELIGIBILITY REQUIREMENTS
States, cities, counties and other political subdivisions and private and
public nonprofit organizations. Median family income and unemployment
are considerations of eligibility. Project must conform with an EPA-
approved Overall Economic Development Program and be located in an EDA
designated area.
EXAMPLES
City of Conover
Catawba County, NC
City of Lynchburg
Moore County, SC
Mr. William J. Day, Regional Director
Economic Development Administration
1365 Peachtree Street, NE
Suite 750
Atlanta, GA 30309
(404)881-7401
ADMINISTRATIVE REQUIREMENTS
CONTACTS
Qualified projects must:
1. Improve opportunities for expansion or establishment of industrial or
commercial plants or facilities.
2. Create or add long-term employment opportunities.
3. Benefit long-term unemployed and members of low income families.
Program #11.300 - Economic Development Grants
for Public Works and Development Facilities,
1983 Catalogue of Federal Domestic Assistance,
OMB, Washington, DC
Main Office:
Mr. Charles W. Coss
Director of the Office of Public Works
Economic Development Administration
14th Street, NW
Washington, DC
(202)377-5265
GRANT
LOAN
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-6
Georgia Emergency Grants
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
State of Georgia Emergency Grant Program for Construction of Water and
Sewer Projects
Georgia Department of Natural Resources
Division of Environmental Protection
For design and construction of emergency
rehabilitation or replacement wastewater
facilities.
PROGRAM OBJECTIVES
Cover cost for emergency rehabilitation and replacement of wastewater
facilities.
LIMITING FACTORS
Must produce matching funds by non-State agency
other than EPA.
Priority ranking based on point system.
ELIGIBILITY REQUIREMENTS
The project must be a justified emergency need for rehabilitation or
replacement.
Only government-owned (county, city or authority) facilities are eligible.
Sewage and sludge facilities can be eligible.
EXAMPLES
City of Clayton
Rabun County
Paul Buchanan, Mayor
(404)782-4512
Grant for correction of sewer line problem due
to flooding (1983)
ADMINISTRATIVE REQUIREMENTS
CONTACTS
No application deadline exists.
Up to 50 percent of engineering and construction costs are eligible for
grant assistance.
$1 million allocated for FY-85.
GRANT
LOAN
Mr. C. A. (Andy) Yarn
Environmental Protection Division
Georgia Department of Natural Resources
Atlanta, GA
(404) 656-7416
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-7
Georgia Economic and Environmental Grants
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
State of Georgia Economic and Environmental Grant Program for new or
expanding industries
Georgia Department of Natural Resources
Division of Environmental Protection
PROGRAM OBJECTIVES
To enhance economic growth by providing needed water supply and pollution
control facilities.
These funds jre utilized primarily to promote
industrial growth, although funds for tourist
areas have been considered eligible. Treat-
ment plants, wastewater collection and inter-
ceptors, land, professional services, admini-
strative costs and construction testing are
\ eligible.
LIMITING FACTORS
Applicant must provide 50% of non-State
funds (not including Federal EPA funds).
Applications are rated according to a speci-
fied priority points system.
ELIGIBILITY REQUIREMENTS
Local governments with new or expanding industries can be eligible.
Financial need must be demonstrated. Operators must meet minimum State
qualifications. A capital cost-recovery system with a 20-year payback is
required with funds to be retained by applicant for operation, maintenance
and repair. An equitable user charge or rate structure is required.
EXAMPLES
St. Mary's, GA
Camden County
Office of the Mayor
(919)882-5516
Calhoun, GA
Gordon County
Office of the Mayor
(404)629-0151
ADMINISTRATIVE REQUIREMENTS
CONTACTS
No application deadline exists.
Approved application forms must be submitted.
Decisions regarding grant awards are made as applications are received
and reviewed.
$5 million allocated for FY-85 (beginning July 1, 1984).
Quarterly itemized reports are required.
GRANT
LOAN
Mr. C. A. (Andy) Yarn
Environmental Protection Division
Georgia Department of Natural Resources
Atlanta, GA
(404) 656-7416
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-8
Georgia Environmental
Facilities Loan
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
State of Georgia Environmental Facilities Program for Economic Development
(administered by the Georgia Development Authority)
Both water and sewer projects will be eligible
for this type of loan.
PROGRAM OBJECTIVES
LIMITING FACTORS
To provide low interest loans to small communities for sewer and water
projects in order to encourage economic development.
$30 million will be available to local
governments for water and sewer projects
during Fiscal Year 1985 (beg. July 1, 1984).
ELIGIBILITY REQUIREMENTS
EXAMPLES
Municipalities, counties, authorities and special districts are eligible.
Preliminary technical approval of the project by the Georgia Environmental
Protection Division is needed.
Fiscal Year 1985 will be the first year this
program will be in effect.
ADMINISTRATIVE REQUIREMENTS
CONTACTS
7 1/2 to 7 3/4% loan interest rates are available.
Applications are to be considered on a "first come, first served" basis
until loan funds allocated for a particular fiscal year are exhausted.
Mr. Henry M. Huckaby (Executive Director)
or Mr. W. Ross King
Georgia Development Authority
Atlanta, GA
(404) 894-6044
GRANT
LOAN
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-9
Kentucky Wastewater Loans
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
State of Kentucky loan program for wastuwater facilities
Kentucky Pollution Abatement Authority (part of the Finance Cabinet)
Funds from sewer fees are held in a reserve
by the state on behalf of the municipality
until the loan is completely repaid. The
municipality need not hold funds in a reserve
for operation-maintenance activities.
PROGRAM OBJECTIVES
To provide affordable loans for small municipalities with wastewater
projects that do not themselves warrant separate issuance of bonds.
LIMITING FACTORS
If applications from small communities for
this type of loan do not accumulate to warrant
issuance of a bond, only some interim financ-
ing is available.
ELIGIBILITY REQUIREMENTS
The local municipality must be willing to enact a sewer fee structure to
cover the debt that the loan is to handle.
Technical merit of the proposed facilities should be based on EPA funda-
bility requirements.
EXAMPLES
Alexandria, KY - Campbell County
Roger Steffen, Mayor
400 W. Main Street 41001
(502)635-4125 (City Hall)
Cold Springs , KY
Walter Koch, City Treasurer
29 E. Alexandria Pike 41076
(502)441-9604 (City Hall)
ADMINISTRATIVE REQUIREMENTS
CONTACTS
Application forms Chat need to be completed are available.
Federal or state engineers not employed by the Pollution Abatement Autho-
rity must handle field inspection and monitoring needs.
Mr. Don Morse, Kentucky Pollution Abatement
Authority (in Frankfort)
(502) 564-2924
GRANT
LOAN
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET ^
FINANCIAL
ALTERNATIVES
Figure 5-10
North Carolina Clean Water Bonds
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
State of North Carolina
Clean Water Board
Division of Environmental Management
Department of Natural Resources
For wastewater construction projects only.
PROGRAM OBJECTIVES
Assist local communities with the local share of wastewater projects.
LIMITING FACTORS
Limited to less than 8 percent of assessed
value.
Program may expire at the end of this fiscal
year.
ELIGIBILITY REQUIREMENTS
Any municipality in North Carolina which has received a federal grant or
loan for a wastewater project.
EXAMPLES
Burnsville, North Carolina
Ronald Dayton, Mayor
(704)682-2420
Also:
Mars Hill, Buncombe County and
Spruce Pines, NC
ADMINISTRATIVE REQUIREMENTS
CONTACTS
Program provides 25 percent of non-federal share of project costs or 1/2 of
non-federal share, whichever is less.
GRANT
LOAN
Mr. Herb Davis
Supervisor, state Grants Unit
NC Department of Natural Resources
Division of Environmental Management
Raleigh, NC
(919)733-6900
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-11
North Carolina One-Half
Cent Sales Tax
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
State of North Carolina One-Hal f Cent Sales Tax
Administered by individual counties
40% of all proceeds are allocated to wastewater projects
For wastewater construction or operation and
maintenance of wastewater facilities.
PROGRAM OBJECTIVES
LIMITING FACTORS
To assist local communities with wastewater projects.
Only available in those counties where the
local option for a Federal grant or loan
has been exercised.
ELIGIBILITY REQUIREMENTS
Any municipality in NC located in a county which has implemented the one
half cent sales tax. The tax program was started in 1983. Funds are
dispersed within the municipality.
EXAMPLES
/ Bui
incombe County
ADMINISTRATIVE REQUIREMENTS
CONTACTS
The tax is administered at the County level.
GRANT
LOAN
Stephanie Richardson and Alan Wayhab
Division of Environmental Management
NC Department of Natural Resources
Raleigh, NC
(919) 733-6900
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-12
South Carolina Facilities
Development Grants
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Scute of South Carolina Rural Community Facilities Development Grants
Administered by the S.C. Division of Rural Improvement.
Grants ranging from $500 to $10,000 can be
utilized for construction, feasibility/engi-
neering studies or to assist in paying fees
for connecting to a sewer system. Funds can
be used to leverage financing from other
PROGRAM OBJECTIVES
To assist small towns and rural communities (population of 5,000 or less)
with assessing and providing safe drinking water and wastewater services.
LIMITING FACTORS
Emphasis is placed on projects that benefit
low-income rural residents (as defined by
poverty income guidelines), demonstrate co-
operative funding arrangements and serve to
reduce a known health hazard.
ELIGIBILITY REQUIREMENTS
Small towns and cities, local water companies and nonprofit organizations
iu areas with a population of less than 5,000 people can apply.
EXAMPLES
Town of Heath Springs
Lancaster County, South Carolina
Grant for performance of feasibility study for
sewer system improvements
Warren Mackey,
P.O. Box 68
Heath Springs,
Mayor
SC
ADMINISTRATIVE REQUIREMENTS
CONTACTS
A letter of intent must be submitted requesting an application and
stating proposed amount and use of funds.
Final decisions are made within 30 days of receiving an application.
Ms. Karen Ross Grant, Assistant Project
Administrator
Div. of Rural Improvement
Office of the Governor
1205 Pendleton Street, Suite 303
Columbia, SC 29201
(803) 758-7804
GRANT
LOAN
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-13
Soutli Carolina Rural
Wuter-Sewor Grants
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
State of South Carolina Rural Water and Sewer Program Grants
Administered by the South Carolina Department of Health and Environmental
Control (DHEC), Bureau of Water Supply and Special Programs
Funds have been utilized primarily in the
past for water supply facilities. Engineer-
ing, legal and construction costs are eligible.
PROGRAM OBJECTIVES
To provide some supplemental funds to small communities for water and
sewer systems.
LIMITING FACTORS
Only $130,000 are appropriated annually. The
funds can be carried over from one year to
another. Selection criteria have been estab-
lished by the administering agency.
ELIGIBILITY REQUIREMENTS
EXAMPLES
Any authority, district, system or nonprofit organization recognized in
the State or any general purpose local government or any municipal system
in a city, town or village of less than 1,500 residents.
Funds used primarily for water supply facilities
although monies are available for sewer facil-
ities.
ADMINISTRATIVE REQUIREMENTS
CONTACTS
An application is required as is verification from the primary funding
source that an intention to provide funds exists.
Ks. Pamela Robinson with DHEC in Columbia
(803) 758-7921 or
Mr. George Nelson, DHEC
<803)758-5544
GRANT
LOAN
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-14
Tennessee Wastewater Loans
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Tennessee! Department of Public Health
Loau Program for Wastewater Projects
Funds are available for either eligible costs
under the Federal Construction Grants program
or for the local share.
PROGRAM OBJECTIVES
LIMITING FACTORS
To provide low interest loans for wastewater projects eligible for
Federal grants.
None. Based strictly on state-shared
tax capacity.
ELIGIBILITY REQUIREMENTS
Municipality must be eligible for an EPA Construction Grant.
Project must be approved by Tennessee Department of Health.
Application must be submitted by a county or community that is eligible
for state-shared taxes.
EXAMPLES
Oakcidge, Tennessee
Anderson County
Deborah Rosen
(615)483-5671
City Administrator—David Morris
Also:
Morristown, Tennessee
Jefferson City, Tennessee
Johnson City, Tennessee
ADMINISTRATIVE REQUIREMENTS
CONTACTS
No application deadlines
Loan amount cannot exceed the amount of state-shared taxes for 30 years
at 13 percent. Current loan interest rate is 6.2 percent.
GRANT
LOAN
Mr. John Morgan
(Local Bonds and Finance)
Tennessee Department of Public Health
Nashville, TN
(615) 741-4272
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-15
Community Development Block Grants
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Community Development Block Grant (CDBG) Program
State Community Development Agencies
PROGRAM OBJECTIVES
Sewer and Water Projects
Housing
Commercial Revitalization
LIMITING FACTORS
To assist small communities with grants for community development.
ELIGIBILITY REQUIREMENTS
Generally, communities with less than 50,000 residents or counties with
less than 200,000 residents are eligible.
ADMINISTRATIVE REQUIREMENTS
Competitive application process.
Administration of the grants varies from state to state.
Grants usually are available for 50% of project cost; however, this may
vary from state to state.
V E<] GRANT D LOAN
EXAMPLES
Heath Springs, South Carolina
Madison County, North Carolina Housing Authority
Avery County, North Carolina Housing Department
(See below for contacts)
CONTACTS
Warren Mackey, Mayor
P.O. Box 68
Heath Springs, SC
Mr. Sam Parker
Madison County Housing Authority
(704)649-2788
Mr. Charles VonCannon
Avery County Commissioner
County Court House
Newland, NC 28657
(704)733-2900
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-16
General Obligation Bonds
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
General Obligation (GO) Bonds
Local Community, Special District or Authority
These funds can be used at the municipality's
discretion for any portion of a wastewater
project. Most commonly, bond proceeds are used
to pay the non-Federal grant share of a pro-
ject.
PROGRAM OBJECTIVES
LIMITING FACTORS
GO Bonds provide funds to the local community for undertaking wastewater
projects.
State borrowing limitations, if any which
are placed upon a municipality. Interest
rates and other local indebtedness can also
be limiting.
ELIGIBILITY REQUIREMENTS
EXAMPLES
Ability to sell bonds and repayment by the municipality are required.
ADMINISTRATIVE REQUIREMENTS
CONTACTS
Municipal bond for which the full faith, credit, and taxing power of the
issuing municipality is pledged to repay. Repayment can be through
general property taxes, revenues from service charges, or special assess-
ments. GO Bonds generally command lower interest rates and overhead costs
since they have the full faith, credit, and taxing power of the munici-
pality as security.
Government Finance Research Center
1750 K St., N.W.
Suite 650
Washington, D.C. 20006
(202)466-2473
GRANT
LOAN
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-17
Revenue Bonds
-------
FUNDING PROGRAM AND AGENCY
Revenue Ikmds
Local Community, Special District or Authorities can be the agencies
responsible.
USE OF FUNDS
These funds can be used at the municipality's
discretion for any portion of a wastewater
project.
PROGRAM OBJECTIVES
Revenue bonds provide funds Co the local community for undertaking waste-
water projects.
ELIGIBILITY REQUIREMENTS
LIMITING FACTORS
State borrowing limitations, if any. However,
revenue bonds generally have no debt limits
since they are tied to revenues from a specific I
project. Interest rates can also be limiting, I
if high. y
EXAMPLES
Ability to sell bonds and repayment by the municipality are required.
