Minutes 03/27/1979 - Laserfiche WebLink

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-3- The City would show a benefit from the project begin.ning in the sixth year. The 15 year cumulative benefit would be $6.9 million--the 20 year cumulative benefit would be $22.5 million--the 27 year cumulative benefit would be $65.3 million. METHODS PROPOSED TO FUND A SHORTFALL: There are two methods proposed to fund the 5 year shortfall of $1,883,000. Both methods should achieve the objectives of a self-supporting project with no tax increases to the citizens, no disruption of or sacrifice of City services, and no increase in retail electricity rates to levels higher than those charged by APCo. The two methods are as follows: 1. Transfer of Electric Department SurDlus to an Escrow Account: Under this proposal, Electric Department Surplus would be transferred to an Escrow Account in installments. It is anticipated that all installments can be made without affecting the operating or capital expenditure budgets of the City. The proposed amounts of the installments, the tentative schedule and the justification for the amounts and dates are as follows: July 1, 1979 - $900,000 On July 1, 1978, the Electric Department Surplus stood at $987,743. Current estimates are that the Electric Department will net about $950,000 this year, which will add $250,000 to Surplus after the budgeted $700,000 transfer to the General Fund. The General Fund owes the Electric Fund $150,000, a debt that dates back to Fiscal 1963, and has been reflected in all City audits since that time. The General Fund is in a good position to repay the interest free debt this year. These two items will increase Electric Department Surplus to approximately $1,387,743 at June 30, 1979. A transfer of $900,000 to an Escrow Account will leave close to $500,000 in surplus to fund the next study. July 1, 1980 - $25,000 Next year the General Fund will receive approximately $121,000 (3/4 of $161,000) in new State maintenance fund money as a result of House Bill 602. The receipt of these new funds by the General Fund should enable the City to reduce the transfer of funds from the Electric Fund to the General Fund by $25,000 with no adverse effect on General Fund finances. July 1, 1981 - $100,000 Beginning July 1, 1980, the City will receive close to $400,000 in new State funds as a result of House Bill 599, to pay for law enforcement, local hospitali- zation, Circuit Court judges salaries, and Commonwealth Attorney expenses. Also, the City will receive a full year's funding of increased State street maintenance. This infusion of new funds into the General Fund should enable the Electric Department to reduce the transfer to the General Fund by $100,000 without an adverse effect on the General Fund. July 1, 1983 - $50,000 In fiscal 1983, the City's Debt Service Payments will drop $219,000. This should enable the Electric Department to reduce the transfer to the General Fund by $50,000 without an adverse effect on the General Fund. It is projected that the $900,000 "set-aside" installment in July 1979 can be invested at 9% for two years. All other installment s are a ssumed to be invested at 8}%.