Replacement and Rehabilitation Program Costs

R & R Program Financial Analysis Key Factors

  • Analysis considers the initial 20 years of 50-year program
  • Program to begin in January 2014
  • Replacement costs $1 million per mile – Total project cost $180 million (today’s dollars)
  • $3.7 million annual funding requirement
  • 3.0% annual escalation factor applied to costs
  •  In 2014 and beyond, all R&R program funding to be collected in additional fixed fee

Financing

The option chosen is a mix of cash from rates and new debt (Revenue Bonds). With this option existing and future rate payers contribute to the program.

Assumptions

  • Depreciation funding from rates $1.7 million to $3.7 million
  • $90 million total capital funding from rates for 20 year period
  • $35 million new debt funding – 40% debt funding

Funding

The option chosen is based on a fixed fee by meter size

The Pros for this funding

  •  Recover cost more equitably for larger users
  •  Lower/smaller users pay less
  •  Revenue stability

If you have any further questions, please email either Randall Black at rblack@lakewoodwater.org or Philip Mendoza at pmendoza@lakewoodwater.org  or call at 253-588-4423

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