ADMINISTRATIVE REQUIREMENTS
A revenue bond is a municipal security payable from charges acquired
from services provided by the capital improvement that is financed. No
further backing of revenue bonds is generally required. Revenues for
these projects would come from sewer rentals charged to users of the
system.
D GRANT Jgf LOAN
CONTACTS
Government Finance Research Center
1750 K St., N.W.
Suite 650
Washington, D.C. 20006
(202)466-2473
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-18
Bond Anticipation Notes
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Local Municipality,, Special Districts or Authorities can be thu agencies
responsib
Used to meet financial demands that arise
during the early construction stages of a
wastewater treatment system.
PROGRAM OBJECTIVES
LIMITING FACTORS
To provide funds to the local municipality for undertaking wastewater
projects.
Interest rates
Bond buyer apprehension
ELIGIBILITY REQUIREMENTS
EXAMPLES
Ability to sell bonds and repayment by the municipality are required.
ADMINISTRATIVE REQUIREMENTS
CONTACTS
Bond anticipation notes are backed by the anticipated proceeds of a
future bond issue. These notes permit the issuer to delay placing a
long-term bond issue on the market at a time when interest rates are
high. It also provides the issuer a greater period of time to determine
total capita1 financing req uirements.
GRANT
LOAN
Government Finance Research Center
1750 K St., N.W.
Suite 650
Washington, D.C. 20006
(202)466-2473
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-19
Short-Term Loans
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Short-Term Loans
Local Municipality, Special Districts or Authorities
Capital cost payments during the early stages
of a project.
PROGRAM OBJECTIVES
LIMITING FACTORS
To provide funds during construction start-up.
Interest rates
ELIGIBILITY REQUIREMENTS
EXAMPLES
ADMINISTRATIVE REQUIREMENTS
Loans are usually secured by negotiable promissor" notes and are repaid
from the proceeds of long-term bond issues. Loans of this type also permit
a borrower to delay placing a long-term bond issue in the market in times
of adverse interest rates.
GRANT
LOAN
CONTACTS
Government Finance Research Center
1750 K St., NW
Suite 650
Washington, D.C. 20006
(202)466-2473
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-20
Special Assessment Bonds
-------
FUNDING PROGRAM AND AGENCY
USE OF FUNDS
Special Assessment Bonds
Local Municipality, Special Districts or Authorities can be the agencies
responsible.
Funds from special assessment bonds are gener-
ally used for collection systems only.
PROGRAM OBJECTIVES
LIMITING FACTORS
To provide funds to the local municipality for undertaking wastewater
projects.
Interest rates
Terms of bonds
ELIGIBILITY REQUIREMENTS
EXAMPLES
Ability to sell bonds and repayment by the municipality are required.
ADMINISTRATIVE REQUIREMENTS
Special assessment bonds are generally used to pay for capital costs
associated with wastewater collection systems. Bonds are usually payable
only from special benefit assessments that are based upon the front
footage of lots served by sewer systems. The term of a special assess-
ment bond is usually 3-5 years.
GRANT
LOAN
CONTACTS
Government Finance Research Center
1750 K St., NW
Suite 650
Washington, DC 20006
(202)466-2473
-------
MOUNTAIN COMMUNITIES
WASTEWATER MANAGEMENT
ASSESSMENT
ALTERNATIVES
DEVELOPMENT REPORT
FACT SHEET
FINANCIAL
ALTERNATIVES
Figure 5-21
User Cfiarges
-------
FUNDING PROGRAM AND AGENCY
/ Ty^c of Usfar Charges
Special Assessment
Connection Charges
Tapping Fees
Sewer Rentals
Agencies responsible for user charges can be local municipalities, special
districts, or special authorities.
USE OF FUNDS
Loan and bond repayment. Operation and
maintenance costs.
PROGRAM OBJECTIVES
LIMITING FACTORS
To provide funds for any loan or bond repayment. Also serve as a source
of funds for operation and maintenance costs.
ELIGIBILITY REQUIREMENTS
EXAMPLES
ADMINISTRATIVE REQUIREMENTS
Special Assessments - Generally levied on properties that benefit from
the wastewater system. Assessments are usually calculated on a front
footage basis.
Connection Charges - Levied against customers when they connect to the
wastewater system.
Tapping Fees - This is an alternative to special assessments. Under this
arrangement, each property owner is charged the same flat rate regardless
of the size of the property.
Sewer Rentals - Monthly charges for use of the wastewater system.
CONTACTS
Government Finance Research Center
1750 K St., N.W.
Suite 650
Washington, D.C. 20006
(202)466-2473
GRANT
LOAN
-------
CHAPTER 5 BIBLIOGRAPHY
-------
BIBLIOGRAPHY
CHAPTER 5
Appalachian Regional Commission. 1980. Wastewater Management For Small
Communities and Rural Areas in Appalachia; An Institutional and
Technical Assessment. Washington, D.C. Prepared by INTASA, Inc.
Menlo Park, CA. ARC Contract No. 80-35-F103.
Moak, Lennox L. and Albert M. Hillhouse. 1978. Concepts and Practices
in Local Government Finance. Municipal Finance Officers Association
of the U.S. and Canada. Chicago, IL.
Pennsylvania Intergovernmental Council. 1982. Rural Wastewater Systems;
Practical Alternatives For Small Communities in Pennsylvania.
Pennsylvania Department of Environmental Resources. 1976. Comprehensive
Water Quality Management Plan, Central Susquehanna River Basin
Study Area 6. Chapter VII. Existing Water Quality Management
Program. Prepared by Gannett Fleming Corddry and Carpenter, Inc.
Harrisburg, PA. in association with Kaiser Engineers. Pittsburgh,
Petersen, John E. and Wesley C. Hough. 1983. Creative Capital Financing
for State and Local Governments. Government Finance Research Center.
Municipal Finance Officers Association. Chicago, IL.
Swavely, Robert L. "Privatization of a Small Community Wastewater System".
BCM Eastern, Inc.
Tennessee Department of Health and Environment. Oct 1983. Fiscal Year
1984-1985 Priority Ranking System.
U. S. Environmental Protection Agency. 1983. Final-Generic Environmental
Impact Statement. Wastewater Management in Rural Lake Areas. Region
V. Chicago, IL.
U.S. Environmental Protection Agency. 1981. North Carolina Barrier Islands.
Generic EIS. Financial Planning Handbook for Wastewater Management.
Prepared by Briscoe, Maphis, Murray & Lament, Inc. Boulder, CO,
in cooperation with Claude Terry and Associates, Inc. Atlanta, GA
and Gannett Fleming Corddry and Carpenter, Inc. Harrisburg, PA.
U.S. Office of Management and Budget. 1983. Catalogue of Federal Domestic
Assistance. Washington, D.C.
Personal Communications;
Bowman, Larry C. 1984. Loan Specialist. Water and Waste Disposal Division.
Farmers Home Administration. U.S. Department of Agriculture.
Washington, D.C.
Davis, Herb. 1984. Supervisor, State Grants Unit. North Carolina Department
of Natural Resources. Division of Environmental Management.
-------
Grant, Karen Ross. 1984. Assistant Project Administrator. Division of
Rural Improvement. Office of the Governor.
South Carolina.
Huckaby, Henry M. 1984. Executive Director. Georgia Development Authority.
Manookian, Janet. 1984. Local Bonds and Finance. Tennessee Department
of Public Health.
Mcllwain, David. 1984. Acting Chief, Public Works. Economic Development
Administration. Washington, D.C.
Morse, Don. 1984. Kentucky Pollution Abatement Authority. Frankfort.
Powell, Judy. 1984. Appalachian Regional Commission. Washington, D.C.
Robinson, Pamela. 1984. South Carolina Department of Health and
Environmental Control.
Roderick, Donna. 1984. Loan Specialist. Water and Waste Disposal Division.
Farmers Home Administration. U.S. Department of Agriculture.
Washington, D.C.
Schutz, F.R. 1984. F.R. Schutz Consulting Engineers. Asheville, N.C.
Yarn, C.A. 1984. Environmental Protection Division. Georgia Department
of Natural Resources.
-------
VOLUME IV APPENDICES
-------
APPENDIX IV-A STATE 201 CONSTRUCTION GRANT AND FmHA CONTACTS
-------
VOLUME IV-A
STATE CONTACTS
State 201 Construction Grant Contacts:
Mr. William Manasco
Chief, Municipal Waste Control Section
Department of Environmental Management
Water Division
State Capital
Montgomery, AL 36130
(205)271-7700
Mr. Robert W. Troxler
Program Manager
Municipal Compliance and Technical Support Program
Environmental Protection Division
State of Georgia
3420 Norman Berry Drive
7th Floor
Hopeville, GA 30354
(404)656-7400
Mr. Judson Cramer
Construction Grants Branch
Bureau of Environmental Protection
18 Reilly Road
Fort Boone Plaza
Frankfort, KY 40601
(502)564-3410 x520
Mr. T. Allen Wahab
Environmental Engineer
Construction Grants Program
P.O. Box 27687
Raleigh, NC 27611
(919)733-6900
Mr. Samuel J. Grant, Jr.
Domestic Wastewater Division
South Carolina Department of Health
and Environmental Control
2600 Bull Street
Aycock Building
Columbia, SC 29201
(803)758-5067
Mr. Robert G. Threadgill, Jr.
Environmental Engineer
Division of Construction Grants and Loans
150 9th Avenue North
Nashville, TN 37203
(615)741-0638
-------
State Farmers Home Administration Loan/Grant Contacts:
Mr. Bill Somerall
Community Program Chief
474 South Court Street
Montgomery, AL 36104
(205)832-7067
Mr. Jim Thigpen
Community Program Chief
355 East Hancock Avenue
Athens, GA 30601
(404)546-2162
Mr. Bob Letton
Community Program Chief
333 Waller Avenue
Lexington, KY 40504
(606)233-2733
Mr. Carson Brinkley
Community Program Chief
310 New Bern Avenue
Raleigh, NC 27601
(919)755-4640
Mr. Elwood Gerald
Community Program Chief
8135 Assembly Street
Columbia, SC 29201
(803)765-5163
Mr. Jim McCroy
Community Program Chief
U.S. Courthouse Building
801 Broadway
Nashville, TN 37203
(615)251-7341
-------
APPENDIX IV-B FINANCIAL PLANNING HANDBOOK
FOR WASTEWATER MANAGEMENT,
EPA
-------
APPENDIX III-B FINANCIAL PLANNING HANDBOOK
FOR WASTEWATER MANAGEMENT,
EPA
-------
U. S. Environmental Protection Agency
Region IV - Atlanta
NORTH CAROLINA BARRIER ISLANDS
ENVIRONMENTAL IMPACT STATEMENT
FINANCIAL PLANNING HANDBOOK
FOR WASTEWATER MANAGEMENT
September, 1982
-------
TABLE OF CONTENTS
INTRODUCTION I
WORKSHEET #1; FINANCIAL PLANNING CHECKLIST 3
WORKSHEET #2; COSTS OF PROPOSED IMPROVEMENTS 5
WORKSHEET //3; COST ESTIMATES BY HOUSEHOLD 7
WORKSHEET //4; AGENCY ROLES AND COST RESPONSIBILITIES 9
WORKSHEET #5: AGENCY FINANCIAL CAPABILITIES II
WORKSHEET //6; SUMMARY OF FINANCIAL AND INSTITUTIONAL
INFORMATION 13
-------
INTRODUCTION
Provision of waste water trealment is a major financial undertaking for a community
and its residents. There are multiple objectives to be met: protection of the
environment, maintenance of water quality standards, reliable treatment and
sufficient capacity to meet present and future demands, to name a few. Naturally,
the goal is to fulfill these objectives without placing a financial burden on the
community and its wastewater customers or taxpayers. This can best be accomplished
by anticipating and understanding the likely financial and management impacts as
plans evolve, so that informed decisions can be made to optimize the wastewater
treatment plan.
Whether regional and/or centralized treatment facilities, community facilities, on-site
systems, or alternative technologies are being considered, meeting the community's
wastewater treatment needs and maintaining water quality will incur some costs. It is
important to evaluate at an early stage the costs associated with alternative plans,
and other financial and management implications that may arise. If such information
is considered as planning progresses and alternatives are narrowed down, the
community is more likely to arrive at a solution which is financially and institutionally
acceptable as well as technically and environmentally sound.
The worksheets contained in this handbook are aids to financial planning for
wastewater treatment. They are designed to address certain issues, provide analytical
techniques, disclose information, and function as aids to decision-making regarding
financial and management commitments.
A series of six worksheets is included:
# I: Financial Planning Checklist
#2: Costs of Proposed Improvements
//3: Cost Estimates by Household
#4: Agency Roles and Cost Responsibilities
#5: Agency Financial Capabilities
#6: Summary of Financial and Institutional Information
-------
The remainder of this handbook contains brief descriptions of each worksheet and its
purpose and gives recommendations for its use. The worksheets themselves are self-
explanatory, with instructions incorporated on them.
The six sheets are intended to be used consecutively since the information required for
each follows the natural progression of the types of financial and institutional planning
tasks which should be a part of the facility planning process. In addition, the
worksheets are linked so that in some instances results or responses obtained on a
previous sheet are required.
A set of six worksheets should be filled out for each wastewater management system
alternative during the alternatives evaluation phase of the planning process. The
worksheets are meant to be an integral part of the study, not a task undertaken once
the preferred alternative has been selected.
-2-
-------
WORKSHEET//!; FINANCIAL PLANNING CHECKLIST
Frequently, the early stages of facility planning are dominated by feasibility studies
and consideration of technical alternatives. The financial and institutional
implications of what is being considered are often overlooked or given minimal
attention beyond estimating gross project costs.
Serious attention should be given to thorough financial planning early in the facility
planning process for two major reasons: first, a complete picture of the financial and
institutional aspects of various technical alternatives helps to assure selection of a
plan which not only meets wastewater treatment needs, but is also irnplementable
from a political and financial standpoint. Second, if potential issues are addressed at
an early stage, there will be a better chance for satisfactory resolution and greater
acceptance of the ultimate financial plan, particularly in a regional situation where a
number of agencies may be involved in system financing and management.
The Financial Planning Checklist (Worksheet //I) is an aid to identifying the tasks
which should be incorporated into the financial planning process in order to accomplish
these objectives. The questions on the worksheet are intended to help those involved
in system planning to structure an approach to addressing issues concerned with
management and financing. It is recommended that a work plan be developed in which
systematic financial and management planning tasks are identified.
Worksheets #2, 3, 4, and 5 are referred to on Worksheet //1 to indicate that many of
the questions raised can be answered by using these worksheets to perform certain
analyses or address specific issues. Worksheet #6 summarizes the results. A
description of the purpose and use of each of the subsequent worksheets follows.
-3-
-------
FINANCIAL PLANNING CHECKLIST*
WORKSHEET 7F1
Agency .
Date __
A. Issue Identification and Work Plan Development
For Financial and Institutional Analysis
1 Has a financial management oversight committee been established
with representation of all locally involved agencies, including
elected officials, town or county managers, finance officers, and/or
utility managers'
2. Have local issues which might affect implementation of financing
arrangements, joint management agreements, cost allocation
agreements, etc been identified and discussed among appropriate
local agencies and have acceptable solutions been proposed1?
3 Has supporting information (such as population estimates, growth
rates, and service areas) been reviewed and accepted by the
appropriate agencies for use in estimating costs and analyzing
financial requirements7
4 Have issues of a financial and institutional nature that might result
from the inclusion of special populations in the plan (such as
seasonal, major industrial or commercial users) been identified and
discussed"?
5. Has a work plan been developed in which financial and institutional
planning and analysis tasks are identified9
6 Has technical facility planning been coordinated with financial
and institutional tasks included in the work plan referred to in
Question #5'
7 Will all segments of the public and the elected officials be advised
of the costs of various alternatives and the institutional implica-
tions of each prior to selection of a system alternative'
B. Financial and Institutional Analysis
8 Are cost estimates for the proposed alternative systems up-to-date,
reflecting current cost information and current (1982) price levels'
9 Have total capital costs been identified for all the components to
be included in the proposed system alternatives, including those
not expected to be grant-eligible? (See Worksheet #2)
10 Have total annual costs been estimated separately for administra-
tion, operations, maintenance, and capital replacements for the
various alternatives' (See Worksheet #2)
11. Has a judgment been made regarding which of the system cost
elements are eligible for outside funding? (See Worksheet #2)
D D
D D
D D
D D
D D
D D
D D
D D
D D
D D
D D
12 Have estimates for different facility alternatives (such as regional,
community, or on-site systems) been made regarding total cost of
the proposed alternatives, expected outside funding support, and
resulting local capital requirements' (See Worksheet #2)
13 Have estimates been made of average annual costs for typical
households that will be served by the proposed alternatives, in-
cluding permanent residents as distinct from seasonal residents'
(See Worksheet #3)
14 Is information presented so that non-residential users can readily
calculate their costs' (See Worksheet #3)
15 Have the effects of factors such as inflation, growth in households,
availability of grant funding, or use of plant investment fees been
considered as far as their effect on local system costs and costs
per household' (See back of Worksheet #3)
16 Has a determination been made of which agencies have the
necessary legal and political powers to finance, operate, manage,
and regulate the system' (See Worksheet #4)
17. Will existing agencies assume all system responsibilities, or will a
new entity be created to manage and operate the system' (See
Worksheet #4)
18 Have all agencies which will bear financial responsibility in the
- system been identified' (See Worksheet #4)
19. If more than one agency is to bear capita! financing and/or opera-
tions and maintenance costs, has a formula for cost allocation
been proposed, discussed and agreed upon' (See Worksheet #4)
20 Will an intergovernmental agreement be established by which roles
and responsibilities for all involved agencies are assigned and
agreed upon' (See Worksheet #4)
21. Have the financial consequences of secondary effects of proposed
improvements such as locations and density of new development,
growth rates, and types of development been identified' (See
Worksheet #4)
22 Have ordinances been established to regulate and ensure support
of the proposed system m terms of effluent discharges, re-
quirements for hook-ms, design standards, and extension policies'
(See Worksheet #4)
23 Has the current financial condition of all agencies which will be
financially involved in the system been assessed in terms of poten-
tial to assume new financial commitments' (See Worksheet #5}
24 Have various methods of financing the local costs been considered
in regard to statutory limitations, effect on other agency financing
projects, or the financial status of the agency? (See Worksheet #5)
25. Has a system of lees and charges been devised for support of an-
nual operations, maintenance, and administrative costs' (See
Worksheet #5)
D D
D D
D D
D D
D D
D D
D D
D D
D D
D D
D D
D D
D D
D D
Instructions
1 Worksheet #1 should be completed
as a joint effort by town or county
managers, finance officers, and/or
elected officials of the agencies
involved in the wastewater facility
planning process Its purpose is to
identify tasks for financial and
institutional analysis which should
be completed m the early phases of
facility planning, prior to adoption of
a facility plan or final system
alternative
2 The responses to the questions on
this worksheet will help identify
needs for specific tasks, which may
form the basis for developing a work
plan to resolve issues and answer
financial and institutional questions
necessary to assure successful plan
implementation
3 Section A contains questions which
relate generally to the facility
planning process and how it is being
managed; in particular, how financial
and institutional tasks will be
approached Section B contains
questions regarding specific
analytical needs to resolve financial
and institutional issues and
establish an acceptable structure for
effective system management and
successful implementation Note
that m Section B each question is
followed by a reference to another
worksheet in this series which, when
completed, will provide specific
answers to the questions.
* Refer to Instructions at the right before completing the worksheet.
Prepared for EPA Region IV
for N C Barrier Islands EIS by
3RWTII Briscoe. Maphis, Murray & Lamont, Inc
3111111k 2855 Valmont Road, Boulder, Colorado 80301 {12/61}
-------
WORKSHEET//!: COSTS OF PROPOSED IMPROVEMENTS
Different facility engineering firms may approach the identification of system costs in
various ways within a plan. The costs may be broken down to varying levels of detail;
certain categories of costs may not be addressed; some plans contain estimates only
for those system elements which are expected to be financed, at least in part, by state
or federal funding. Worksheet #2 provides a consistent method of summarizing cost
estimates for each of the various system alternatives.
The Costs of Proposed Improvements worksheet contains lines for entering costs
associated with all the components and/or functions anticipated for a particular
system alternative. It is applicable for all types of treatment systems, including
central and/or regional, community facilities, and individual on-site systems. A
summary of all estimates, including capital and operations and maintenance costs, can
be entered on a single sheet; in addition, the expected non-local funding amounts are
identified so that a clear picture of local financing responsibilities is obtained.
This worksheet should be used after preliminary estimates for system alternatives
have been furnished by the engineering consultant. The engineer and a community
finance officer should cooperatively use this sheet to summarize all costs associated
with each viable alternative. Although preliminary estimates should be made as
accurately as possible, the costs entered on Worksheet #2 should be updated as better
information becomes available (including availability of grant funds), to serve as a
basis for further analysis of system plans.
-5-
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COSTS OF
PROPOSED IMPROVEMENTS*
First Year of Full Operation 19
Description of Proposed Improvements
WORKSHEET #2
Agency_
Date __
,' v-V1-;" /•-"', ;"v-. - ?''*'£ xxv, '•• •' •. •-•»•'"•
— Wastewater System
Components/Functions
Centralized Facilities
1 Treatment Faciltty(ies)
•>
?. Interceptor Sewers
4
B.
R Pump StatmnsXFnrnff Mains
7 Ocean Outfall
ft P,nliectinn 1 tnes
Q Rhirlgfi Handling R piapnfial
m I anr)(lnnl Rirjh1s-nf.\A/ay\
11 Management A Administration
Community Facilities
13.
1* I anrt(lnnl Rights.nf.Wayl
In", Management* Administration
Site Facilities
i7, FanilitiesA Fqnipment
1B
?n land(lnH Rights.nf-Way)
?1 Management* Administration
Other Costs
Miscellaneous Identifiable Costs
n
24 Total Cost of Proposed Improvements
5-year Estimated Capital Costs
Total _ EPA Grant _ Fed/State/ - Local
Capital Cost Eligible Amount Other Funding Capital Cost
$ _ $ _ $ — Total Local
Capital Cost
25. Total Local Capital Costs (A.) and Total Annual O&M Costs (B.) A.
$
Names of individuals/firm who prepared GORt information-
Sources of information and methods used to calculate cost estimates (describe).
Estimated Annual Operations & Maintenance
(O&M) CoStS (For 1st Year of Full Operation)
Personnel ^. Materials 4, Reserve for 4, Other — Annual
(Incl. Contracts) (Incl. Power) Replacements ~ O&M Cost
\
« + $ +$ 4
-s =
B.
• Total Annual
i O&M Cost
s .
Instructions
t. Worksheet #2 should be
completed jointly by the
community's facility en-
gineer and a finance officer
2. All cost estimates should be
expressed at 1982 constant
price levels; if another year
is used, it should be explicit-
ly identified and used con-
sistently for all the work-
sheets
3 Costs entered on Worksheet
#2 should relate only to the
proposed improvements, do
not include costs attribut-
able to any existing
facilities
4 Cost estimates should be
made for all components,
functions, or activities re-
lated to the total proposed
improvements, regardless of
the expected source of
funding
5 Capital costs should include
all projected capital needs
through the fifth year of full
system operation The antici-
pated EPA grant-eligible
amount, as well as funding
from other sources (in-
cluding other federal, state,
industry, or other third party)
should be deducted from the
total to give an estimate of
local capital to be financed
by local agencies.
6 O&M costs should represent
requirements projected for
the first full year of
operation
Comments/Qualifications.
•The basis for the cost calculations contained on this worksheet, including key assumptions, is explained in the instructions provided at the right. Prepared for EPA Region iv ar^r^l Bnscoe Ma his M &L '
for N C Barrier Islands EIS by 3I||I|IL 2855 Va mont Road, Boulder, Colorado 80301 (12/81'
-------
WORKSHEET #3; COST ESTIMATES BY HOUSEHOLD
Since the bulk of the system costs .will ultimately be paid by community residents,
taxpayers and/or system users, it is important to develop an estimate of annual costs
attributable to an average or typical household to be served by the proposed system.
It must be emphasized that these household cost estimates are not necessarily the
same as the rates that will be charged for wastewater treatment. Rather, the figures
derived on this worksheet are an estimate of what it will cost for an average household
to receive treatment within the proposed system. Rates v/ill be established at a later
date, and constitute a decision to be made by the individual community.
Cost Estimates by Household (Worksheet #3) provides a step-by-step methodology to
express total local system costs, including any existing cost components which are to
be incorporated into the proposed system, in terms of household costs. This worksheet
is designed to provide estimates for two classes of "typical" households: the average
permanent residential and the average seasonal (or part-time) residential household. If
there is an insignificant demand for part-time service, this part of the worksheet can
be disregarded and estimates can be obtained only for permanent households. In
addition, an estimate of costs per commercial or other specified user may be obtained
by following the steps given in Instruction #6 on the worksheet.
Worksheet #3 provides for computation of annual debt repayment costs derived from
the local capital cost total estimated on Worksheet #2 and combines costs associated
with the proposed improvements with those which are to be carried over from existing
facilities. A series of computational steps are then followed to allocate annual system
costs to permanent and seasonal households. The rnethodoloy provided is a simplified
method for calculating cost burden; the approach may be tailored to meet the needs of
a specific situation.
In addition to computing an average annual cost per permanent and seasonal household
in uninflated (1982) dollars, the back of Worksheet #3 gives instructions for conducting
sensitivity (risk) analyses. The purpose for this is to test the effects of variable
factors, such as inflation, growth in households, local funding requirements, and use of
plant investment fees, on the individual household costs.
-7-
-------
COST ESTIMATES
BY HOUSEHOLD*
Step 1: Summary of Total System Costs For Year 1 and Year 5
(See Instructions #1,2,3)
A. Calculation of Annual Debt Repayment for Proposed Improvements:
1. Total local capital cost. _?
2. Less' available local funds J
3 Remainder amount to be financed
4. Add legal & underwriting fees
5. Add: reserve amount (if required)
6. TOTAL CAPITAL DEBT
7. Estimated annual debt repayment
8. Will hook up charges, called Plant Investment Fees (PIF's), be charged new
customers to offset part or all of the projected annual debt repayment costs'? Yes I—I No LJ
9. If yes, what is the planned PIF per new connection? $
_ (Worksheet #2, Line 25a, see Instruction #3)
1 (See Instruction #4}
_(Lme1 - Line 2)
_ (See Instruction #4 or use 1 5% of Line 3}
_ (See Instruction #4 or use 10% of Line 3)
_ (Line 3 + Line 4 + Line 5)
„ (See Repayment Schedule on reverse side)
10 Estimated number of new connections in preceding year a
11 Estimated total PIF revenue (Line 9 x Line 10 a, b). a_i
12. Net annual debt repayment (Line 7 - Line 11 a, b) aJI
B. Annual Total Cost of Existing System plus Proposed Improvements:
Existing System: (See Instruction #3) Year 1
13. Annual repayment on existing debt a--5
14 Annual O&M to be carried over a-5
Proposed Improvements:
15. Net annual debt repayment (Line 12 a, b):
16 Annual O&M (Worksheet #2, Line 25 b for Yearl, estimate Year 5)-
Total System:
17. Total debt repayment (Line 13 a, b + 15 a, b)
18 Total annual O&M (Line 14 a, b + 16 a, b)
a $
a. $
b. $
a. $
b. $
Step 2: Allocation of Annual Costs to Permanent, Seasonal Households
A. Allocation of Annual Debt Repayment Costs (See instruction #§)•
19. Percent of plant capacity to serve permanent population
20. Percent of plant capacity to serve seasonal population
21 Debt repayment allocated for permanent capacity (Line 17a, b x 19a, b)
22 Debt repayment allocated for seasonal capacity (Line 18a, b x 20a, b)-
B. Allocation of Annual O&M Costs (See instruction #6)
23 Average Annual Permanent Residential Discharge
a Year 1
_% - 100 = a 0
_% - 100 = a °
b Year 5 .
« Perm H H) (# Persons/H H) (Gal/Person/day)
X X
(tt Perm H H) (H Persons/H H) (Gal/Person/day)
24 Average Annual Seasonal Residential Discharge
a. YearT.
x 365 days/year = .
. x 365 days/year = .
_ gallons per year
_ gallons per year
{# Seas H H)
ins/H H)
(Gal/Person/day)
(# days/year)
b Year 5..
.gallons per year
.gallons per year
First Year of Full Operation
#of Permanent Residential Households
# of Seasonal Residential Households
(Year 1)
(Year 5)
25 Residential Flow Ratio = (Total System Flow - Non-residential Flow)
.,„, Total System Flow
(See Instruction #6) '
a Year 1 I > ~ ' ' = 0
b Years
26 Ratio of Permanent Residential to Total System Flow
a Year 1 ( )
b Years
Lme23a
(
Lme24a
)
= 0-
27 Ratio of Seasonal Residential to Total System Flow
a Year 1 ( )
= 0
b Years
= 0
Lme23b
Lme24b
28 Annual O&M allocated to Permanent Households
a Year 1 Line 18a x Line 26a = $
b YearS Line 18b x Lme26b = $
29 Annual O&M allocated to Seasonal Households
a Year! Line 18a x Lme27a = $
b Years Lme18b x Line 27b = $
Step 3: Calculation of Year 1, Year 5 Costs per
Permanent, Seasonal Household
30 Total Annual Cost per Permanent Household:
a Year 1 ( + __) - .
31 Total Annual Cost per Seasonal Household:
a. Year 1 ( + ) - .
b Years (_
Next Step: Perform Risk Analysis
(Follow Procedure on Reverse Side)
(# Seas H H) (# Persons/H H) (Gal/Person/day) (S days/year)
•The basis for the cost calculations contained on this worksheet, including key assumptions, is explained in the instructions provided at the right
WORKSHEET #3
Agency .
Date _
Instructions
1 Worksheet #3 should be completed on a system-
wide basis by the facility engineer and a finance
officer It is not necessary (or each agency in a
regional system to complete a separate
Worksheet fl3 The techniques on this worksheet
provide a simplified method for estimating house-
hold cost burden If more accurate methods are
available for specific calculations, enter the
results in the appropriate blanks The results ob-
tained are estimates of system costs per
household and will not necessarily be the same
as the rates which will be determined by com-
munity elected officials
2 Worksheet #3 can be filled out more than once,
varying key assumptions to show the sensitivity
of cost estimates by household to risk factors
such as inflation, local capital costs, growth in
households, or PIF revenue Refer to back of
Worksheet #3 for detailed instructions on conduc-
ting risk analysis
3 All costs should be expressed at 1982 price levels
(or other year if used consistently); for existing
system costs in Line 14, use latest budget year
data to project O&M costs which are to be earned
over to Years 1 and 5, then adjust to 1982 price
levels
4 "Available Local Funds" (Line 2) is the amount of
money (cash reserves, accumulated funds, or
other) projected to be available for financing the
proposed improvements Estimates for Lines 4
and 5 should be based on the agency's ex-
perience with similar financing issues, rough esti-
mates can be based on the percentages shown.
5 Debt repayment for facility capital is allocated ac-
cording to the plant treatment capacity needed
for the permanent and seasonal populations and
other uses, since capacity must be sufficient to
serve all users at peak usage Lines 19 and 20 will
not necessarily add up to 100%, a percentage of
the remaining capacity can be calculated for
specific commercial or other users and applied to
the total debt repayment costs (Line 17) to derive
their share of the capital debt costs
6 Annual O&M costs are allocated on the basis of
treatment of annual wastewater flows at-
tributable to permanent and seasonal popula-
tions In Lines 23 and 24, the annual household
discharge (excluding mf lit ration/inflow) from per-
manent and seasonal residences is calculated to
give a ratio of permanent to seasonal use Line 25
a, b is a calculation of the decimal ratio of total
residential flow (all flow not attributable to other
uses, should include infiltration/inflow} to total
system flow for Year 1 and 5 In Lines 26 and 27,
the permanent and seasonal use ratios are ap-
plied to the total residential flow ratios to derive
the ratios of permanent and seasonal flows (in-
cluding infiltration/inflow) to total system flow
These ratios are multiplied in Lines 28 and 29 by
total annual O&M costs to calculate the per-
manent and seasonal cost shares O&M costs per
commercial or other user can be derived separate-
ly for Year 1 and 5 as follows (1) Divide- Total an-
nual O&M costs (Line 18 a,b} - Total annual
system flow (for Year 1,5) = Annual O&M cost per
gallon (2) Multiply. Annual O&M cost per gallon
x tt gallons per year estimated for the specified
user This calculation assumes that each gallon
of system (low has similar strength
characteristics
Prepared tor EPA Region IV
for N C Barrier Islands EIS by
3ITtlTII Sriscoe, Maphis, Murray & Lamonl. Inc
0IIIIIIL 2855 Valmont Road, Boulder,Colorado80301 (12/81)
-------
Factors for Annual Debt Repayment
(Capital Recovery Factors)
Mufliply the Total Capital Debt shown tn Ltne 6 by the appropriate factor for the
assumed rate of interest and term of maturity to derive a fixed amount for
annual debt repayment Enter on Line 7
Term of Maturity
10 years
15 years
20 years
25 years
8%
014903
011683
010185
0,09368
10%
0 16275
013147
011746
011017
Interest Rate
12%
017698
0 14682
013388
012750
15%
019925
017102
015976
015470
20%
0 23852
021388
0 20536
020212
RISK ANALYSIS OF HOUSEHOLD COST
ESTIMATES
Cost estimates on Worksheet #2 and the calculations made on Worksheet #3 are based initially on assumptions
considered "rnost likely" at the time they are made but may vary as grant awards, design and construction pro-
ceed it is important to test the sensitivity of Costs per Household to variables such as inflation, growth in
households, local funding share, amount of plant investment fees, proportion of permanent/seasonal population,
and any other factors which are likely to vary from what is being planned
Sensitivity or Risk Analyses can be conducted by changing only a few of the procedures on Worksheet #3, each
~"^ varying one assumption to test the effect on the cost per household For each Risk Analysis performed, a
rate Worksheet #3 should be used, with the new assumption clearly indicated
Step 1: Risk Factor: Inflation
1 Assume an annual rate of inflation which might be expected to affect the annual O&M costs debt repayment
will not be affected by inflation since it is a fixed cost determined at the lime of financing
2 Calculate the number of years' inflation affecting costs in Years 1 and 5 subtract 1982 (or the year initially used
for expressing all costs) from Year 1 and 5
3 in the inflation Factor table, find the factors for the assumed rate of inflation and the appropriate number of
years (two different factors for Year 1 and 5)
4 Multiply the factors by O&M costs given for the Existing System {Lines 14 a, b)and Proposed Improvements
(Lines 16 a, b)
Example: Assumed rate of inflation: 10% Year 1:1984 Year 5' 1988
O&M costs (1982 prices): $17,500
Factor for 2 years'inflation {Year 1) 1210 x $17,500 = $21,175
Factor for 6 years'inflation (Year 5)' 1 772 x.$17,500 = $31,010
5 Re-calculate Lines 28-31 on Worksheet #3 using adjusted O&M costs
6 Perform a second Risk Analysis using a higher assumed rate of inflation to measure the increased risk
Note Inflation factors must not be used in overall alternative analysis, except as allowed by regulation (e.g land,
energy costs) These factors are to be used for estimating local costs as they may be affected in future
years
Inflation Factor Table
Annual Rate of
Inflation:
1 year
2 years
3 years
4 years
5 years
6 years
7 years
7%
107
1 145
1225
1 311
1403
1 501
1 606
8%
1 08
1 166
1.260
1360
1469
1587
1 714
9%
1 09
1 188
1.295
1 412
1539
1677
1828
10%
1 10
1 210
1331
1 464
1611
1 772
1 949
11%
1 11
1232
1368
1518
1685
1870
2076
12%
1 12
1.254
1 405
1574
1 762
1974
2211
13%
1 13
1277
1 443
1630
1842
2082
2353
14%
1 14
1300
1 482
1689
1925
2195
2502
15%
1 15
1323
1.521
1 749
2011
2313
2660
16%
1 16
1 346
1561
1 811
2100
2436
2.826
Step 2: Risk Factor: Growth in Households
The first estimates of the numoer of permanent and
1 Conduct a Risk Analysis by changing the number of households in Year 1 and 5 to reflect a slower rate of
growth Re-calculate Lines 23, 24, 30, and 31
2 Vary the proportion of permanent and seasonal households expected Re-caicuiate Lines 23, 24, 30 and 31
Step 3: Risk Factor: Amount of Local Funding Share
Worksheet #2 provides estimates of Total Capital Costs, outside funding, and local share based on current ex-
pectations about funding The actual amount to be funded by the locat agency is likely to change as planning
proceeds and grant awards are determined. The effects of (ess optimistic view of funding should be tested
1 Conduct a Risk Analysis by assuming higher initial capita! costs, or assume reduced or no outside funding on
Worksheet #2 Enter new local capital cost on Line 1, re-calculate Lines 3-7,12,17, 21, 22, 30, and 31
2 Complete Worksheet #3 with the higher assumed capital cost
Step 4: Risk Factor: Plant Investment Fees
The amount of PIF funds available depends on the PIF charge sef by the operating agency and on the amount of
growth in new connections on which PIF's are charged The amount of PIF revenue can be varied by assuming
different PIF charges or total PIF funds available in Year 1 and 5 to check the effect on annual costs per
household
1 Vary the planned PIF charge m Line 9 and the total PIF revenue in Line 11 to calculate a different amount of net
annual debt repayment to be shared by all system users
2. Re-calculate Lines 12, 15,17, 21, 22,30 and 31
-------
WORKSHEET #4; AGENCY ROLES AND COST RESPONSIBILITIES
Several decisions about system management which will have financial implications
must be made before adoption of a wastewater treatment plan. There may be several
agencies which have institutional powers that affect the system, and it is important to
establish who will be responsible for various system functions in the general areas of
planning, operations, management, and regulation.
Worksheet //4, Agency Roles and Cost Responsibilities, gives an indication of the types
of functions and activities for which various agencies may be assigned primary
responsibility. Even in the case of a single agency such as a city or town providing
treatment for its constituents, there may nevertheless be other agencies whose actions
can assure support for the system (for example, a county's powers to make land-use
decisions). If a regional system is planned, two or more agencies will probably be
contributing financially as well as sharing other management responsibilities. If cost-
sharing is involved, a suitable method of allocating the costs must be agreed upon;
each agency's financial and management responsibilities should be identified in the
manner suggested on Worksheet /M. A clear understanding of how these roles will be
determined is critical to successful implementation through a cooperative agreement.
-9-
-------
COST RESPONSIBILITIES
A. Assignment of System Functions VV i
On the top row of the chart, enter the names of all agencies or groups which will have primary
responsibilities in the system, then indicate which functions each will perform-
Agency Names and Types
(City, County, District,
Industry, etc)
System Functions
1. System Planning:
2 Ownership of:
a. Treatment Facilities
« Centralized
• Community
• On-Site
b Collection Lines
c Disposal Facilities
ri Other
3 Financial Responsibilities:
a Capital Financing
b. Annual O&M Costs
c Grant Administration
d Accounting System
4 Management:
a System Operation
b. Policy Decisions
5 Regulation:
a Ordinances
b Enforcement of Standards
B. Allocation of Total System Costs (See instruction #3)
6 Enter total local capita! costs (Worksheet #2, Line 25a) $_
7 Which agencies will contribute to capital financing costs
8 Explain basis or give formula or example indicating how local capital costs will be allocated among above
agencies
9 How much of the total local capital costs will each agency be responsible for?
Agency Amount Agency
a S ri 3
Amount
Agency
Date
b « R S
n. S
10 Fn^rtntalapniiain«Mnn«t(WnrkKhRfit#21Lme25b} S
1 1 Which agencies will contribute to annual O&M costs (Line 3b, above)
12, Explain basis or give formula or example for allocation of O&M costs among above agencies'
C. Legal Support for System Implementation
Indicate which of the following measures will be established as ordinances or resolutions governing the
system service area
13 Requirement that all potential users m the service area (including those now on septics
as well as new development) hook into system D
No
D
14 Extension policies establishing responsibility for costs, design, etc of extension of
facilities to serve new developments
15 Minimum design standards to assure compatible facilities
16 Requirement for public ownership of collection lines
17 Prohibition of illegal or excessive discharges to system
18 Prohibition of illegal connections to system
19 Other
D. Implementation Agreements
20 An intergovernmental agreement will be established among the following agencies
Indicate the provisions which will be included in the agreement
21. Establishment and membership of system management oversight committee
22 Delineation of, and provision for amending, service area boundaries
23 Methods and administration of cost allocations for capital and O&M'
24 Intended methods of financing and provision for establishing rates
25 Guarantee of treatment capacity for participating agencies
LJ
D
D
n
D
D
Yes
D
a
a
D
a
26 Assignment of responsibilities for all system functions listed in Lines 1 through 5 above: D
27 Other-
a
D
n
a
a
a
a
No
a
n
n
n
a
a
D
Instructions
1 Worksheet #4 should be
completed as a joint
effort by representatives
cies (the membership of
financial management
oversight committee)
2 This worksheet is primar-
ily intended for use in a
situation where a regional
system, serving two or
more agencies, is being
planned Much of the in-
formation requested may
nevertheless apply to
systems involving only
one agency
3. Section B applies only to
a regional situation where
two or more agencies will
share cost-bearing
responsibilities While
there may be only one
lead agency responsible
for financing total local
costs (Line 3a), the other
participating agencies
will be allocated cost-
shares which are then
reimbursed on some
agreed-upon basis, to be
described m Lines 8 and
12 Cost allocation
among participating
agencies should not be
confused with the alloca-
tion of annual costs to
various classes of users
(presented on Worksheet
#3) The latter is an
estimation of average in-
dividual user costs on a
system-wide basis while
Worksheet #4, Section B
asks how the total
system costs will be
divided up among agen-
cies
4 The information entered
on this worksheet is for
planning purposes and
does not constitute a for-
mal agreement among
agencies. Mutual cooper-
ation should be guaran-
teed by an intergovern-
mental agreement
(Section D)
•Refer to Instructions at the right before completing the worksheet.
-------
WORKSHEET #5; AGENCY FINANCIAL CAPABILITIES
On Worksheet #2, total local system costs are identified; Worksheet //3 gives an
estimate of the cost burden for individual households on a system-wide basis. On
Worksheet #4, financial and institutional responsibilities for the individual
participating agencies are determined. An assessment of whether each agency can
afford its financial commitment to the proposed system, in light of its existing
governmental financial activities, is the next step in financial planning. !f a regional
system is being planned, each agency must address this question by filling out
Worksheet #5.
Agency Financial Capabilities (Worksheet //5) is a compilation of financial data which
provides a basis for judgments concerning whether and how the agency can finance its
share of system costs. Information concerning basic resources, governmental fund
activities, existing debts, and tax rates is used to indicate the current financial status
of the agency. In addition, the agency's intended methods of financing its share of
capital and O & M costs are to be recorded on the worksheet.
The data provided do not answer the question of whether the agency has the necessary
financial capability. Interpretation of the information is left to the agency's financial
experts; however, some guidelines are provided on the back of Worksheet //5 for
analysis of the information.
-------
AUtNUY riNANUIAft. WMfMDILJ I II
(Percent Change)
(Fiscal Year 1981) (Fiscal Year 1976) (1976 to 1981)
A. Basic Resources
1 Population Within Jurisdiction
2 Taxable Assessed Valuation
3 Assessed Valuation Per Capita
(Line 2 - Line 1)
B. Financial Position of General, Sewer and/or Water Funds
(See Instruction**) _ < . >„ „ •
D. Existing Debt and Debt Capacity (See instruction #5)
Agency
Date __
18 Existing Long-Term Debt:
a General Obligation Bonds
b Revenue Bonds
c Bonds authorized
but unissued
d Other long-term debt
Purpose
Amount
Outstanding
Annual Debt
Payment
Source of
Repayment
General Fund
(FY 1981)
(FY 1976) (% Chani
(1976
ige)
Sewer Fund (Or Water/Sewer Fund, or Water Fund}
(F.Y 1981)
{FY 1976) (% Change)
(1976101981)
4 Working Capital
(Current Assets - Current Liabilities)
5 Beginning Fund Balance
6. Total Revenues:
a Property Tax
b. Other Taxes
c. Fees & Charges
d Other Local
e Non-Local
f Transfers In Total
From
(Amount/Percent of Total)
100% $
9. Working Capital *
(Current Assets - Current Liabilities)
10 Beginning Fund Balance ?
11 Total Revenues: $_
a Charges for Services
b Connection Fees
c Property Tax
d Other
e Transfers In- Total
From
(Amount/Percent of Total)
100% $ 100%
7 Total Expenditures:
a General/Administrative .
b Operations/
Maintenance
c Capital Outlay
d. Debt Service
e. Other
f Transfers Out. Total
To
Ending Fund Balance
12 Total Expenditures:
a General/Adminis-
trative
b Operations/
Maintenance
c Capital Outlay
d Debt Service
e Other
f Transfers Out Total
To
C. Property Tax Rates & Collections
14 Total Rate per $100
(All Funds)
a General Purpose
b Debt Retirement
c. Other
(FY 1981)
(FY 1976)
13. Ending Fund Balance
15. Total Property Tax
Collections
16 Total Collections Per
Capita
(FY 1981)
(FY 1976} (% Change)
(1976 to 1981)
17 Is the percent change shown in Line 16 less than, equal to, or greater than the rate of inflation in local costs of your agency
over the period from 1976 to 1981? —
* Refer to Instructions at the right before completing the worksheet
19, Net Outstanding Debt $
(NC Statutes 159-55}
20 Net Debt as % of Assessed Value .
21 Remaining Capacity for G.O Debt
Current Assessed Value
E. Intended Methods of
Financing Capital and
O&M CoStS (See In at ruction #6}
22 Individual agency's share of
local capital financing $
(See Worksheet #2, 4)
23 Intended methods for capital financing
Method Amount Source of % Each
(G O, Repayment Source
Revenue, (Taxes, PIF's,
Loan, etc) Assessments)
24 Total Net Debt margin anticipated after
financing % of Assessed Valuation
25 Increase in tax rate (if any) due to proposed
financing .... .c per $100
26. Individual agency's share of annual O&M costs
(See Worksheet #2, 4)- $
27 Intended sources of annual operating revenue
(give % of total amount required)'
a User charges %
b Property tax . %
c Other _ %
Total 100%
Prepared for EPA Region IV
(or N C Barrier Islands EIS by
Instruction
1 Worksheet #5 should be completed
separately for each agency which will
have financial responsibility in the
proposed system by a finance officer
of that agency.
2 Sources of financial information are
the financial audit reports prepared
for Fiscal Years 1981 (July 1,1980 to
June 30,1981) and 1976 If more re-
cent data are available (for example,
after the end of fiscal year 1982), use
the most recent audited year and five
years previous, indicating which
years are represented
3 Percent Change 1976 to 1981 is the
total amount of change occurring in
that period If the percentage repre-
sents a decrease, indicate by en-
closing the figure in parentheses.
4 Financial information is required for
two types of funds General Fund In-
formation is to be filled out for ail
general-purpose governments (not
applicable for special-purpose dis-
tricts). For all agencies currently op-
erating a wastewater and water sys-
tem, information on the Sewer Fund
is preferred If both activities are
operated as a combined Water/Sewer
Fund, use these data. If the agency
operates only a water system, enter
these data Indicate which fund is
represented, if either.
5 Information about the current status
of the agency's long-term debt and
debt repayment requirements is
available from the N C Local Govern-
ment Commission Net Outstanding
Debt is defined m the N C. General
Statutes, Section 159-55, and is the
basis for calculating an agency's
debt subject to the 8% statutory
limitation
6. Intended methods of financing rep-
resent the best judgment of the
agency's finance officer, based on
current financial condition regarding
potential sources of f inancmg'for its
capital and operating revenue and
the resultant effect on tax rates, debt
margin, etc
7 Interpretation of the information
provided on this worksheet is the re-
sponsibility of local officials Refer to
back of this worksheet for some
guidelines to the interpretation.
Bnscoe, Maphis, Murray & Lament, Inc
2855 Valmont Road, Boulder, Colorado 80301 (12/81)
-------
INTERPRETATION OF AGENCY
FINANCIAL CAPABILITIES
The financial data given on Worksheet #5 are the basis for assessing an agency's ability to assume the
financial commitment necessary for wastewater system financing The interpretation of the data is
left to the agency's finance officers who may make recommendations about financing and the elected
officials who must make the final decision regarding financial commitment 10 the system Nevertheless,
some guidelines to help interpret trie meaning of the information on the other side are provided here
A. Basic Resources
If assessed valuation is increasing more rapidly than population (a net gam rn per capita valuation), the tax
base is probably expanding to reflect some degree of inflation in addition to population growth Growth in
per capita valuation will relieve the burden on the taxpayer, on the other hand, decreasing valuation per
capita implies the reverse
B, Financial Position of General, Sewer, and/or Water Funds
Data on the General Fund are used to indicate whether an agency is currently straining to pay for basic
services provided and in general summarizes its state of financial health. For both the General and the
Sewer or Water Funds, Working Capital (Lines 4 9) shows general liquidity or the agency's ability to cope
with day-to-day financial obligations
The Beginning and Ending Fund Balances indicate the extent to which the agency is accumulating or
depleting surpluses, which may or may not represent funds available to help finance wastewater improve
ments A comparison of Total Revenues with TotaJ Expenditures shows whether current revenues are
adequate to pay for current costs or if carned-over balances are relied on to make up the deficit Percen-
tages of various categories of revenues show which sources are relied upon most heavily for fund support
The percentage of change over the 1976 to 1982 period indicates the relative growth in revenues as
compared with expend&tures and also allows comparison of both with inflation to show if revenues are
responding sufficiently to offset rising costs Jf revenues and costs are not keeping pace with inflation per
capita (i.e. with population growth), future financial difficulties may arise.
C. Property Tax Rates and Collections
Property taxes are probably the mainstay of local government income The question is, are property tax
rates being pushed to the limit? Compare the genera) purpose rate Jo the limitation imposed by North
Carolina law of $1.30 per $100 for Group II {general) functions Although the rate for debt service is not sub-
ject to a limit, this rate and the total tax tats suggest the extent of the current burden on trie taxpayers
Note that the rates given on this worksheet represent only the Jevtes of the agency named Other jurisdic-
tions are taxing the same taxpayers, creating an overlapping tax burden which should also be considered
Although total collections per capita may have increased over the five year period, it is important to
compare this with the increase in inflation for the same period to see if the per capita tax dollar is keeping
pace with inflation
D. Existing Debt and Debt Capacity
burdensome than those repaid from property taxes
E. Intended Methods of Financing
<-- s ~_. --. -1. .. -,*•. >, - ,. '
After completion of the rest of Worksheet #5, this section requests information regarding which methods
of capital financing seem most likely or appropriate for each agency with financing responsibilities, and
what effects they might have on statutory limitations. Sources of income for O&M are usually based on a
user charge system, although some other sources may contribute revenues for system operations. This
provides a preliminary indication of the types of rate structures that might be established and how these
decisions might relate to existing levels of property taxes and other revenues relied on as income to the
General Fund.
-------
WORKSHEET #6: SUMMARY OF FINANCIAL AND INSTITUTIONAL INFORMATION
The final worksheet in the series serves the purpose of summarizing the information
provided on the preceding worksheets. Information on the proposed system, its total
estimated costs, household cost burden, agency responsibilities, and intended financing
methods is presented in a concise format. The primary purpose for this worksheet is
to summarize the results of the analytical and planning tasks performed in the
financial planning process. Worksheet #6 should be completed, reproduced and
distributed at a public hearing for consideration of the recommended system
alternative(s). If more than one plan is being presented, several Worksheets #6 could
be filled out, one for each plan, to allow comparison of the financial and institutional
implications of each.
The Financial Planning Handbook and Worksheets if\-6 should be considered tools to
promote better understanding of the implications of facility planning. They can serve
the purpose of anticipating outcomes of various decisions which might be made during
the planning process. They should not be considered an end product but can best be
used as planning aids. As such, the whole package, or any part of it, can be used
repeatedly at various stages of facility planning. Even as design and construction
progress the package can be used to refine the financial and institutional information
provided.
•U.S. GOVERNMENT PRINTING OFFICE: 1983-650-127 Region 4.
- 13-
-------
SUMMARY OF FINANCIAL
AND INSTITUTIONAL INFORMATION
First Full Year ot bystem uperanon is_
Description of Proposed Improvements
wm ^m «••%*
A. What is Proposed in the Facility Plan?
1 What type of system is planned?
D Centralized wastewater treatment
D Community treatment facilities
D On-site systems
D Other
2 The proposed facilities include
D New facilities
D Expansion of existing facilities
D Upgrading or replacement of existing
facilities
3. Facilities to be constructed
[~J Treatment facitiiyi.ies)
C On-site systems /individual)
D Interceptor sewers
Q Pumo station(s)
Z Collection lines
Z Other components ,
5- Areas to be served (attach map)
D Municipality
D County
D District
D Industry
D Other
6 Estimated population. Permanent Seasonal
in first full year of
operation
m fiftr year of operation
7 Givea timetable for construct ion and operation of
the proposed facilities (attach schedule)
Begin construction
Completion of system
First year of service
First yearof full operation
A The facilities will benefit
Q Population now on sewers
D Anticipated growth
D Developed areas served by septics
B. How Much Will the System Cost At Today's (1982) Prices?
(See Worksheet #2)
8 Estimated Capital Costs of Proposed Improvements
(Worksheet #2, Line 25a)
(Total Capital - (Expected - (Other Non-
Cost) EPA Amount) Local Amount)
_ - $ - $_
(Local Funds = Amount to be
Available) Locally Financed
Estimated annual
replacement cost;
« Existing facilitie
• New facilities
, Year 1 ,
YearS
operations, maintenance and
^ $ per year
(Workshee! #3, Line 14|
(Worksheet #3, Line 15)
10. Method of calculating costs
D Standard engineering cost curves
D Comparison to comparable system
D Adjustment for local conditions
PI Olhfirfrleficribel
C. What Are the Average Annual Costs to Typical Permanent
and Seasonal Households?
• Finance thfinonstruntion cosis"?
16 Will sysl em costs be shared among two or more
agencies' Yes D No D
17. About what % of total local capital costs wiJI
each agency bear'' (Worksheet #4, Line B)
Name % 1
%
%
E. How Will the Facilities be Fin;
20 Intended methods of financing capital costs (Worksh
Financing Amount to t
Method Agency Financed
GO Bond $
Revenue BnnrJ $
Loan $
Financing Agreement S
Other S
21 Intended sources of annual operating income
Methods Percentage of Total Revenue
User charges %
PIF revenue %
Property fa* %
Other %
22, A system of user charges will be established that me
D Surcharge for excessive fiow
L^ Variable rates for strength of flow
C! Rates established for various classes of users
23. What effect will financing the agency's share of local
agency's otner financial commitments'5
~ Will create severe limitations
~ Will require moderate commitment
C Will not constrain other activities aJ all
Yes No
D ~3 Requires developed areas to
hook m
D U Establishes system extension
policies
D 3 Sets minimum design standards
D C Requires public ownership of
colfecnon lines
D C Prohibits discharge of toxic
substances
D D Prohibits illegal connections to
system
9 Wili an intergovernmental agreement be
established to assure cooperative mutual sup-
port among involved agencies for financial and
institutional implementation1?
(Worksheet^, Part D)
Yes D No D
meed? (See Worksheet #5)
eel #5, Line 23)
>e Interest Term of Annual Debt
Rate Maturity Repayment
% years $ per year
% years $ pervear
% years $ peryear
% years $ per year
% years $ oeryear
udes:
Instructions
1 Worksheet #6 is the last
of a series of financial
and institutional planning
aids which have been
filled out by agencies in-
volved in a waslewater
facility planning process
It summarizes the results
of the financial and insti-
tutional analyses con-
ducted by the agency
named above during pre-
liminary planning.
2 Worksheet #6 is to be
filled out after completion
of Worksheets #1 through
5 The results and respon-
ses obtained on those
worksheets are to b&
entered in the appropriate
spaces on Worksheet #6
as indicated.
3. Worksheet #6 may be
used as an information
sheet to toe handed out to
those attending the pub-
lic hearing for presenta-
tion of the facility alterna
tives Note that the snfor-
matton contained on this
worksheet represents as-
sumptions about finan-
cial and institutional in-
formation which may oe
accurate today but are
subject to change as
planning, destgn. and
construction progress.
Prepared for EPA Region IV 3|T|K1| Bnscoe, Waphis. Murray & La-nont, Inc
torN C BarnerlslandsElSby 0111111k 2B55Valmonl Road, Boulder, Color ado 80301 {12/81
-------
APPENDIX IV-C A GUIDE TO FINANCIAL MANAGEMENT
FOR SMALL UTILITIES, NATIONAL
DEMONSTRATION WATER PROJECT.
-------
TABLE OF CONTENTS
PAGE
The Financial Management Process 1-2
Planning 3-85
Budgeting 9-15
Financing 16 - 24a
Cost Recovery 25-28
Record Keeping/Management Information 29-34
Reference 35-36
Exhibits 1-34
-------
MANAGING MONEY
"These questions will help
you find ways to face your1
problems".
AN OVERVIEW
OF_
FINANCIAL MANAGEMENT
• How do you decide where your going?
• How do you get the money you need to
build your system?
• How much does it cost to operate?
• How are you going to spend your money?
a How are you going to be sure everyone
pays their fair share?
• How do you know where you've been?
• How well did you do?
- l -
-------
Financial Management Involves:
® Planning
» Financing
• Budgeting
a Cost Recovery
9 Record Keeping
t Information
- 2 -
-------
PLANNING
WHAT STEPS TO TAKE
UTILITY PLANNING
A framework for planning is essential, es-
pecially for the small utility. Taking
the time to plan now will provide you
with two essential tools:
• a formal (or informal) document illus-
trating existing and future needs
e a "checklist" to measure progress toward
the accomplishment of the plan (goals
and objectives)
Planning is like following
a road map to go from one
place to another, you deoide
where you want to end up, what
route your going to take,, and
how long it will take to get
there.
FACTORS AFFECTING PLANNING
A number of factors affect the planning
process. They include:
t current wastewater and/or water supply
demands
c anticipated levels of demand current
year
• anticipated resource needs
- 3 -
-------
EFFECTIVE PLANNING: WHAT IS NEEDED?
Planning requires:
• budgeting sufficient time and funds
for planning
• Involving plant supervisors (OPERATORS)
in the planning process
• A commitment to determining the cur-
rent and future needs
• Public involvement
• Comprehensive planning is necessary
KEY ELEMENTS OF PLANNING
Remember The key elements of planning are:
these..,
• Policy setting
t Problem identification
t Implementing the planning process
- 4 -
-------
PLANNING INVOLVES TWO PROCESSES
Utility planning includes two separate,
but related planning processes. They
are:
• Capital planning
• Operations planning
WHAT IS CAPITAL PLANNING?
IT INCLUDES IDENTIFICATION OF YOUR
UTILITY'S CAPITAL NEEDS OVER A
PERIOD OF TIME.
WHO SHOULD BE INVOLVED?
Participation from all operating levels
of your system is essential. This in-
cludes:
t PLANT STAFF
t CLERK
t RECORDER
• CONSULTING ENGINEER
• BOARD CHAIRPERSON (MAYOR)
- 5 -
-------
STEPS IN CAPITAL PLANNING
Follow
these
steps.. .
Determine the Utility
Activity, Goals, and
Objectives
Estimating Capital
Requirements
Determine The
Acceptable Capital
Outlay Level
Set Priorities
Develop A Capital
Improvement Plant And
A Capital Budget
Analyze Financing
Options
Review and
Evaluation
- 6 -
-------
OPERATIONS PLANNING
Operations planning facilitates the
achievement of your plant's operating
objectives.
Your efficiency and
effectiveness can be
measured.. .
WHAT IS INVOLVED
IN OPERATIONS PLANNING?
• Establishing operating objectives
t Estimating about staff and resource
needs
t Setting performance criteria and
standards
You can use the operations
plan to prepare your budget
request.
USE OBJECTIVES TO
DEVELOP BUDGET REQUESTS
The following questions should be ad-
dressed when developing budget requests:
• How much service is needed to meet
your objectives?
• How much work must be performed to
meet the service demand?
t What are the personnel, materials,
and equipment requirements for
effective operational performance?
- 7 -
-------
REVIEWING PERFORMANCE PERIODICALLY
Ask these questions:
• IS PERFORMANCE ON SCHEDULE?
Everyone • ARE COSTS HIGHER OR LOWER THAN
needs
Qheok PLANNED?
points.
PROBLEMS IN PLANNING
• Inadequate operational plan
t Inadequate capital improvement plan
• Crisis management
• Incapacity to respond to revenue and
appropriation limitations
_ 8 _
-------
:1 '•';>' K 'tffa'jZf*'"•//''/ '•**'/ ?r!v
' '?•}!',' * //'. ' x» s&'j'-- ' " ' ' "s77\/fy
'' '.• I / •/<£'. 44'"$. '/'•'//''' ''-/ft fyzy.yfr
PLANNING
THE SEVEN P'S
-------
BUDGETING
KNOWING WHERE THE
MONEY GOES
WHAT IS BUDGET?
A budget is a management tool used to PLAN,
ADMINISTER, and PROVIDE PAST DATA about
your utility's fiscal operations during
a given period of time.
There are a number of different types of
budgets including:
• OPERATING BUDGET (income & expense)
• CAPITAL-EXPENSE BUDGETS
• CASH BUDGETS
THE BUDGET PROCESS
The budget can help
•you define the goals
of your> system -in terms
of money.
The budget also serves as the main source
of information for:
• ILLUSTRATING HOW THE MONEY WILL BE
SPENT
• ESTABLISHING WORK PRIORITIES
t MEASURING THE QUALITY OF THE WORK
PERFORMED
• ENSURING THE AVAILABILITY OF RESOURCES
TO MEET EXPENSES
- 9 -
-------
STEPS IN THE BUDGET PROCESS
The budgeting process includes a number of
steps:
Develop a budget
framework and
structure by
• item
• activity
One step at
a time.,.
Identify Revenue
Sources
Review operating
expenses and
capital improve-
ment requests
Rank and Priori-
tize Budget Re-
quests
Prepare Document
Budget
Approve and
Adopt Budget
Implement
Budget
- 10 -
-------
- 10 a -
-------
THE BUDGET FRAMEWORK
Within the budget framework.,
the operating' budget should
reflect the major functions
of your utility.
Developing a budget framework a structure
around which budget requests can be
identified and allocated. The budget
framework provides a mechanism for iden-
tifying and reporting actual expenses.
State statutes or local ordinances may
dictate that the budget appear in a "line
item" format. Line items may be direct
or indirect. Here are examples of
direct and indirect expenses:
Direct
• operating expenses
for materials, sup-
plies, travel,
utilities, and
chemicals
• maintenance expens-
es for vehicles,
equipment and
buildings
• equipment pur-
chases
• salaries, over-
time and lon-
gevity pay
Indirect
t debt service for
principal payment
and interest on
debt
t fringe benefits for
pensions, employee
insurance, vacation,
and sick pay
t overhead for sup-
port services such
as accounting,
revenue collection
and investment
costs
- 11 -
-------
IDENTIFYING REVENUE SOURCES
You should identify each source of
revenue by the type and amount. Ex-
amples of revenue sources are:
• SERVICE CHARGES
• GENERAL PROPERTY TAXES
t FEES
• INTERESTS ON INVESTMENTS
Give these
issues
some
thought
RANKING AND PRIORITIZING
BUDGET REQUESTS
The following issues should be addressed:
• ARE COSTS REALISTIC?
• ARE THEY BASED ON PAST PERFORMANCE?
• IS STAFF TIME BEING USED EFFECIENTLY?
• ARE THERE WAYS TO KEEP WAGES AND
SALARY EXPENSES AT A MINIMUM?
- 12 -
-------
REVIEWING THE EXISTING
RATE STRUCTURE
Design the budget document
so that it can provide you
with information about your
system's operations and re-
quirements .
The document should consist of a narrative
describing:
t THE UTILITY OPERATION
0 MAJOR ASSUMPTIONS
• THE BUDGET
• MAJOR ISSUES THE GOVERNING BODY
SHOULD ADDRESS
• SIGNIFICANT CHANGES IN THE PROPOSED
BUDGET FROM THE CURRENT YEAR
• ANY CHANGES THE BUDGET MAY HAVE ON
SERVICE CHARGES
A sample budget format is in the reference
section. Exhibit # 25 & 26
IMPLEMENTING THE BUDGET
Two steps are involved in budget imple-
mentation:
t ALLOCATION
• CONTROL AND MONITORING
- 13 -
-------
CONTROLLING AND MONITORING
THE BUDGET
—*j*"*a You may
have to
make
some
choices.
Periodic budget to actual reports should
be prepared to sufficiently monitor per-
formance and expenses. These reports
should be prepared each month. If in-
come is down or expenses are up from the
estimated amounts, one or more of the
following actions may be required:
• PRIORITIES MAY HAVE TO BE REVISED
AND SOME EXPENSES MAY HAVE TO BE
CUT
9 SOME EXPENSES MAY HAVE TO BE DELAYED
• EXPENSES MAY HAVE TO BE APPROVED
AS BUDGETED FROM CASH RESERVES
Who should be involved in the budgeting
process?
It is critical to involve the key staff
and decisionmakers in this process, in-
cluding:
• TREATMENT PLANT SUPERVISOR (Operator)
t CLERK
§ RECORDER
• BOARD CHAIRPERSON or MAYOR
- 14 -
-------
PROBLEMS IN BUDGETING
• Not Enough Money
• Capital Budgets Are Always Cut
• Reliance On The Property Tax
• Inadequate Revenue Budget
« Inadequate Analytical Reviews
• Excessive Transfers
• Inadequate Budget Controls
• No Activity Budgets
- 15 -
-------
CAPITAL FINANCING
HOW TO GET THE
CREDIT AND
CAPITAL TO
FUND JOUR
SYSTEM
• Where do you get the money to build
a new plant?
t What do you do if you can't sell bonds?
• How do you know if you can afford the
new system?
Types of financing for capital projects
are:
• U.S. EPA Construction Grants
• Farmer's Home Administration
• Housing and Urban Development
• Local Banks
• State Loans
• Investment Bankers
• Municipal Lease
• Sale Leaseback
• Sale - Service Contract
• Full Service Contract
Grants.. . "Money you get
to keep"
Grants
Are there federal or state programs to help?
• U.S. EPA's Construction Grants
• Farmer's Home Administration (FmHA)
• Housing and Urban Development (HUD)
Community Development Block Grants (CDBG)
- 16 -
-------
ERA'S CONSTRUCTION GRANTS
EPA -is one
source...
What do you have to do to get one?
• Your project has to be eligible.
• It has to be on the State's priority list.
• You have to submit a plan and a final de-
sign.
• You have to apply.
How much can you get?
t You can get 55% of the costs of eligible
projects.
t 65% if its clever (I/A).
What projects are eligible?
• Sewage treatment plants
• Sludge disposal
• Some interceptor/Pump Stations
• Collection systems never move (at least
for now)
t Build for today (no reserve capacity)
Nothing is forever.
How long will it last?
0 1985
• 1988
• And beyond
- 17 -
-------
What costs are eligible?
• Most building costs (brick & block)
t Inspection and engineering during con-
struction
• An allowance for planning and design
• No land costs
t No financing costs
FmHA is another source
of funds for small
communities.
FARMER'S HOME ADMINISTRATION
e You have to be rural
0 You have to be small
• May be based on need
• Will pay for construction related costs,
Try the CDBG program.
HOUSING AND URBAN DEVELOPMENT
Community Development Block Grants
Requirements may vary from state to state,
but most grants are based on:
• NEED (assisting low-income persons)
• PROGRAM IMPACT
- resolving threats to health/
safety
- improving public facilities
- 18 -
-------
LOANS AND BONDS
Who will lend you the money?
• Local Banks
Money you have to • State Loan Programs
pay baok.
• Farmer's Home Administration
• Investment Bankers (Wall Street,
here I come)
What will it cost you?
• Low Interest Rates (FmHA, States)
• Tax Exempt Rates
• Financing and Legal Fees
• Application Fees
• Reserves
How long should you borrow?
• Life of the project
• FmHA (Is longer really better?)
- 19 -
-------
Consider
all the
aspects.
GENERAL OBLIGATION BONDS
• Full faith and credit (Everything you've
got)
• Taxing power
• Taxing exempt - low interest cost
• May need voters to approve
• Debt limits - Do they limit?
• What's in a bond rating?
• What about bond insurance?
REVENUE BONDS
• Supported by user charges ONLY
• Rates may be higher
• Coverage Requirements
• Reserve Funds
- 20 -
-------
Get private
companies
into the
aat.
CREATIVE FINANCING
What do you do if you can't borrow or DON'T
want to?
• Municipal Lease
• Sale - Leaseback
• Sale - Service Contract
• Full Service Contract
CREATIVE FINANCING TECHNIQUES
New Facilities
• Municipal Lease
• Service Contract
Exi st i ng Faci1i ties
• Sale - Leaseback
• Sale - Service Contract
Municipal Lease
• Conditional Sale
• Tax-Exempt Rates
• Community has possession and control
• Purchase at end 1$
• Year-To-Year - Not long term debt
Included in municipal lease
• Buildings t Vehicles
• Equipment • Pump Station
t Plant
- 21 -
-------
WHAT CAN WE FINANCE?
COLLECTION
SYSTEM
NJ
H1
9)
PUMP
STATION
ADMINISTRATION
BUILDING
-------
NEW FACILITIES
MUNICIPAL LEASE
EQUIPMENT
MANUFACTURER
LESSOR
(Partnership)
PAYMENTS
LEASE
AGREEMENT
CITY
OR
WASTEWATER
DISTRICT
(LESSEE)
-------
Sale-Leaseback
—^3 One of these
options may
work for
you.
9 Sell the tax deductions - depreciation
• Can sell construction grant projects
• Good for local projects
• Use industrial development bonds
• Congress may get rid of this, unless
you operate it
Sale-Servi ce Contract
e Turnkey projects
• Design, construct, operate
• No construction grants
• Need to enter Long Term Agreements
• How about competitive bidding requirements
« What about our NPDES Permit
Service Contract For:
• Vehicles (Sludge Hauling Trucks)
• Equipment (Computers, Boilers, Sludge
Handling)
• Pump Station
• Plant
- 22 -
-------
SALE - LEASEBACK
EXISTING FACILITY
OR
UPGRADE
KJ
fO
B)
LESSOR
(Partnership)
TITLE
PURCHASE
PRICE
PAYMENTS
LEASE
AGREEMENT
CITY
OR
WASTEWATER
DISTRICT
(LESSEE)
-------
SALE SERVICE CONTRACT
EXISTING FACILITY
OR
UPGRADE
bo
ro
V
(Partnership)
SERVICE
TITLE
PURCHASE
PRICE
PAYMENTS
CONTRACT
AGREEMENT
CITY
OR
WASTEWATER
DISTRICT
-------
NEW FACILITIES
SERVICE CONTRACT
EQUIPMENT
MANUFACTURER
(Partnership)
SERVICE
PAYMENTS
CONTRACT
AGREEMENT
CITY OR
WASTEWATER
DISTRICT
(CONTRACT FOR SERVICES)
-------
THE CHALLENGE
NJ
NJ
-------
OVERVIEW OF FINANCING OPTIONS
FOR WASTEWATER TREATMENT
PLANT
t\J
O
FINANCING
CITY
FINANCES
• MUNICIPAL
LEASE
• SERVICE
CONTRACT
ALTERNATIVES
CITY BUILDS WITH
GO OR REVENUE
BOND
PRIVATE GROUP
BUILDS/LEASES TO
CITY
PRIVATE GROUP
BUILDS AND
OPERATES FOR
CITY
OWNER
CITY
PRIVATE
GROUP
PRIVATE
GROUP
OPERATOR
CITY
CITY
PRIVATE
GROUP
TAX BENEFITS
DEPRECIATION
15 YEARS
ACRS
ON
BUILDINGS
ON
BUILDINGS
6 YEAR
ACRS
—
ON
EQUIPMENT
ON
EQUIPMENT
TAX CREDITS
ITC
—
NONE
10%
-------
Before you start... find
answers to these questions.
How do you know if you can afford the
project?
• What is in the proposed project?
• Whose responsible and for what?
• How much does the project cost?
• How will I finance the construction,
operation and maintenance?
• What are the annual costs per household?
What is the proposed project?
t What kind of facilities are planned?
t Do we need new sewers?
• Are they sized for growth?
• Do they have low O&M costs?
Who is responsible and for what?
• Who will own it?
• Who will operate it?
• Who will finance it?
• Do you have agreements with all large
users?
How much will the project cost?
• Use current prices
• Construction Cost (Brick & Block)
• Construction related costs
• Operation & Maintenance Costs
- 23 -
-------
-------
Getting
this in-
formation
together*
will help
you avoid
p-fob lems
in the
future.
what are your sources of capital?
• EPA
• FmHA
• HUD
• State
• Cash on Hand
• Prepaid Connection Fees
• Special Assessments
• Local Funding
What are your annual costs?
• Debt Service
• Operation, Maintenance & Replacement
What are your sources of annual revenue?
• Sewer Service Charges
• Property Taxes
• General Funds
• Industrial Surcharges
What are the annual costs per household?
• Total $ - Nonresidential $ - Residential
Costs
• Estimating Number of Households
• Average Costs Per Household
• Other Annual Costs
• Cost Compared To Median Houshold Income
- 24 -
-------
&
-------
COST RECOVERY
FINDING THE MONEY TO
OPERATE AND MANAGE
YOUR SYSTEM
This can be a battle
KEY QUESTIONS
f How do you collect enough money to
operate your system?
• What are the true costs?
• How much should each user pay?
How to collect enough money to operate
your system?
• Know ALL yours costs
• .Know what each part of your system costs
• Know how much money you need
• Know your customers and how much they use
• Set rates that are fair and raise enough
money
• Collect what you bill
J1 J J -V-0 u_L
$ Labor - The Biggest Cost
- Wages
- Fringe Benefits
- Operation
- Maintenance
- Administrative -(You cein't do it
without them)
- 25 -
-------
• Utilities
- Electricity - Usually the next
biggest
- Fuel Oil
- Automotive
All these
costs have
to be con-
sidered.
• Materials and Supplies
- Chemicals
- Spare Parts
- Laboratory Supplies
- Office Supplies
• Expenses
- Training
- Insurance
- Rentals
- Services
• Capital Costs
- Debt Service (both principal and interest)
- Capital Reserves
• Overhead
- Personnel
- Purchasing
- Town Clerk
- 26 -
-------
Know what each part of your system costs
• Collection System
• Pumping Stations
• Plant Operations
A budget form like the • Maintenance
one shown in exhibit
# 26 will help... • Laboratory
• Sludge Disposal
t Administrator
Decide how much money you need
(Revenue Requirements in the Jargon)
t Total Costs
• Spread Over Each Operation
• Subtract Any Money You Have Available
• What's Left Comes From Customers
Know your customers and how much they use
(Cost of Service)
• Types of Customers
- Residential
- Industrial
- Commercial
• How Much Do They Use
- Water Records
- High Strength
- 27 -
-------
Set rates that are fair - Match rates
These points
are very
important.
to costs
• Based on Water Records
• Based on Property Value
t Flat rate
• Special Assessments
• Surcharges
• Connection Fees
Collect what you bill
(How to deal with delinquents)
• Deposits
t Payment in Advance
• Refuse Service
• Sheet of Service
• Make the Property Owner Liable
• Lien the Property
t Discounts for Prompt Payment
• Charge Interest or Penalties
Problems with cost recovery
• User fees do not recover total costs
• User fees are not equitable
t User fees do not comply with regulations
• Assessment authority is limited
• Facility is not self-supporting
- 28 -
-------
KEEPING TRACK
OF INFORMATION
RECORD KEEPING/MANAGEMENT
INFORMATION
RECORD KEEPING
(Accounting Systems)
What does record keeping do?
• Let you keep track of your costs
• See how your plant is doing
• Account for taxpayers money
Types of accounting system
• Fund Accounting - Lots of buckets
t Enterprise Funds - Treat it like a
business
• Cash Basis Accounting - Just like your
checkbook
t Accrual Basis Accounting - Somethings
last a long time
t Depreciation - Your plant is weaving out
CHART OF ACCOUNTS
(Types of Costs)
t Personal Services
- Wages
- Fringe Benefits
- Operations
- Maintenance
- 29 -
-------
MANAGING INFORMATION
BEFORE IT MANAGES YOU
• Materials and Supplies
- Chemicals
- Spare Parts
0 Utilities
- Electricity
- Fuel Oil
- Automotive
• Equipment Replacement
• Depreciation
• Debt Service
MANAGEMENT INFORMATION
• By the time you find out what your prob-
lems are, your out of compliance or out
of money.
• You get information, but don't know what
it means.
• The way the information is presented,
doesn't do you any good.
• There is too much information for you
to review.
- 30 -
-------
Make reports work
for you, not against
you.
What should reports tell you?
e How your plant is running
• How much it is costing
• Do you have enough money
t What condition your plant is in
t When you will have to maintain equipment
• When you will have to replace equipment
• Where can you purchase certain material
What types of reports do you need?
• Operating Reports
t Financial Reports
• Maintenance Reports
• Purchasing Reports
Reports eon help you
figure out where
you 're going.
OPERATING REPORTS
What do operating reports tell you?
- How your plant is doing
- Are you in compliance
Is your plant operating differently
than it has before
- How much energy did you use, How
much chemicals
- 31-
-------
PLANT PERFORMANCE REPORT
Don ' t forget
information on
plant performance!
• What does it tell me?
- How my plant is doing everyday
- How much flow is coming in
- What is the weather like
- What is the strength of the work
- How much waste am I removing
- Am I in compliance
• What kind of information is in my report?
- Rainfall
- Flow coming in
- Strength of waste coming in BOD/
Suspended Solids/PH/Coliforms
- Strength of waste going out
FINANCIAL REPORTS
* What are they for?
- To tell the council, the citizens,
or the banks about the financial
condition of the utility
- To help the Superintendent control
the costs of the plant
-32-
-------
How muah did you say you would
spend, and how muoh did you
really spend?
How much money is coming in,
and does it cover your costs?
How much is the plant worth?
How much did treatment cost?
0 What type of financial reports do
you need?
- Monthly Budget To Actual Report
- Monthly Revenue Reports
- Balance Sheet
- Cost-of-Service Reports
SEE EXHIBIT #'s 17, 18, & 19
Maintenance should be a
part of your regular
routine.
MAINTENANCE REPORTS
• What do they tell you?
- What type of maintenance was done
- What needs to be done soon
- Was some scheduled maintenance
skipped, WHY
- What spare parts did I use
- How much time did I spend, and
how much did it cost
- Is some equipment breaking down
too often
Sample Forms
- Equipment Record (SEE EXHIBIT #8)
- Preventive Maintenance (SEE EXHIBIT #9)
- Corrective Maintenance (SEE EXHIBIT #14
& 15)
- 33 -
-------
PURCHASING REPORTS
Sometimes the
details of
purchasing
are overlooked.
What do they tell you?
- How long have you had purchase
orders outstanding
- When do you expect them to be
delivered
- What suppliers are available
- What spare parts do you stock,
how many
Types of reports
- Purchase Order Status Reports
- Spare Parts Files
- Vendor Files
Problems with accounting and financial
reporting
• Total costs are not identified
• Inadequate budget controls
• Inadequate cash flow
t Uniformative financial reports
- 34 -
-------
REFERENCES
Some additional information to help you
with...
PURCHASING
Policy
Key roles
Purchase orders
Limited purchase orders
Request for quotations
Vendor list
Vendor checklist
EQUIPMENT
Record card
Inventory record card
Stock activity report description
Stock activity report example
MAINTENANCE SCHEDULING
Weekly Schedule
Record Card
- 35 -
-------
REPORTING
Financial Model
Incurred Costs/Dispersed Funds
Budget To Actual Expenses
Budget To Actual Revenues
Balance Sheet
Statement of Revenues
BILLING
The Process
A Way To Think About Billing
BUDGETS
Line Item
Activity
DETERMINING FINANCIAL CAPABILITIES
Facilities Cost Worksheets
- 36 -
-------
PURCHASING
Purchasing is buying the right material at the best price in the proper
quantity at the proper time and from the best supplier. The plant super-
visor is generally not responsible for all of the above aspects of the
purchasing function. The plant supervisor frequently must:
• Adhere to municipal purchasing policies
• Participate in purchasing procedures which are external
to the system
• Maintain separate records for purchased goods, vendor
suppliers and goods received
• Provide requisitions for purchasing through a central
pruchasing agent.
Guidelines for Purchasing:
Policy
A purchasing system needs to be flexible and responsive to'changing conditions,
Key elements of the policy should include:
1. Standards of conduct should include:
a unprejudiced buying
t forbidden practices (such as collusion)
t vendor relations (maintaining objective relationships)
• educational development.
2. Purchasing Limits and Authority should include:
« Limited Purchase Item: a purchase of goods or services
costing less than $100, requires a Limited Purchase Order
and may be authorized by the utility supervisor (operator).
• Verbal Quote Item: a purchase of goods or services costing
between $100 and $750, requires a Purchase Order, three
verbal quotes from vendors and may be authorized by the
utility supervisor (operator).
• Written Quote Item: a purchase of goods or services costing
$751 - $4,000, requires a Purchase Order; Request for Quota-
tion; a minimum of three written quotes from approved vendors
and must be authorized by the Mayor or Board Chairperson.
§ Sealed Bid Items: a purchase of goods or services costing
more than $4,000, requires a Purchase Order; Request for Quo-
tation; a sealed bid procedure and must be authorized by the
Board Chairperson within the utility.
-------
3. Exceptions should be provided for:
• Emergency orders - when the public's health, welfare
or safety is in jeopardy or the utility is in danger
of extensive damage, an emergency order may be issued
for corrective action without following standard
purchasing policy. The declaration and action must be
authorized by the Mayor or Board Chairperson.
• Confirming orders - in special cases, not qualifying as
emergency situations, but critical to the successful
operation of the utility, Mayor or Board Chairperson
may approve the verbal purchase of a good or- service,
followed by a confirming purchase order. Confirming
orders should not be permitted for sealed bid items.
la
-------
THE AUTHORITY TO PURCHASE...
KEY ROLES
Governing Body: responsible for overall adherence to purchasing policy
and control.this function complies with and enforces maximum purchase
requirements established by statute or ordinance. This function in-
directly controls day to day purchasing through the appointment of
various supervisors and/or managers. This function oversees the selec-
tion of all vendors and release of purchase orders.
Utility Supervisor in consultation with Board Chairperson: responsible
for coordinating and reviewing all purchases above the limited purchase
order amount. Reviews would consist of:
• reasonable need for the item
• proper vendor selection
• timely order and anticipated delivery
• review of bid specifications and submissions for
consistency and meeting of requirements
• identifying duplicate purchases
9 monitoring price fluctuations
• identifying joint or cooperative purchase opportunities
Utility Supervisor (operator): responsible for the origination of all
purchase orders issued from the utility. Authority to purchase is for
limited local purchase and verbal quote items. Purchase requests for
other than these items are routed to the Board Chairperson for review,
quote and approval through the purchasing cycle.
This position would monitor and recommend approved vendors for limited
purchase orders. This position is responsible for assembling speci-
fications, assisted as required by technical specialists, for bid
i terns .
Clerk: responsible for test and review for availability of budgeted
funds. Authority to hold or postpone a purchase until funds availability
questions are resolved with Board Chairperson and the plant's supervisor.
-------
PURCHASE ORDERS
The purchase order is a key document in an effective purchasing system.
It should:
• Provide adequate space for vendor and utility name,
address, vendor contact, and phone number.
• Enable all items ordered to be included in one order
with space for:
commodity (stock item) number or code
description and quantity ordered
unit price and payment terms
total anticipated price
scheduled delivery date
shipping terms
Trace the vendor quotes received
Identify vendor selection process
Provide for authorizations and signatures
Indicate purchase order copy distribution
Contain a prenumbered reference for control purposes.
Format - the format of the purchase order should supply the utility the
following information:
Request for vendor delivery
Price agreement
Vendor tracking system
Accounting approval for payment
Payment voucher.
LIMITED PURCHASE ORDERS
When do they app-ly? Using an approved vendor, the following situations call
for a limited purchase order:
• The commodity must cost less than $100.
• Budgeted funds must be available to pay for the order.
• The vendor must be established and authorized.
• The expenditure must be justified.
-------
LIMITED PURCHASE ORDER
Vendor Name
Address
Attn:
Justl f i cat Ion
No.
Phone
Ut i 1 i ty Name
Address
Attn:
Phone
LPO #
Quanti ty
1.
2.
3.
Descr i pt ion
Comm . No .
Unit Price
Total (less than $100.00)
Total Price
$
1.
Account No:
2.
Account No:
3.
Account No:
Authorized By
Paid By
Date_
Date
Check No.
DISTRIBUTION: White: Vendor
Pink: Ut i1ity
Blue: Accounting
-------
REQUEST FOR QUOTATION
(THIS IS NOT AN ORDER)
TO:
Attn:
Vendor Name
Address
Phone:
FROM:
Util
i ty Name
Address
Attn:
Phone:
P.O. Reference
No.
Dear Vendor,
Please provide a unit price quotation for the goods and/or services described below.
Keep the attached duplicate copy and return the original to the above address. Ex-
plain any substitutes or modifications to the description completely. YOUR QUOTA-
TION MUST BE IN OUR OFFICE AT THE ABOVE ADDRESS BY: (a.m./p.m.) 19
Del ivery to be
Terms :
made from in days from receipt of order
estimated shipping weight
Ibs.
ITEM
QUANT m
DESCRIPTION OF GOODS AND/OR SERVICES
UNIT
PRICE
We quote you as noted above:
Signed:
Title:
Date:
-------
VENDOR LIST
Revi sed
For Quotation Reference
P.O. Number:
Date Sumbitted:
Vendor RFQ
Vendor Name
Vendor Number
Address
Contact Person Phone
Camtnodi ties
-------
VENDOR EVALUATION CHECKLIST
CRITERIA
VENDOR A:
RAT ING
VENDOR B:
RATING
VENDOR C:
RAT ING
1. Lowest Price
2. Deli very Date
3. Post Performance
4. Freight/Delivery
5. Discount Offered
6. Multi-Commodity
7. Type of Commodity
8. Price Adjustment Clause
9. Variation to
Spec!fications
10. Non-Collusion Clause
low medium high
first second third
low average high
low medium high
low medium high
low medium high
brand replace- tooled
name ment
yes
no
none slight substan-
tial
yes
no
low
f i rst
low
low
med r urr>
second
average
medi urn
low medium
low medium
high
thi rd
high
high
high
high
brand replace- tooled
name ment
yes
no
none slight substan-
tial
yes
no
low medium high
first second third
low average high
low medium high
low medium high
low medium high
brand replace- tooled
name ment
none
yes
yes
no
siight substan-
tial
no
-------
EQUIPMENT
EQUIPMENT RECORD CARD
INVENTORY NO:
CARD NO:
REFERENCE:
MANUFACTURER:
SALES £ SERVICE:
DATE OF MANUF:
DATE PUT INTO SERVICE:
DATE REPLACED:
LENGTH OF SERVICE:
NAMEPLATE DATE - MODEL
SERIAL NO.
SIZE
RPM
TYPE
MOTOR DATA - MODEL
SERIAL NO.
FRAME
TYPE
CODE LETTER
H.P. VOLTS
AMPS
RPM
HERTZ
PHASE
RATING
DEMA DESIGN
INSULATION
SERVICE FACTOR
REMARKS:
PARTS DESCRIPTION
SPARE PARTS
UNITS RECOMMENDED
INVENTORY RECORD (NO. IN STOCK 6 DATE)
-------
DATE: DESCRIPTION OF REPAIR:
PARTS REPAIRED OR REPLACED
TOTAL COST: PARTS TOTAL
COST
BY WHOM
LABOR TOTAL
MANHOURS
COST
REMARKS
DOWNTIME:
DATE: DESCRIPTION OF REPAIR:
PARTS REPAIRED OR REPLACED
TOTAL COST: PARTS TOTAL
COST
BY WHOM
LABOR TOTAL
MANHOURS
COST
REMARKS
DOWNTIME:
DATE:
DESCRIPTION OF REPAIR:
PARTS REPAIRED OR REPLACED
TOTAL COST:
PARTS TOTAL
COST
BY WHOM
LABOR TOTAL
MANHOURS
COST
REMARKS
DOWNTIME:
-------
PREVENTIVE MAINTENANCE RECORD
CODE
DATE
TYPE MAINTENANCE PERFORMED
CODE
BY WHOM
REMARKS
CODE
DATE
TYPE MAINTENANCE PERFORMED
CODE
BY WHOM
REMARKS
CODE
DATE
TYPE MAINTENANCE PERFORMED
CODE
BY WHOM
REMARKS
-------
INVENTORY RECORD CARD
Commodity Class Code:
Descri pt ion:
Minimum Stock Qty:_
Required Lead Time:
Primary Vendor:
Maximum Stock Qty:
Unit of Measure:
Storage Location:
ORDERED
Date
P.O. No.
Vendor
Qty.
RECEIVED
Date
Qty.
Amt. ($)
ISSUED
Date
Equip,
Qty.
Amt.($)
BALANCE
Date
Qty.
Amt. ($)
Additional Considerations:
1. Seasonal Maintenance Requirements
2. New Equipment Purchase
3. Other:
Date_
Date
Quant i ty
Quant i ty
-------
STOCK ACTIVITY REPORT
(Semi-Annual)y or on Demand)
REPORT USE
Utility manager uses this re-
port to:
• Identify overstocked and
understocked items
• Identify items which
should be on hand in in-
ventory rather than order
material s
• identify duplicate stock
• Determine value of in-
ventory
DESCRIPTION
A monthly report which shows
the movement of inventory and
stock items from the point of
order through receipt and use.
The report shows balances and
value by commodity, and re-
order point.
Note: Summary cards by com-
modity may be maintained if
EDP capabilities do not exist.
Utility manager should review
each card in lieu of this re-
port .
KEY DATA ELEMENTS
1. Commodity Number
2. Reorder
3. Commodity Name
k , Beginning Balance
Un i ts
5. Beginning Balance
Cost
6. Purchased Units
7 , Purchased Uni t
Costs
8. Issued Units
9, Balance on Hand
1 In I i-
un \ i
10. Balance on Hand
Unit
1 1 . End ing 1 nventory
Ba lance
DATA ELEMENT SOURCE
1 . Purchase Order/Vendor
File
2. Inventory Ticket
3. Purchase Order
k. Prior Month Report
5- Prior Month Report
6, Purchase Order
7. Purchase Order/Quote
8. Inventory Ticket
9. Calculated
10. Calculated
11. Calculated
-------
STOCK ACTIVITY REPORT
Report #
For The Period:
Issued To:
Commod i ty
Number
604
Reorder
Point
22
Commod i ty Name
1" Bearings
Begi nni ng
Units
Balance
Unit Cost
Purchases
Units Unit Cost
1.29
20
.33
Units Balance on Hand
Issued Uni ts Uni t Cost
19 8
End i ng
Inventory
Balance
$10.64
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WEEKLY MAINTENANCE WORK SCHEDULE
DAILY ITEM
1. St
2. Li
3. Bu
5.
6.
Boiler
Other
on Check
& Sludge Pumps
ing & Walkthrough
Check
By Pass By
By
By
By
r By
By
WEEKLY ITEM
1 . Clar i f iers_
2 . Detro i ters
3. Aerators
Ma 1 functions
k. Class i f iers
5. Coilfilters
6. Cl Pumps
7. Eff Pump
8. Grit Pumps
9. Other
SCHEDULED PROJECTS
Complete By
1.
2.
3.
k.
5.
6.
LOG OF DAILY ACTIVITIES
14
-------
MACHINE NO.
TYPE MACHINE:
JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
MAINTENANCE RECORD
MECHANICAL AND ELECTRICAL INSPECTIONS SCHEDULE
YEAR
5 6
91011
12
13
15
16
17
18 19
20
21
22
23
24 25 26 27 28
29
19
19
19
OIL CHANGE AND LUBRICATION SCHEDULE
YEAR 1234
5 6 7 8 9 10 11 12
13
15
16
7 18 19
20 21
22
23 24 25 26
27
28 29
19
DATE
WORK ORD.
DESCRIPTION OF REPAIRS AND REPLACEMENTS
DOWNTIME
MANHOURS
MATERIAL COST
TOTAL COST
PREVENTIVE MAINTENANCE RECORD
-------
BOOMTOWN FINANCIAL MODEL
WATER BILLS $6,240.28
TAP FEES AND
SERVICE CHARGES 80.00
5
SALARIES
VACATION PAY
FEDERAL PAYROLL TAX
SALES TAX
GASOLINE
MID STATES METERS
TRI-STATE
BOOMTOWN WHOLESALE
ED's
POST OFFICE
FmHA
RESERVE ACCOUNT
POWER BILL
PAST DUE BILLS
DEPRECIATION
METER BOX REPLACEMENT
$3,116.76
131.83
168.00
.00
40.36
275.69
88.88
12.25
5.48
71.50
$2,987.00
250.00
753.32
.00
1,000.00
$8,901.07
4
.00
DEPOSITS 500.00
PAST DUE RENTALS .00
6
DEPOSIT IN SAVINGS
500.00
DEPOSIT IN SAVINGS
DEPRECIATION, OR
RESERVE
.00
4 Remember that water bill collections should be more than expenses: $6240.28
vs $8901.07. Water bills do not exceed expenses; therefore, Boomtown ex-
perienced a loss.
5 Tap fees and service charges can be added to rental funds because installing
new meters is included in the every day activities of the operator.
6 Past due bill funds are included with water bill collections because the
present bookkeeping system does not allow easy separation.
16
-------
JANUARY INCURRED COSTS AND DISPERSED FUNDS
Salaries
Vacation Pay
Federal Payroll Tax
Sales Tax
Gasoline
Power Bill
Mid States Meter
TRI-STATE
Boomtown Wholesale
ED's
FmHA
Reserve Funds
Post Office
Depreciation
Past Due Bills
JANUARY
EXPENSES
$3,116.76
131.83
168.00
0.00
40.36
752.32
275.69
88.88
12.25
5.48
$2,987.00
250.00
71.50
$1,000.00
0.00
$8,901.07
FUNDS
DISPERSED
ON JAN.
EXPENSES
$3,116.76
131.83
168.00
0.00
0.00
623.51
0.00
0.00
0.00
0.00
$2,987.00
250.00
71.50
0.00
0.00
$7,348.60
PAST DUE
EXPENSES
0.00
0.00
0.00
11.80
0.00
259.61
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$1,620.35
$1,891.76
TOTAL FUNDS
DISPERSED
IN JANUARY
$3,116.76
131.83
168.00
11.80
0.00
883.12
0.00
0.00
0.00
0.00
$2,987.00
250.00
71.50
0.00
0.00
$7,348.60
17
-------
STATEMENT OF BUDGETED AMD ACTUAL EXPENSES
WASTE WATER TREATMENT
Ava i lable
Budget Actual Accruals (Unencumbered
Account (Appropriation) Expend!tures (Encumbrances) Balance)
CO
-------
STATEMENT OF ACTUAL AND ESTIMATED REVENUES
WASTEWATER TREATMENT
CURRENT MONTH
YEAR TO DATE
Revenue Sources
User Charges
General Property Taxes
Federal Grants
State Grants
Septic Tank Disposal Fees
Interest Revenue
Rents
Sewer Availability Charges
Connection Fees
Development Fees
Special Assessments
Other
Total Revenue
Estimated
Actual
Over
(Under)
Total Over Balance To
Estimated Estimated Actual (Under) Be Collected
-------
SAMPLE BALANCE SHEET
to
o
ASSETS
Cash
Investments
Accounts Receivable
Due from other Funds
Prepaid Expenses
Materials and Supplies
Restricted Assets
Equi pment
less Accumulated Depreciation
Uti1ity Plant
less Accumulated Depreciation
Construction in Progress
LIABILITIES AND FUND EQUITY
LiabiIi t ies
Accounts Payable
Due to Other Funds
Notes Payable
Bonds Payable
Customer Deposits
Accrued Liabilities
Reserves
Total Liabi1i t ies
Fund Equity
Contr i but ions
Retained Earnings
Total Fund Equity
TOTAL ASSETS
TOTAL LIABILITIES AND FUND EQUITY
-------
STATEMENT OF REVENUES,
EXPENSES AND CHANGES IN RETAINED EARNINGS
WASTEWATER TREATMENT UTILITY
Operating Revenues
User Charges
Septage Disposal Fees
Total Operating Revenues
Operating Expenses
Persona] Services
Operations
Maintenance
Depreciat ion
Capital Outlay
Other
Total Operating Expenses
Operating Income
Non-Operating Revenues (Expenses)
Operating Grants
Interest Revenue
Rent
Sewer Availability Charges
Connection Fees
Interest Expense
Total Non-Operating Revenues (Expenses)
Net Income (Loss)
Retained Earnings July 1
Retained Earnings June 30
-------
FINANCIAL MODEL
INCOME SOURCE
TO BE USED FOR
EXPENSES
WATER BILLS
1
OPERATING EXPENSES
LOAN PAYMENTS
RESERVE FUNDS
DEPRECIATION
TAP FEES
DEPOSITS
METER INSTALLATION COSTS
HOLD AS SECURITY
PAST DUE BILLS
3
DEPRECIATION, OR
RESERVE, OR SAVINGS
1 Monthly water bills should exceed operating expenses, loan payments,
reserve needs and depreciation needs.
2 Depreciation is a fund to assist in financing major renovations.
3 A strong cut-off policy should be used to discourage delinquent
accounts.
22
-------
SOURCE OF WATER
TREATMENT
DISTRIBUTION
BILLING
The fixing of a water meter
goes under distribution. The
reading of meters goes under
billing.
Robert Nicholas, Water Resources Assistance Council
-------
As soon as the
water system
receives a bill
Write down what
activity each
item on the bill
is associated
wi th.
ACTIVITIES
Water Treatment
Water Distribution
Vehicle
Water Billing
Water Administration
Take the
monthly
bill log
out of
the file.
company name
and the amount
of money spent
under each act-
ivity. Even
bills for past
months are re-
corded but only
under the past
due column on
the sheet.
File the monthly
bill log back in
the files.
Take the bill and file
it under the company
name in the files.
-------
LINE ITEM BUDGET PRESENTATION
Wastewater Treatment Utility
Objective of Expenditure
Personal Services
Salaries
Overtime
Total Personal Services
Expenses
Supplies
Electricity
Gas, Oil and Diesel
Maintenance
Chemicals
Equipment Rentals
Training
Travel
Total Expenses
Capital Outlay
Capital Replacement Reserve
Total Utility
25
-------
ACTIVITY BUDGET PRESENTATION
ACTIVITY
OBJECT OF EXPENDITURE
Persona] Services
Salaries
Overtime
Total Personal Services
PRIMARY SECONDARY TERTIARY SLUDGE ADMINISTRATION
TOTAL
ro
01
Expenses
Supplies
Electricity
Gas, Oil and Diesel
Maintenance
Chemicals
Equipment Rental
Training
Travel
Total Expenses
Capital Outlay
Capital Replacement Reserve
TOTAL TREATMENT
-------
HOW MUCH WILL THE FACILITIES COST
AT TODAY'S PRICES?
A. CONSTRUCTION COSTS ESTIMATE
System Component Coet Total Cost
• Wastewater Treatment Plant
Sludge Handling Facilities
(Year to be built ) (201)
Pump Stations
(202)
Interceptor Sewers
(203)
• Collection Sewers
• On-site And Other Inovative
Alternative Systems
• Othsr
Inspection and Construction
Management
-(204)
(205)
Land Acquisition
_(206)
TOTAL CONSTRUCTION COSTS
(201 + 202 + 203 -f 204 -f 205
+ 206 + 207) .<208)
27
-------
B. ESTIMATED ANNUAL OPERATION, MAINTENANCE, AND
REPLACEMENT COSTS FOR THE PROPOSED FACILITIES
System Components
Sludpe
Cost Treatment Handling Pump Interceptor Ccllnollon On-S!1e Tolsl
Categories Plant Disposal Stations Sewers Sewers Systems Costs
• Labor (Salaries, Fringe
Benefits, ( Overtime)
. • Operations
• Maintenance
• Management
• Support Services
(Purchasing. Data
Processing, Finance,
Etc.)
Total ; (208)
• Utilities (Fuel « Power)
• Electricity
• Fuel Oil
- Natural Gat
• Automotive Fuel
• Water Service
• Other
Total
• Materials * Supplies
- Chemicals
(llemlre)
- Maintenance
• Automotive
- Laboratory
• Administrative
Supplies
• General
Total . «">
• Outside Services
• Sludge Hauling
or Dispose*
- Engineering
Service
- Data Processing
-Other
Tout
• Miscellaneous
Expenses
- Insurance
- Travel & Meal*
-Telephone
•• Training
• Equipment Rental
Total
• Equipment Replacement
• Process Equipment
(e.g., Pumps.
Scrappers,
Collectors, etc.)
• Vehicles
• Minor Miscellaneous
(215>
Total Operallpn, MalnlentPCI, end Rsoteinm^nl Cct'.t
28
-------
HOW WILL THE FACILITIES BE FINANCED?
A. AMOUNT TO BE BORROWED FOR CONSTRUCTION
AND CONSTRUCTION-RELATED COSTS
Grantee Share of Construction Costs
Con-
Frotn struction EPA State Other Grantee
System Component Line Cost Share Share Grants Share
Wastewater Treatment
Plant 201 $ $ $ $ $ (301)
Pump Stations 202 (302)
Interceptor Sewers 203 (303)
Collection Sewers 204 (304)
On-Site Systems 205 (305)
Land Acquisition 206 - - (306)
Other 207 _ (307)
Total $ $ $ $ (308)
Total Grantee Share
307) $ i (309)
29
-------
Construction-Related Costs
Interest Paid on Loans and Notes $ (310)
Repayments to Other Funds (311)
Local Share of Planning
and Design Costs (312)
Legal, Financial and Other Fees
for Issuance and Sale of Bonds (313)
Other Costs (Identify)
(314)
Total Construction-Related Costs $ (315)
(310 + 311+312 + 313 + 314)
Grantee Contributions (Reduction in Amount to be Borrowed)
Accumulated Property Tax Revenue $ (316)
Local Funds (Reserves) Available
for the Project (317)
Prepaid Connection Fees and
Betterment Assessments . (318)
Other Sources of Front-End Funding (Identify)
ZZZZZZZZZZ (319);
Total Grantee Contributions $ , (320)
(316 + 317 + 318 + 319)
Amount to be Borrowed & (321)
(309+315-320)
30
-------
B. METHODS OF FINANCING THE AMOUNT TO BE BORROWED
Financing
Method
General
Obligation
Bond
Revenue
Bond
Loan
Total
Amount
Borrowed
Interest
Rate
.
'•.. ' V<<
Term of
Maturity
'.
<
-.••>.
Annual Debt
Service
Payment
(322)
. {323|
(324?
(325J
Capital Recovery Table
Length of
Maturity in
Years
10
15
20
25
30
35
40
Interest Rates in Percents
7
.142
.110
.094
.086
.081
.077
.075
8
.149
.117
.102
.094
.089
.086
.084
9
.156
.124
.110
.102
.097
.095
.093
10
.163
.131
.117
.110
.106
.104
.102
11
.170
.139
.126
.119
.115
.113
.112
12
.177
.147
.134
.128
.124
.122
.121
13
.184
.155
.142
.136
.133
.132
.131
14
.192
.163
.151
.145
.143
.141
.141
15
.199
.171
.160
.155
.152
.151
.151
31
-------
C. TOTAL ESTIMATED ANNUAL LOCAL WASTEWATER TREATMENT SYSTEM COSTS
• Existing Annual Operation,
Maintenance, and Replacement Costs $ (326)
• Discontinued Annual Operation
Maintenance, and Replacement Costs
to be Discontinued as a Result of
Proposed Project $ (327)
• Net Existing Annual Operation,
Maintenance, and Replacement Costs
(Net) (326-327) $ (328)
• Existing Annual Debt Service $ (329)
• Estimated Annual Operation,
Maintenance, and Replacement Costs
of Proposed Facilities (215) $ (330)
• Estimated Annual Debt Service and
Other Required Expenses for Proposed « 13311
Facilities (325) * l '
• Total Estimated Annual Local
Wastewater Treatment System
Costs (328 4- 329 -I- 330 + 331) $ — (33*1
32
-------
O. SOURCES OF FUNDING FOR TOTAL ANNUAL
WASTEWATER TREATMENT AND FACILITIES COSTS
• Sewer Service Charges _$ _ (333)
• Surcharge on Sewer Service Charges _ (334)
• Special Assessments and Fees
— Connection Fees
($ _ per connection, number of _ (335)
connections _ )
— Betterment Assessments
($ _ per __ _ (336)
number - )
- Other (Describe)
• Transfers From Other Funds
(Identify)
(338)
Other (Identify)
(339)
Total Funding $ _,__ (340)
33
-------
WHAT ARE THE ANNUAL COSTS PER HOUSEHOLD?
• Total Estimated Annual Wastewater Treatment
System Costs (332) $ (400)
• Nonresidential Share of Total Annual
Wastewater Treatment System Costs $ (401)
• Residential Share of Total Annual Wastewater
Treatment Svstem Costs (400 - 401J $ (402)
• Number of Households (403)
• Annual Wastewater Treatment System
Cost Per Household (402+ 401) $ (404)
• Other Annual Costs Per Household (Identify)
HZZZHZZZZIIZZZIZZZI I (405)
• Total Annual Costs Per Household
(404 -f 405)
34
-------
Basic Management Principles For Small
Water Systems
Sources Used In , . . . . . . . . . , .
American Water Works Association
. 7 . . ,
Preparing Th^s G^de n ,, , , /innn\
^ y Denver, Colorado (1982)
Comprehensive Diagnostic Evaluation And
Selected Management Issues
U.S. EPA, Office of Water Program Operations
Washington, D.C. (1982)
New England Wastewater Management Guide
New England Interstate Water Pollution
Control Commission
Boston, Massachusetts (1981)
Utility Manager's Guide To Financial
Planning (Draft)
U.S. EPA, Office of Water Programs Operations
Washington, D.C. (1983)
*U.S. GOVERNMENT PRINTING OFFICE! 984 -5>t5-062/ REGION NO. 4
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